Atlanta’s rising rent prices are driving some residents to head for the hills—er, suburbs—to the point it’s triggering a revival, if not a renaissance, in places.
So says metro Atlanta real estate executive Norman Radow, CEO and founder of RADCO, an investment firm focused on the development of multifamily housing.
It’s no secret that as Atlanta’s population swells, and the job market inflates, intown living is becoming less affordable by the day.
So, Radow said in an email interview, suburbs are capitalizing on the increase of people looking to live just outside of cities.
With live, work, play spaces, such as Alpharetta’s Avalon, suburban cities are developing more frequently in ways that mimic city living.
Wooing young professionals and families with lower rent prices than Atlanta’s, the suburbs, Radow said, are “offering a taste of intown living while both feet are planted in the suburbs.”
Below, Radow discusses why what he calls Atlanta’s “suburban renaissance” is real, based on his experience.
Curbed Atlanta: What forces are pulling Atlantans from intown living? Sure, the city’s becoming a more costly place to stay, but what else is ushering people toward the suburbs? What are some examples of the “urban amenities city-dwellers crave?”
Norman Radow: Much of the movement to the suburbs is value-centric. Intown rents have soared over the last four years and, as construction costs rise, new mid-and high-rise projects must command even higher rents.
On top of that, most millennials grew up in the suburbs, and they are comfortable there. As they age, develop relationships, and marry, the suburbs become a more attractive option. However, intown living is still very popular, and I wouldn’t say that intown living is out of vogue.
CA: What kinds of people are heading Outside The Perimeter? Young professionals, long-planted families?
NR: The RADCO Companies owns at least one community on every exit of I-85, from Cheshire Bridge to Indian Trails. We can actually see the migration pattern in real-time. Millennials are moving one exit at a time, seeking value, but also proximity.
Young families are looking for good schools. And, the immigrant and blue collar demographics leapfrog several exits searching for value, as long as they have access to the jobs corridor.
CA: Which OTP hotspots are seeing—or will see—the biggest influx in this “suburban renaissance,” and how might one predict which areas are on the cusp of the surge?
NR: There is no one answer. Obviously, incredible live, work, play projects like Avalon keep people in the suburbs, offering a taste of intown living while both feet are planted in the suburbs.
Rents in these projects are equivalent and often more expensive than those in the city. There is typically a mix of retail experiences that gives people access to the things they need, but are not necessarily mixed-use developments. For example, Fuqua’s mixed-use project on the corner of Cobb and Barrett Parkway in Kennesaw includes a Whole Foods.
We own a property across the street, and our rents are up 30 percent in less than three years (part of which is attributed to the massive development next door).
While some of our residents came from intown, we are seeing more locals moving into the community because they can walk to Whole Foods and have access to jobs, as Kennesaw is its own market.
CA: In a similar vein, how do developers determine which suburbs are best equipped for multifamily Class B projects?
NR: Take Kennesaw again. Besides the drivers I discussed, there is Kennesaw State University, which is growing but has not built additional student housing since I was its chairman six years ago.
Couple that with a blanket moratorium on apartments in this city, and you have a great opportunity to buy and renovate Class B communities due to the barrier to entry. Moving to I-85, Peachtree Corners, and Norcross have similar moratoriums in place. I like to look there.
CA: If people who can’t afford to live in Atlanta start pouring into the suburbs, what happens to those OTP cities’ economies? Do they become poorer?
NR: Just the opposite. We are seeing demographic shifts in the closer suburban communities where blue collar residents are being replaced with younger and better paid millennials.
This is relieving some burden to the schools, and this new demographic eats out more and shops differently. They may demand more services, or different services, but the higher rents they pay drive tax values and improve the local governments financial position so they can provide those services.
CA: How does Atlanta’s growing apartment stock impact the suburban sprawl?
NR: In one sense, not much. The new product is much more expensive due in part to higher construction costs. So, as millennials flock into the job market from college or see rent increases on their intown apartments, a larger number of them move out one or two exits to seek value.
But, the city is still seeing net population growth, and eventually all the new double Class A intown apartments will stabilize (probably within two years). However, during this time, the concessions offered may keep more young people intown until the concessions burn off.