Downtown may be ripe for more residential development
By Leslie Johnson
In order for downtown Atlanta’s simmering housing market to come to a boil, real estate experts say a few more key ingredients need to be added to the residential kettle: namely, more new inventory and infrastructure development.
“Downtown has been a bit of a laggard compared to the rest of the market,” said David Tufts, president of The Marketing Directors LLC. “Compared to areas such as Midtown there’s less cultural infrastructure downtown. There is more coming, but there has been less thus far.”
Observers say it’s only a matter of time before these concepts come to fruition.
“Today there’s numerous development reshaping downtown like the Falcons stadium, the Streetcar, Underground Atlanta, and civic center redevelopment. But the seeds of that were planted in the 2000s in Midtown,” David Gutting, managing director of multifamily investment sales at Jones Lang LaSalle Inc. (JLL).
“In my opinion, large blocks of underutilized land in Midtown had to backfill first, before these downtown developments could have emerged with any scale,” Gutting said.
Downtown’s development progress will continue to unfold as the build outs of surrounding areas are completed. “Because of the hemmed in nature of Midtown with Georgia Tech to the west and Piedmont Park to the east, the backfilling of these large land blocks were the catalysts that forced the orderly push of development further south. I think this explains the emergence of these new downtown developments.”
According to The Marketing Directors’ “Atlanta Market Update Year-End 2014,” there were 273 condo closings last year, up 3 percent over the same time in 2013.
The average sales price rose 35 percent to $175,600 year-over-year while the average price per square foot was up 37 percent to $165.
Townhomes in the downtown submarket are “rare,” the market report states. Last year, there were 21 townhome closings at an average price of $166,017, or $122 per square foot.
“There are more buyers than sellers in pretty much every price point and type of house until you get to significant luxury price points,” said Justin Landis, president of The Justin Landis Group with Keller Williams Realty Peachtree Road.
Downtown Atlanta’s residential inventory has seen some beefing up in recent years, with finished projects coming online and new plans under development, including:
A new hotel and loft apartments planned for the Castleberry Hill neighborhood, representing a portion of investment projects of more than $80 million;
Twelve Centennial Park, a hotel with residences;
The Carter/Georgia State University proposal for a $300 million redevelopment of the property around Turner Field, which would include residential and student housing. Recently, the Fulton County Commission wants the city of Atlanta to work with it in Turner Field’s development. The city and county both own the facility being vacated by the Atlanta Braves.
Those in real estate say fresh residential offerings would help fuel the market.
“New is the operative word,” said Tufts. “A lot of the last wave of product was developed in 2008 or earlier. Almost all the product out in the market is really not state-of-the-art anymore.”
Landis sees interest picking up with the temperatures.
“There’s enough demand now that it’s going to be a good spring for the downtown real estate market,” he said.