MARKET Ye Apartment Construction Outpaced by Demand; High Initial Yields Attract Out of State Investors Local employment and household gronthoister demand for housing TheAtanta rental market isgrovingasthemetroconlinves to expand its employment base. Duringthe recovery jobs grew at anaverage annul atoofS ponont Ahigh-sllol labor oreo, oecwtiv housingaptions and lect international igh vetoattmetcomorite healquneters as Mercedes ena and Norfll Southern. Ascareer opportunities in ‘Atlanta expand, eb seckers ste relocating throughout the market, creat additional demana for apurtne tained household gront wil keep apartment trends postive, compressing the vacancy rateapd driving theaverageefletive rental ate higher. *.Thea {rowing rental demand hes t absorb new construction. Develon- ‘meat has increased apartment iavertoryby7 percent since 2015 The bulk ‘ofthe new supply hasbeen Cass luxury apartmentsin Downtown and Migtown Atlanta, The affluent suburb of Buckbead isalso experiencing ‘apd apartment srowth, providing high-income residents with more rental optionsin thesubsiarket, The West Atlanta submarket expects alargedepositof inventory over the next 18 months.Sixproject here arecurrently under co ruction with completion dates xtendinginto 2021. Outsidethe perimeter, development in Atlnt's surrounding submarketsisstrongas well The Alpharetta/Curnming submarket wll receive more thar 900 rental UBits With this years constructor Local Apartment Yield Trends — Ayaronene Cap hae 6 NN 10-Yoer Treasury Rete ate 2 copratehing meth eerage tough IQ Tra rotor Mech 2? Marcus ¢ Millichap Multifamily 2019 Outlook ® 1300. nt beconpete ® 40 BASIS POINT CONSTRUCTION Conetrctionin At all increas by 28ppercen in200. Ths isthe second anges annul delivery inthe eye. VACANCY: ‘Vacancy wil fall to 49 percent in 2009. Last year vacaney ell 90basis points from 62 percent RENTS: ‘The averate eectiverent climbs to $1290 per month in 2019. The average (4io INCREASE annua ret growth (63 percent. Investment Trends + 12018 thetotal numberof transactions decreased yearoveryearfor ‘hens time sincethedownturn in 2009 Since the trough curing the cmeossnersarelookingto andexchange intolarser sees vital on the cuit gains + 12016 ma sultraket located nortinestof Downtown Athata where propertie vestorsfecused on assets in the Cumnberanl/Galletia traded with average cp ratesin the low-s percent range: Compared with th ter submarkets, this area had the + Onaverage cap ratesin Atlanta are in the high-5to low-6 percent range [Newer Class A properties in Sandy Springs provide the metws lowest Westside Allarta submarket provide the highest first averaging 70 percent,Renee sid Eviptoyinant Teds 1019 ~ 12-Month Poriod Metre — Unie states EMPLOYMENT s 2.2% increase intotal employment Y-0-¥ Bs + Sincetast ped, ore than 60:00 obshave bren created nthe 5 ‘lana met. Over these prevousannualpetod the markt po row aol 8, 900poiions, loo 2 percent sin £ service sector, wich add approximately 14700 obsiathe oe past nats. Thetrade, transportation and utilis, ad wor eauee one Iieure and hospitality eters slsopoted payoltaditions Completions and Absorption = —— = Completions Absorption CONSTRUCTION ‘ 9,180 unite completed ¥-0- Re + Total completions inthe metro averthe past 2 months are doin 26 & percent froma thos prvi tine oro Darin thinnest ze W) ‘Stl, 2017 was the eakyearforconstraton wth 8.70 net anartnets. Thsvear wil bethesecodhlehest nal mount 1 + diy Aaa kde eed ie larestammun of aw : lsat yeu with approxima 3180ne reals Vacancy Rate Trends — Metro — United States VACANCY _ GO basis point decrease in vacancy Y-O-Y a” + Altheendofthesirs quarter Atlanta's vacangy rate 653 e percent, 0 bass points down fromtas yer At its pean 2009, is ®) te metros vacancy rate was 100 percent Og ey ingrowing armor reskent are moving tthe area forts proxiity to Buckhead, Operation in hissubmarketighesed wore nner e ‘as points, ringing the rate to 4.9 percent Rent Trends Monthy Reet — YO. Rent Change RENTS: 00 = 6.8% increase in the average effective rent Y-0-Y 3 sso af + tke percent irene during the pevusourquaters the z i average efecthve ont climbedto $1,225 per month in March Eevee oes —_ ae incoming. perntio 9¢permorth. TheClas Daven i monthly ental rite vse 77 percent to $1182andCls Aled Wy72 iin os percent to $1458per moatDemographic Highlights Five-Year Population Growiht 571,100 fe Five-Year Household Growih* 231,700 SUBMARKET TRENDS Lowest Vacancy Rates |Q19 Smyrna smo oath Cobh County come Douglas Soath Dekalb County s7% 200 Virgins Highlands Morningsie oe ee Midtown Alama me 40 sus? 1000 s1904 i225 $$ lI9 Population Age 20-94 [Q10 Median Household Income (Percent of toxal population) aero 21% ter $67,240 US.stetan $08,299 wT {00 Total Housohotde Populaionof Age 25+ BRD) 1 97% Porcent with Bachelor's Degrees** sare 36% FB) om 63% usaverge 30% SALES TRENDS: Heavy Trading in Previous Years Increases Buyer Competition for Listed Assets + Trade velocity decrewedover the past 12 months eadingia March, down proximate 8 percent from the orevicus veri. Thehesw tradingover the past three yearshas limited the numberof assets availabe toexchangeint, pushing up the vluefor those iste ‘The rst quarter average sale price per unitroseby 3. percent, bringing the average o €16,c00perdoon Cap rates dipped models down 20 basispointsto an average inital return of 9 percent ‘utlon Assets are atractng out-of statebuyers Many California na Now York based investors are explering the market insearchof first year _ylcids that are 160-200 bass points higher than theirhorme metos. Sales Trends Slee — Prov Groh Average Pro per it 000) 8 «6 ill oo feng 12nd vag 100 visi seen Sin, nl pt natn