Could Midtown Price Out Its Target Audience?
Midtown is best positioned to capture Millennials. But escalating apartment rents risk losing that audience, says Portman Holdings' Hunter Richardson on the eve of our 3rd Annual Future of Midtown event tomorrow morning at the W Hotel, starting at 7am.
“I'm concerned about pricing Millennials out when it's the Millennials you want in those products,” Hunter tells us. According to Haddow & Co's Q1 numbers, new high-rise multifamily rents averaged $2.50/SF in both Midtown and Buckhead, which could easily place typical two-bedrooms well past $2,100/month rents. “It certainly is not the Millennials we're seeing in those properties,” Hunter says.
Hunter is part of an all-star lineup of speakers tomorrow morning for our event, including North American Properties' Mark Toro, Gateway Development Services' David Tyndall and Savills Studley's Chris White (here). Chris, however, says if you look beyond the heart of Midtown—that 14th Street corridor—and into the fringes just outside of Midtown like Morningside or Druid Hills or Decatur/Emory, you can find rents more in a Millennial's price range while still being interconnected and walkable. “Really, in my opinion, it's the only submarket of Atlanta that you can liken to a world-class city,” with the prospect of being 24 hours in short order, he says.
It's why the tech world has fallen in love with the area, from NCR to Sage Software to Worldpay to AthenaHealth, Kaiser Permanente's IT division and even the coming high-performance computing center tower (here, and being developed by Portman). Chris says from 2007 to 2014, 1,200 tech companies began or moved to Midtown. Compare that with only 240 new law firms, once the stalwart of Midtown tenancy, during the same period. “It's not the Midtown we all got accustomed to 10 years ago,” he says.
Even a year has made a massive difference in Midtown, says Midtown Alliance CEO Kevin Green, another of our panelists tomorrow. Today there are 16 projects underway within a square mile of Midtown's heart, and another 20 in the pipeline, much of that residential. “The residential population is on track to basically double. So it doesn't make me the slightest bit nervous,” Kevin says. And while rents will reflect market demand and will moderate when its prime audience can't afford them, Kevin says he feels we're a ways off from that precipice. “I don't think we have topped out on the demand yet,” he says.
If there is a future issue with Midtown housing, it could be with the availability for product that will cater to families. “I'm seeing a lot of strollers, but I'm not seeing a lot of housing product that addresses families,” Kevin says. “If you add more three-bedroom product, you have more options for families.” The growth of children in the CBD is something Hunter says he noticed at Buckhead Atlanta. “I'm seeing more and more kids. And frankly, I did not expect that when [OliverMcMillan] was developing [Buckhead Atlanta],” he says. But with families coming from cities like New York, it's not an unusual lifestyle choice. Hear more from Hunter, Chris, Kevin and the rest at our 3rd Annual Future of Midtown event, starting 7:30am at the W Hotel Midtown (info and dwindling tickets here).
