Research & Forecast Report

ATLANTAQ1 2016 | Multifamily

Employment Plays a Key Role in Atlanta’s Strong Apartment MarketKey Takeaways > Annual rent growth: Atlanta, 7.1%; Regional, 4.2%; National, 5%

> Atlanta Falcons Stadium: $1.4B development near downtown

> Occupancy: 94% in 1st Qtr. 2016 (5.7 points higher than 2009 post recession low)

> 2016 Annual Supply: 10,300 units (2.2% base increase)

> Hartsfield-Jackson Int’l Airport reveals 20-year, $6B capital plan ($1B spent by 2017)

Atlanta Multifamily MarketAtlanta’s strong economy derives from a well-educated population, first class regional location and transportation hub. As the trend for corporate relocations to the Atlanta area continue, more quality jobs are becoming available, and therefore, attracting and retaining workers to the region. Strong job growth has led to improving demand for rental housing. These factors are boding well in the Atlanta apartment market, particularly in high-end areas such as Midtown, Buckhead and the North Perimeter where, occupancy and rent growth are remaining at high benchmark levels. Overall, Atlanta’s economy will continue to see strong growth as a result of an educated workforce, extensive infrastructure and business-friendly climate.

While downtown and the suburbs to its south continue to struggle, there are a couple of noteworthy projects that are generating excitement. The most notable development, located southwest of downtown, is the new, state-of-the-art, Mercedes-Benz Stadium. The $1.4 billion stadium, will be home to the Atlanta Falcons in 2017. Team management, along with local government agencies have committed $30 million towards infrastructure improvements in the immediate area. Another project, the Hartsfield-Jackson International Airport, just southwest of downtown, will soon start construction on a $6 billion expansion. The 20-year plan will ensure Hartsfield-Jackson remains the world’s leading airport, with plans to spend over $1 billion in 2017. While promising, these developments alone will fall short of resembling activity located north of downtown.

US SOUTH ATLANTA Source: MPF Research

Historical Apartment Occupancy & Rents

Market IndicatorsRelative to prior period

ATLQ1 2016

ATLQ2 2016*

VACANCY

RENTS

CONCESSIONS

TRANSACTIONS

PRICE PER UNIT

CAP RATES -*Projected

90%

91%

92%

93%

94%

95%

96%

97%

2014

2015

2016

Occ

upan

cy %

$400

$600

$800

$1,000

$1,200

$1,400

2014

2015

2016

AVG

Mon

thly

Ren

t

2 Research & Forecast Report | Q1 2016 | Atlanta Multifamily | Colliers International

DEMAND

Apartment demand remains very strong, mostly due to renter’s preference for in-town amenities and access to employment. Annual demand ended at 8,565 units, outpacing the five-year average demand by 405 units. The third quarter of 2015 recorded demand of 13,097 units, the highest annual total since 2010. A leading indicator for demand in the city is the steady growth in population. The 55+ age segment is Atlanta’s fastest- growing group and make up roughly 21% of the population. As the apartment market continues to provide new product to the market, this growing group will significantly impact absorption.

SUPPLY

Atlanta apartment supply continues to remain elevated, mostly located in very concentrated submarkets within the perimeter. The market had a net increase of 5,816 units in the first quarter of 2016, which equals an expansion rate of 1.3%. The five year annual average was 5,115 units, which accounted for 88% of past 12-month supply. This year, nearly 10,300 units will hit the market. Those units will result in a 2.2% increase of the existing supply. Current and future apartment activity, will nonetheless, remain near areas located inside the perimeter- primarily Midtown and Buckhead.

OCCUPANCY

Due to the strong demand over the past several years, the local market occupancy has maintained fairly steady. The average annual rate increased 0.7% to 94% and stronger demand is a result of the central and northern submarkets of Atlanta. As more units hit the market occupancy will soften as indicated by a -1.0% decline in the first quarter of the 2016. Older, less desirable submarkets remain stagnant while existing supply is absorbed and mid-grade product is burned off.

OUTLOOK FOR 2016

2016 continues to look positive in the multifamily market. The projected 12-month supply will peak at 10,293, a 28% increase over the prior 12-months. Demand will keep pace with supply and is primarily predicated on production of jobs. The majority of activity will continue to focus in top-tier submarkets such as Midtown and Buckhead. Almost 15,002 units have been proposed for construction in these luxury markets and similar activity will carry over into the beginning of 2017. Annual rent growth is expected to cool down as more units hit the market and the anticipation of overbuilding creates concern; overall rent growth expected between 3-4%.

Historical Investment Volume & Cap Rates

UPDATE - Recent Transactions in the Market

Notable Sales Activity

PROPERTY SUBMARKET SALES DATE SALE PRICE SIZE (UNITS) PRICE / UNIT BUYER

The Point at Perimeter Apts. Central Perimeter 1/27/2016 $90,000,000 603 $149,254 Abacus Capital Group LLC

The Brooke Decatur 1/19/2016 $73,500,000 537 $136,872 Irinda Capital Mgmt. LLC

1660 Peachtree St Midtown 2/1/2016 $64,200,000 355 $180,845 The Connor Group

Mountain at Park Estates Northwest Atlanta 3/16/2016 $64,000,000 450 $142,222 White Oak Partners

Savannah Midtown Midtown 2/18/2016 $58,100,000 322 $180,435 Waterton Associates LLC

Landmark at Bella Vista Northeast Atlanta 1/27/2016 $53,472,462 564 $151,381 Starwood Capital Group

Lincoln Hills Apartments Northwest Atlanta 2/24/2016 $49,300,000 680 $72,500 Castlegate Property Group

Century Riverside Northeast Atlanta 1/14/2016 $46,600,000 412 $113,107 Wood Partners

The Ivy at Buckhead Buckhead 3/30/2016 $44,400,000 296 $150,000 Fowler Property Acquisition

The Domain at Holcomb Bridge Northeast Atlanta 1/27/2016 $42,500,000 420 $101,190 Atlantic | Pacific Companies

Sales Volume AVG Cap Rate

ATLANTA MULTIFAMILY

Atlanta apartment investment volume in 2015 reached its highest level ever at a total of $6.5 billion. Activity continued into the first quarter with $1.5 billion transacted. The average price per unit was $91,704 in Q1 according to Real Capital Analytics. Atlanta’s average cap rate for apartments ticked up slightly to 6.6% from last quarter.

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

0

1

2

3

4

5

6

7

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

YTD

16

Billions

Atlanta Multifamily Market (continued)

Source: Real Capital Analytics

Source: CoStar Comps

3 Research & Forecast Report | Q1 2016 | Atlanta Multifamily | Colliers International

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MARIETT A

Hartsfield-Jackson International Airport

Multifamily Pipeline | Urban Atlanta Sources: CoStar Property, MPF Research

13

4

9

12

3

117

614

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1

5

9

22

18

8

16

24

3

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25262729

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15

LEASE UP

# Name Developer/Owner Address Market Units

1 University House Midtown Inland Real Estate Corporation 930 Spring St NW Midtown 268

2 Broadstone Court Alliance Residential Company 3091 Maple Dr Buckhead 250

3 Solis Downwood Terwilliger Pappas 3201 Downwood Cir NW West Paces 280

4 Gables Brookhaven - Phase I Gables Residential 4420 Peachtree Rd NE Brookhaven 176

5 Alexan on Krog Trammell Crow Residential Company 44 Krog St NE Inman Park 222

6 Berkshire Howell Mill Crescent Communities, LLC 1950 Howell Mill Rd NW Brookwood 255

7 Elan Lindbergh Greystar Real Estate Partners 741 Morosgo Dr NE Lindbergh 358

8 The High Rise at Post Alexander Post Properties, Inc. 600 Phipps Blvd NE Buckhead 340

9 The Office Apartments DeBartolo Development LLC 250 Piedmont Ave NE Downtown Atlanta 327

10 The Reserve at the Ballpark Atlantic Realty Partners 2875 Crescent Pky Cumberland 322

11 The Collection JLB Partners, LP 4600 Roswell Rd Sandy Springs 316

12 Ardmore & 28th Cocke Finkelstein, Inc. 306 Ardmore Cir NW Brookwood 56

13 The Heights at West Midtown WSE Property Management LLC 507 Bishop St NW West Midthwn 240

14 1824 Defoor RAM Partners, LLC 1824 Defoor Ave NW West Midthwn 24

15 The Reserve at Decatur Atlantic Realty Partners 2600 Milscott Dr Decatur 15

16 Alexan 1133 Trammell Crow Residential Company 1133 Commerce Dr Decatur 84

TOTAL 3,533

15

Over 50 Multifamily Developments currently Proposed for the Urban Atlanta Area.

43

14

20

4445

5

28

4 Research & Forecast Report | Q1 2016 | Atlanta Multifamily | Colliers International

Multifamily Pipeline | Urban Atlanta (cont.) Sources: CoStar Property, MPF Research

UNDER CONSTRUCTION

# Name Developer/Owner Address Market Units

1 Gables Brookhaven - Phase II 4420 Peachtree Rd NE Brookhaven 198

2 Ardmore & 28th - Phase II 306 Ardmore Cir NW Brookwood 109

3 Brookwood Square Apartments

Grayco Partners 2140 Peachtree Rd Brookwood 250

4 Millworks Pollack Shores Real Estate Group 1900 Emery St NW Brookwood 345

5 AMLI City Place AMLI Residential Properties, LP 3464 Roxboro Rd NE Buckhead 640

6 Domain at Phipps Plaza Columbus Realty Partners, Ltd. 705 Phipps Plz NE Buckhead 319

7 Hanover Park Place The Hanover Company 475 Buckhead Ave NE Buckhead 375

8 Hanover at Perimeter Town Center

The Hanover Company 1140 Hammond Dr NE Central Perimeter 385

9 The Encore Oxford Properties 3290 Cobb Galleria Pky Cumberland 339

10 The Metro Audubon Communities 1500 Parkwood Cir SE Cumberland 200

11 Accent North Druid Hills Westplan Investors 7 Executive Park Dr NE Decatur 310

12 Alexan 1133 - Phase II Trammell Crow Residential Company 1133 Commerce Dr Decatur 83

13 Decatur Crossing Fuqua Development 588 Barton Way Decatur 310

14 Green Park 2037 Weems Rd Decatur 310

15 Reserve at Mills Creek 560 Parkdale Dr Decatur 100

16 The Reserve at Decatur - Phase II

Atlantic Realty Partners 2600 Milscott Dr Decatur 283

17 200 Edgewood Sanctuary Residential LLC 200 Edgewood Ave NE Downtown 144

18 Broadstone Sandy Springs Alliance Residential Company 6558 Roswell Rd NE Downtown 230

19 One City Walk George S. Morgan Development Co., Inc. 6050 Roswell Rd NE Downtown 203

20 Post Centennial Park Post Properties, Inc. Centenial Olympic Park Dr NW Downtown 438

21 The Cliftwood 180 Allen Rd NE Downtown 248

22 Alexan Glenwood Trammell Crow Residential Company 860 Glenwood Ave SE Grant Park 216

23 Cheshire Bridge Apartments Catalyst Development Partners, LLC 2470 Cheshire Bridge Rd NE Lindbergh 282

24 Piedmont Heights AMLI Residential Properties, LP 2323 Piedmont Rd NE Lindbergh 20

25 Piedmont Heights - Phase II AMLI Residential Properties, LP 2323 Piedmont Rd NE Lindbergh 355

26 60 11th St Selig Enterprises, Inc. 60 11th St NE Midtown 320

27 Alta Midtown Wood Partners 33 Peachtree Pl Midtown 369

28 Atlantic House Novare Group 1163 W Peachtree St NW Midtown 407

29 Broadstone Terraces Alliance Residential Company 811 Juniper St Midtown 218

30 Modera Midtown Mill Creek Residential Trust LLC 90 Peachtree Pl NW Midtown 450

31 Post Midtown Millenium Post Properties, Inc. 33 11th St Midtown 356

32 Spring Midtown The Related Companies 22 14th St NW Midtown 390

33 Trace Midtown Apartments JLB Partners, LP 782 Peachtree St NE Midtown 290

34 Yoo on The Park The Trillist Companies 207 13th St NE Midtown 245

35 The Olmsted Chamblee Cocke Finkelstein, Inc. 5193 Peachtree Blvd Northlake 277

36 City Lights Wingate Companies 420 Boulevard Old Fourth Ward 80

37 675 N. Highland Abraham Properties & Builders 675 North Highland Ave NE Poncey-Highland 124

38 841 Memorial Enfold Properties 841 Memorial Dr SE Reynoldstown 80

39 Elan Inman Station Crim & Associates 144 Moreland Ave NE Reynoldstown 285

40 Alexan EAV Trammell Crow Residential Company 1205 Metropolitan Ave SE South Edgewood 120

5 Research & Forecast Report | Q1 2016 | Atlanta Multifamily | Colliers International

Metro Atlanta Employment Overview

Metro Atlanta Employment Comparison

METRO AREA RANK Y-O-Y EMPLOYMENT

Y-O-Y PERCENT

UNEMPLOYMENTRATE

New York/NNJ 1 193,200 2.1% 5.0%

Los Angeles/OC 2 145,300 2.5% 4.8%

Dallas-Fort Worth 3 129,900 3.9% 3.8%

DC-Arlington 4 86,600 2.8% 4.1%

Chicago 5 81,400 1.8% 6.6%

Atlanta 6 77,000 3.0% 5.2%

Philadelphia 7 71,700 2.6% 5.0%

San Francisco 8 71,100 3.2% 3.8%

Phoenix 9 69,900 3.7% 4.5%

Miami 10 64,600 2.6% 4.9%

Seattle 11 60,700 3.3% 5.1%

Orlando 12 49,200 4.3% 4.3%

U.S. Total 2,785,300 2.0% 5.1%

> An undisclosed company, codenamed Project Voice, will create more than 140 jobs. The company, a global financial technology firm, will locate the headquarters at Live Oak Square in Buckhead – a subsidiary of Sao Paulo, Brazil based Cielo S.A.

> HD Supply Company relocating headquarters to a $100 million building at I-75 and Cumberland Blvd from Perimeter – the company will create 500 jobs over the next five years

> Synovus Financial Corp. anchoring a new mid-rise office development that will bring 300 Bank of North Georgia employees to Cobb

> WellStar Health System looking to relocate hundreds of employees to Marietta, where the company will lease 143,000 square feet of Parkway Center, a twelve-story office building

UNDER CONSTRUCTION (cont.)

# Name Developer/Owner Address Market Units

41 Alexan Vinings Trammell Crow Residential Company 3330 Cumberland Blvd SE Vinings 232

42 1824 Defoor - Phase II 1824 Defoor Ave NW West Midtown 212

43 455 Fourteenth Pollack Shores Real Estate Group 455 14th St NW West Midtown 361

44 Accent Waterworks Westplan Investors 1390 Northside Dr NW West Midtown 133

45 Westside Heights WSE Property Management LLC 903 Huff Rd NW West Midtown 282

TOTAL 11,923

‐42.2‐23.0

30.2

69.4 66.248.9

‐26.8

‐136.6

‐20.9

35.6 42.459.9

89.0 82.4

37.6

‐150.0

‐100.0

‐50.0

0.0

50.0

100.0

150.0

Jobs Add

ed/Lost (thou

sand

s)

Source: US Dept. of Labor Statistics/Moody’s Analytics

Source: Bureau of Labor Statistics; Metro Level Data March 2016(p) Average, not Seasonally Adjusted

Notable Atlanta Job Relocations

Multifamily Pipeline | Urban Atlanta (cont.) Sources: CoStar Property, MPF Research

6 North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International

Copyright © 2016 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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FOR MORE INFORMATIONRon CameronSenior Vice President | Atlanta+1 404 877 9287ron.cameron@colliers.com

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CONTRIBUTORSScott AmosonDirector of Research | Atlanta

Jaime SlocumbProject Manager | Atlanta

Chevene King, IIIFinancial Analyst | Atlanta

Atlanta Submarkets

Units sold since 2011

30,000MORE THAN

Group gross transactional value since 2011

$2.0B

Dedicated Multifamily Professionals & Advisors

50MORE THAN

Expansive geographic footprint

20COVERING OVER

STATES