Update on Skyhouse leasing.
Looks like the project is now 54% leased (I'm sure there is a lag on the website). Based on what they are advertising on the website, they are renting these units out at $2.05 on average, which is definitely a record in Atlanta for projects that weren't originally built/intended as condos (1065 Peachtree, Mezzo and I believe 05 Buckhead).
Some stacks such as the 7, 9, and 11 stacks are already leased up. All of the corner units but one on the upper 1/3 of the building are leased. Unit 2216 just came on the market and I think they lowered rent a bit (now $1864/mo...or $2.11psf). Some stacks such as 5, 6, and 12 must stink because almost none are leased up. The larger units on the lower 2 floors are also an obvious hard sell.
66% of 1 BRs are leased at $2.01 (average rent of $1414), 61% of 2 BRs are leased at $2.12 (average rent of $2116). Studios are leasing up at half the rate of 2 BRs and make up the same percentage of units in the building (24% of units, 33% leased thus far), and 3BRs are barely leasing at all. I think given that 10-12% of the building is leasing up by way of desirable 1BRs and 2BRs with the remaining ~3-5% leasing up via studios and maybe a 3BR, I don't think it will be more than 1-2 months more before we see a slowdown in leasing velocity as the desirable units are taken and all that are left are the studios, lower floor 3BRs, and stacks/floorplans that nobody seems to want. Still, we would be talking about ~70-75% of the building leasing up within 4 months, and given the market I'm sure they gave themselves at least 12 months to completely stabilize.
Let's hope that project deliveries are spaced apart enough to give each project room to fill up before competing with new deliveries (and I would hope that 100 6th doesn't end up cannibalizing Skyhouse). We have 5 floors of 77 12th delivering in May, and the remainder by November...I'd expect a February 2014 delivery of another 320 units at 100 6th, and all of these projects are going to be working the pre-leasing market. I doubt as if the westside projects or the Eastside/Beltline or the Buckhead projects are direct competition, though all are in the $1.75-$2.10 rental range (VERY high for Atlanta). The success of all will depend on the overall job market for the under 30 set, so hopefully all these lenders and equity groups know something we all don't!
The 3BRs seem suited for *student housing* as they are on the lower floors and have a lower rent per bedroom ($900-$925). I wonder if they're being marketed on campuses? Either way, they aren't filling up very quickly.
The 2BRs are leasing quickly, too. Have to assume that very young people who already live here are moving in as roommates, given the following:
Anyone who can afford to buy in Atlanta (presumably the 27+ crowd) will buy. The average advertised monthly rate for a 2BR in Skyhouse is enough for anyone with good credit and 20% down on a 30 Year mortgage to buy a ~$590K home, which is basically 90+% of high end 2BR condos in Midtown or a decent home in the city (and I'm not even factoring in tax savings!). In other words, it does not make sense to rent in Atlanta! On a PSF basis, 1BRs are even more expensive and they require basically one income stream. (equivalent rent for a 1BR is still like buying a $400K home...which is still enough to get you a nice 2BR in 1010...and again with tax savings buying is even more attractive). $80K down is not an unreasonable number for any professional in Atlanta making $80K a year or more for ~5 years (28-29 year old).
Given the above and given Atlanta incomes, these 2BRs aren't renting out to one person, it makes no sense. At $1,050/BR these 2BRs are a snag for anyone who can come even kind of close to affording a studio or a 1BR. And it looks like more people are able to afford a bedroom in a 2BR than a studio.
And given the insane amount of families/people in the metro who were foreclosed on in $200-$400K houses in the burbs...who says they will be able to even apply for these much more expensive units in the city? Despite all the rhetoric that there are all these people out there priced out of homes and in the rental market, I get the sense that they are relegated to cheaper units in the burbs rather than expensive infill units in the city. Atlanta definitely has a credit problem and a shaky job market that I don't think anyone believes has truly proven itself as fundamentally changed since the prior 2 decades were fully based on a housing/real estate boom that was built on false pretenses, so we'll see if there is room to fill all these apartments at these higher rents!
The pace of lease-up of 1BRs is a good sign, but only until 90% of all units UC/recently delivered are filled up at these rates will we know the strength of the intown rental market.
Caught a formula error in the model, which is why the below looks different from the above net of additional leasing activity (was at 42% leased below on 2-1-13).
Quote:
Originally Posted by simms3_redux
There is nothing secret about the information presented below...just created a little spreadsheet that self-updates based on the information found here:
http://skyhousemidtown.com/floor-plans/
Since I've posted it appears a unit on floor 2 (aka 3BR) leased.
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