Some Atlanta Suburbs Craving Walkability Are Coming Around On Apartments

Density is still a dirty word in many suburban cities and towns throughout Georgia. But some cities in Atlanta’s belt of northern suburbs are starting to embrace larger developments with apartments and a mix of commercial units, at times defying NIMBYism, developers said during Bisnow’s Atlanta State of the Market event last week.

“Suburban and municipal governments in every northern arc city and county in Metro Atlanta has been afraid of density, afraid of multifamily residential, afraid of anything that threatens their life behind the gates of their golf course communities,” said Toro Development Co. founder Mark Toro, who developed Avalon in Alpharetta while at North American Properties, one of the region’s first urban-like dense mixed-use developments to sprout up in suburban Atlanta.

Avalon has more than 500 apartment units, an aspect of the project that was met with pushback during its municipal approval process. But Toro and other panelists at the event, held at The Ritz-Carlton Atlanta, said apartment dwellers are critical to the health of the retail and commercial aspects of these popular projects, which rely on sales to survive.

“Those sales are driven by density,” Toro said. “If you’re going to fuel downtown, town center districts, you better have a lot of people.”

Despite the need for customers — and the ongoing housing crisis in the region — anti-apartment attitudes remain strong in many suburban cities and counties in Metro Atlanta, with a handful of districts imposing new moratoriums on multifamily over the past year.

Since 2022, Henry County and the cities of Marietta and Roswell have enacted moratoriums on new apartment development. Stockbridge also blocked accepting applications for any new rental units, including build-to-rent homes, in 2021. Sandy Springs Mayor Rusty Paul vowed to block new apartment applications within the city’s borders for three years during a Bisnow event last summer.

But other city leaders have sought out developers willing to build apartments to transform their town centers. Despite some initial pushback, the city of Snellville, 25 miles northeast of Downtown Atlanta, entered into a public-private partnership to create the Grove, an $85M mixed-use city center that includes 250 apartments.

The success of the Grove has helped to ease some attitudes toward multifamily in other suburban cities of Gwinnett County, Smallwood principal Greg Bennett said. Duluth, Lawrenceville, Sugar Hill and Peachtree Corners also have approved multifamily within mixed-use projects in recent years.

“I think the success of that project is a testament to the sort of breaking the logjam” against multifamily, Bennett said. “People realize they want convenience, they want walkability, they want connectivity. And as long as you provide it, that’s kind of, sort of, what the secret is.”

North American Properties received approval last year to develop more than 600 apartment units across two properties in Peachtree Corners, including more than 300 units as part of its revamp of the Forum on Peachtree Parkway shopping center. That approval was not unanimous among all city council members and area residents.

North American Properties Managing Partner Tim Perry said apartment dwellers are critical to fueling sales in the retail tenants in these projects, which in turn help to generate more tax revenues to support more infrastructure and school spending, particularly in traditional suburban bedroom communities.

“All of these single-family subdivisions don’t pay for themselves. They don’t pay for the wear and tear on the roads, schools or anything else,” Perry said. “It comes down to me on leadership … within these municipalities. They either accept the burden of their elected position and understand that they need to make decisions for the citizens years down the road, not for the citizens who post stuff on social media and the absolute lack of accountability for everyone who does. That’s what brings successful towns. That’s what brings successful growth. And it all comes down to leadership.”

“Not in my backyard” attitudes, or NIMBYism, aren’t the only thing complicating or pausing development projects in Metro Atlanta. Rising interest rates, anxiety over the overall economy and stubbornly high construction costs have put a number of projects in a holding pattern, Bennett said.

“The whole dynamics of the industry has readily changed dramatically,” he said. “The pricing is sort of off the charts from what we’ve seen in the past.”

While rising costs and economic unease have impacted new multifamily projects less, new office construction in Metro Atlanta has stalled and leasing activity is on the decline, panelists said during the event.

But T. Dallas Smith & Co. President Leonte Benton said that despite hybrid and flexible work schedules, some employers are finding that they actually don’t have enough space to house a surge of employees returning to the office out of fear for their jobs. Benton highlighted how a recent client in New York saw employees come back to the office in droves over concerns of potential job cuts.

“Basically, people had nowhere to sit because of the fear of potentially being laid off. And I’ve seen that happen twice now,” Benton said. “The tea leaves are showing that we’re starting to move from an employee marketplace to an employer marketplace.”

Selig Enterprises Executive Vice President Chris Ahrenkiel said uncertainty over Fed interest rate policy is “effectively a deal killer” in the office market right now. But he said he expects Atlanta to be one of the first cities to see a recovery in the office market when certainty returns.

“Companies are getting rewarded by Wall Street for being fiscally responsible. That means to lay people off and don’t make real estate decisions because they’re capital-intensive,” Ahrenkiel said. “There’s a popular phrase going around which says, ‘Stay alive to ‘25.’ And that may prove to be true.”

This article first appeared on the site Bisnow.com on June 14 24, 2023 by Jarred Schenke. To see the original article, click here.