Although Atlanta's apartment vacancy rate of 9.1% by far exceeds the national average of 5.8%, it continues to attract a steady supply of capital. Economists and investors alike say Atlanta's diverse economy, plus positive job growth projections, continue to make it an attractive market.

“Atlanta is one of those unique markets that has the ability to a create tremendous amount of job growth in a short amount of time,” says Rick Wise, director of acquisitions for Chicago-based multifamily investor Waterton Associates LLC. “When the economy is in expansion mode, a market like Atlanta may lag the national recovery slightly, but at some point it tends to jump forward pretty substantially.”

Mark Vitner, a senior economist with Wachovia Corp., believes that Atlanta's job growth is actually better than figures by the Bureau of Labor Statistics show. While Georgia's population grew by 420,000 people in the past five years, job growth remained stagnant. Vitner argues that labor officials are failing to chart much of the employment growth in small businesses.

“It just doesn't make sense. People don't move to Atlanta to retire,” Vitner says. “Atlanta continues to be one of the top destinations for young people. What are they doing? Obviously, they're going to work somewhere.” Vitner is projecting growth of 48,500 new jobs this year and another 52,000 new jobs in 2007. “Atlanta is one of those cities in the United States where major corporations feel like they need to be,” Wise says. Some of the city's largest employers include Home Depot and Coca-Cola.

Waterton's most recent purchase was the 300-unit Balmoral Village apartment complex in Peachtree City, an affluent suburb just south of Atlanta. That was one of more than 100 apartment transactions in the metro area last year, including RREEF's purchase of the 1,700-unit Post Village in Cobb County and Landmark Residential's purchase of the 972-unit Morgan Falls Station in Sandy Springs.

What's encouraging is that the occupancy rate in Atlanta's apartment market grew 180 basis points to 92.2% from the end of 2004 to the end of 2005, according to Dale Henson Associates, a real estate consulting firm. That's also quite a change from Atlanta's low point during the summer of 2002 when occupancy spiraled downward to 89.4%.

Robert Ito, chief information officer at Dale Henson Associates, predicts the improvement will continue, with occupancy rising to 94% by the end of 2006. “Some of that improvement was concessions burning off,” says Ito. But it was the pure occupancy gains that really helped fuel the rental rate increases, especially in Class-A properties, says Ito.

Kevin Geiger, executive vice president of multifamily investment for CB Richard Ellis in Atlanta, says he noticed the improvement in the apartment market in Atlanta in August of last year. Positive fundamentals have made investors even hungrier for the market.

“Everything I'm hearing is that there is a tremendous amount of activity taking place. There does not seem to be a let-up of investor desire,” says Geiger.

As of the beginning of February, Larry Orr, senior director of Cushman & Wakefield of Georgia, reports that he closed 10 apartment deals, direct evidence of a bullish apartment market. During the same period in 2005, which was a record year for his team at $1.15 billion in sales covering eight states, Orr sold four complexes.