Atlanta’s real estate sectors drive growth amid national trends
Writer: Eleana Teran
October 2024 — The residential and commercial real estate markets in Atlanta continue to showcase resilience and dynamism as the city attracts both homebuyers and businesses alike. Despite broader economic uncertainty, the Metro Atlanta region has maintained its appeal with robust housing activity and strong commercial leasing, particularly in key submarkets. As demand fluctuates and the market evolves, Atlanta remains a focal point of growth in the Southeast, with leaders across both sectors adapting to new trends and opportunities.
On the residential front, Atlanta’s real estate market is a hot spot, driven by its reputation as a top destination for millennial buyers. With over $1 trillion in residential real estate asset value, the city is one of the most active markets in the U.S. However, inventory remains a concern with only 2,778 active listings for houses at the start of the week, according to Altos Research. This shortage creates a highly competitive environment for buyers and real estate agents.
Nationally, the housing market has seen similar trends. Realtor.com’s August monthly housing markets trends report notes that while the number of homes actively for sale has grown by 35.8%, new listings have slowed by 0.9%, and homes are taking longer to sell, with an average of 53 days on the market.
Meanwhile, Atlanta’s commercial real estate market is also experiencing significant movement. Despite economic headwinds, certain sectors, such as industrial and office spaces continue to thrive. According to Cushman & Wakefield, the office sector saw a 43.9% quarter-over-quarter increase in new leasing activity in 2Q24, led by major deals in Midtown and Buckhead. Industrial leasing is equally strong, with the Metro Atlanta region ranking No. 6 out of 83 markets across the nation for new industrial transactions largely driven by clients like Mars Wrigley and Amazon.
On a national scale, the commercial real estate market has faced mixed results. According to Moody’s 2Q24 report, while the office sector continues to struggle with vacancies hitting a historic high of 20.1%, Atlanta’s key submarkets are bucking the trend with strong leasing activity. The multifamily sector is also seeing slight growth, with effective rents increasing by 0.3% and vacancy rates holding steady at 5.7%. Though demand for industrial space has softened nationwide after years of strong performance, Atlanta remains a standout, driven by high levels of leasing activity in key submarkets and significant tenant commitments to modern, well-located facilities.
Leaders in Atlanta’s real estate market, including Bonneau Ansley, founder and chairman of Ansley Real Estate | Christie’s International Real Estate; Kelly Guin Thrash, president of the Atlanta REALTORS Association; Scotland Wright, founder and chairman of Scotland Wright Associates; and Ashley Turner, CFO of Drapac Capital Partners, shared their insights on how shifting buyer preferences, talent migration, and economic resilience are shaping Atlanta’s residential and commercial markets, as well as the ongoing challenges and opportunities ahead:
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Bonneau Ansley, founder and chairman, Ansley Real Estate Christie’s International Real Estate
I believe that COVID has completely shifted where people want to spend their time and live and work. Luckily, Atlanta geographically sits in an area where people want to move to. That’s because we’ve got four seasons of weather. We’ve got a great job market, we’ve got great schools, and our cost of living is relatively low compared to other cities. We’ll continue to see a migration of sorts from other areas and other states to states like Georgia and Florida. As we continue to see that, we’ll be in a great position as homeowners and as real estate agents.
The condo market has surprised me the most. We represented a new building with 44 luxury units called the Graydon, and we were super-successful and sold all 44 units last year. There’s a new building coming up in Atlanta, which is also showing significant early success. At the time of this interview, they had 88 sales out of 144 units. Condos are highly sought after, and they’re getting a high price per square foot. I’d also say our luxury market has been thriving. It’s been great to see homes over $5 million sell quite often. That high, high luxury mark in Atlanta has also been very strong.
Kelly Guin Thrash, president, Atlanta REALTORS Association
The market in the Northern Arc is slightly more robust than inside the perimeter, but the difference is not significant. Buyers today are looking for ease. They prefer homes that are move-in ready, with minimal work required. While they are willing to change paint colors or flooring, they shy away from properties that need extensive renovations. Investors, especially individual or “mom-and-pop” investors, are the ones taking on homes that need significant work. Most regular buyers, however, are looking for homes that require only minor updates, like changing light fixtures or faucets.
Atlanta continues to be a top relocation destination, and we have a thriving real estate market driven by companies bringing in their employees and expansions happening in the area. Despite some softening, the market remains strong, primarily due to the lack of inventory. We don’t have enough homes to meet the demand of people wanting to move here or upgrade their current living situations. New construction starts have increased, but it’s still challenging to keep up with the high demand.
Scotland Wright, founder & chairman, Scotland Wright Associates
As a lifelong resident and native of Atlanta, I am admittedly biased but firmly believe it is one of the greatest cities in the world. The city offers a fantastic lifestyle and a cost of living that is more favorable than many other major metropolitan areas in the United States. Over the past 15 years, many companies have recognized the abundance of talent in Atlanta and the Southeast region. Atlanta, being the capital of Georgia and considered the capital of the Southeast, draws many graduates from the numerous prestigious universities and colleges throughout the region. These graduates are attracted to Atlanta for their first jobs due to the affordable cost of living, enjoyable lifestyle, and excellent weather, which is generally warmer and sunnier compared to other areas. This influx of talent supports the city’s growth and makes it an attractive location for companies ranging from startups to global headquarters. The presence of big technology and Fortune 500 companies in Atlanta is a testament to the city’s ability to attract and retain top talent.
Given Atlanta’s significant role, the real estate market here is expected to remain robust despite current economic fluctuations. Significant real estate development is likely to continue, catering to the demand from companies and individuals who choose to be here. In the near future, the industry will benefit if interest rates decrease, and construction costs stabilize. Office users are recognizing the importance of maintaining their culture by having their teams collaborate in person, though not necessarily every day. Various factors continue to influence company decisions, but I am optimistic that Atlanta will recover faster than many other regions due to its dynamic and desirable nature.
Ashley Turner, CFO, Drapac Capital Partners
Atlanta has shown strong growth and a steady influx of new residents, which drives demand. These indicators suggest that Atlanta might avoid some of the downturns other major cities could face. While the hoped-for soft landing seems case-by-case, Atlanta is showing resilience.
Certain areas, like downtown and midtown, particularly near 50 Ivan Allen, are experiencing a cooling effect, with mixed interest from investors. For example, there’s uncertainty about property values if we were to sell today. Some multifamily builders predict it could take up to five years for the market to fully rebound in Atlanta.
However, Atlanta’s steadily increasing demand means it requires close monitoring. Different areas will respond differently to economic changes. The hope is that interest rates will soften, allowing more people to enter the market, which could stimulate various sectors like multifamily and industrial.
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