Many developers are getting creative and flexible to drive velocity.

by admin

A barrage of national and local coverage has detailed the nation’s housing woes and economic uncertainty – which are clearly having an impact on Atlanta’s multifamily for-sale market. Average absorption rates slowed in all Atlanta submarkets during the first quarter to less than one sale per month, and many projects are struggling to make up for lost contracts as buyers cut their losses, get cold feet or discover they are unable to secure financing or sell their existing homes.

The good news is that the necessary steps are underway to correct the supply-demand imbalance. Projects with standing inventory are increasingly employing new strategies to gain traction by enticing buyers with reduced prices and increased incentives; being more open to negotiation on price; and attracting the broker community by providing a portion of commission for properties under construction at the end of the recission period, rather than all at closing. More proposed developments in the pre-construction phase are going on hold until the market recovers, being converted to rentals or cancelled altogether. For example, The Related Group has placed its One Cityplace project on hold; John Weiland announced that plans for One Museum Place are on hold until at least next summer; and Novare Group recently sold its proposed condo site near The Roxy Theatre.

In light of the economic challenges, many developers are getting creative and flexible to drive velocity. In the Buckhead district, properties with the strongest value propositions are making the strongest headway. The standouts so far this year have been Paces 325 and Paramount at Buckhead, both achieving double-digit sales. Paces 325’s prime location at the intersection of Peachtree and East Paces Ferry roads, adjacent to the upcoming Streets of Buckhead mixed-use development, move-in ready homes and attractive pricing relative to nearby projects under construction makes the project a compelling value. Similarly, Paramount represents luxurious 5-star service and amenities, but at a considerable value relative to new properties still under construction nearby – especially The Mansion, which is next door with a starting price of $2.5 million compared to $199,900 at Paramount.
In midtown, successful pre-construction sales are bucking the overall market trend. Trump Towers, developed by Wood Partners, has over 90 firm and binding contracts before breaking ground. Construction is well underway at 1010 Midtown by Daniel Corp., and Luxe by Paces Properties and Trammell Crow Residential, both of which are having particular success with increasingly popular larger homes, such as three-bedrooms.

A key story in the downtown area is that deeply discounted pricing at Central City has driven double-digit sales since the property was foreclosed on. This is creating an affordable component even lower than TAD financed homes, and it is creating a difficult benchmark for competitive projects. At Novare’s Twelve Centennial Park, a new, innovative buy-back guarantee is aimed at easing buyer financing and concerns about potential price depreciation in order to sell out the remaining homes in Phase I. The W Atlanta Downtown Hotel & Residences by Barry Real Estate is successfully selling at the highest price per square foot ever achieved in the downtown submarket.

In East Atlanta, the hip, artsy, urban neighborhoods with historic authenticity and comparatively affordable homes have been far exceeding the average sales, mostly in the double digits since the start of the year, including 870 Inman in the heart of Inman Park, StudioPlex Lofts in the Old Fourth Ward, and AZ2 Lofts in Edgewood.

Horizon at Wildwood, a Wood Partners development at the Interstate 285 and Powers Ferry Road interchange, near the Chattahoochee River, has achieved over twenty sales and closings this year. The key to Horizon’s success is creating buyer urgency by offering compelling pricing, combined with incentives customized to a buyer’s needs, offered for a limited time only. The program is complemented by the fully amenitized luxury high-rise community and a limited selection of fully-furnished homes, which helps buyers visualize themselves in their new home.

Atlanta’s long-term economic and multifamily housing outlook remains strong. With the city’s growing employment, affordable housing and attractiveness to young professionals, Atlanta continues to attract new residents, an increasing number of whom prefer to live in urban, walkable neighborhoods found among intown condominiums.

— Aletta Barnard, Ph.D. and David Tufts, both with the Atlanta office of the The Marketing Directors, LLC.

You may also like