Intown real estate, especially around Atlanta’s BeltLine, continues to get hotter. Townhome and condominium developments keep popping up and selling out. And according to all accounts, this is likely to be the trend for the foreseeable future.
David J. Tufts, President/Principal Ansley Developer Services, said that there’s presently an insatiable demand for Intown townhome and condominium living, and it’s due to people looking for short commute times, walkability, cultural infrastructure like shopping, restaurants, museums and parks, “…and most dramatically, a tight supply of new state-of-the-art housing alternatives.
“There’s great demand for all price ranges. We’re finding buyers who seek a wide range of features, but walkability, dog and pet friendly amenities, and superior kitchens and master baths are truly important,” he said.
“With the first new glass and concrete construction high-rise coming to west Midtown [Seven88 West Midtown], we’re also seeing huge desire for sweeping skyline views and an amenity rich lifestyle,” Tufts said.
The BeltLine continues to be a driving force for new development in the Intown neighborhoods, according to Anne Schwall, Vice President, Atlanta Fine Homes Sotheby’s International Realty Developer Services Division. “Communities within walking and biking distance of the BeltLine draw a premium and remain the most desirable for buyers who want the connectivity to restaurants and shops.” The expansion of the BeltLine on the west side is spurring the growth of new development, she said, causing residential builders to set their sights on building townhome and condo communities there while lots are plentiful and more affordable.
Lori Combs, VP of Sales and Marketing/Broker, JW Collection LLC, said that she sees the trend for townhomes and condos continuing, as the lock-and-leave concept is very appealing to people these days. “I think people are busy with work, family obligations, etc. and they want to enjoy the little bit of free time they have. They want that to be quality time and having a low maintenance condo or townhome enables them to have just that.”
Urban living is extremely popular, Combs said. “Many of our neighborhoods focus on walkability. Anytime you can come home and not have to jump back into your car to shop, dine or for entertainment is very desirable.”
In 2018 so far, demand has continued to increase for both resale condos and new construction projects, said Christa Huffstickler, President & CEO, Engel & Völkers Atlanta. “With new condo projects like the forthcoming 40th West 12th and Atlantic — which debuted in 2017 and has sold over 100 homes — generating interest and posting high sales, we’re optimistic that the market will respond positively to new condo development throughout the rest of the year and into 2019,” she said.
She has also seen a huge demand for luxury townhome development as more Atlanta residents flock to Intown neighborhoods. “As the BeltLine buzz continues to grow, buyers are looking for townhome developments in walkable, trendy submarkets like Reynoldstown, Old Fourth Ward (O4W) and Grant Park,” Huffstickler said. The Intown neighborhoods offer the perfect combination of multi-story living with enough room for a family and the feeling of having private space while living in the middle of a bustling neighborhood and close to job centers like Midtown and Downtown.
Recently, Huffstickler has seen an increase in the luxury townhome market in Intown areas like Cabbagetown and anywhere along the BeltLine’s east side extension, as well as in more traditionally attractive submarkets stretching down Peachtree Street from Buckhead to Brookhaven. “Luxury townhome product is relatively highly priced and comes with gorgeous design features for more discerning buyers looking for that Intown lifestyle. We’re seeing prices above $1.2 million around the BeltLine and above $2.5 million in Buckhead,” she said, adding that some of the key points for buyers are luxury and finishes such as custom plumbing fixtures and stand-alone master bathtubs.
For condos, it’s all about the amenities and going outside of the home. “Of course, you want an open, flexible floorplan, but we’re working with our developer clients to focus on the lifestyle, whether that’s amenities like a rooftop garden and awesome pool deck or the ability to walk to Whole Foods or the nearby MARTA station,” Huffstickler said, stressing that location is more important than ever.
“There’s a pent-up demand for condominiums and townhomes in Atlanta,” explained Lori Lane, Senior Vice President, CITY HAUS/Berkshire Hathaway Homeservices, Georgia Properties. “With the minimal new construction condos delivered over the past seven to ten years, there’s an accumulation of buyers in existing condominium developments with significant equity who are ready to move up in size and price point.”
The top features her clients ask for are location and walkability, convenience and accessibility to the BeltLine. She said that top areas include Midtown, O4W/Edgewood and even downtown Alpharetta for empty nesters. Condos and townhomes priced between the $300,000s and $600,000s seem to be a reasonable sweet spot for buyers, Lane said.
As prices continue to rise Intown, single family homes have become unaffordable for most buyers, according to Tim Baldus, Director of Sales, Berkshire Hathaway HomeServices. “This makes townhomes and condos the best option,” he said. Buyers want maintenance-free living, “…and welcome all of the exterior maintenance being managed by the homeowners’ association,” he said.
Homebuyers are looking for homes in a price range of the $400,000s to $800,000s, Baldus said, and want open floorplans and large windows for natural light, painted cabinets, quartz countertops and hardwood floors, as well as upgraded large kitchens, master bedrooms and master baths.
While the demand for housing keeps rising, inventory is low and available land is limited. “There’s still a real lack of finished, new construction condo product, which is prompting developers to get more creative in finding options to get new construction options to the market quicker,” said Karen Rodriguez, Founder, GROUP KORA/Berkshire Hathaway HomeServices.
She explained that buyers don’t want to wait two or three years before they can close on a property. “People also want to take advantage of the equity in their current homes, and that may not be possible once there’s a slow-down in the future, which is inevitable,” she said.
Despite the lack of inventory, though, she’s seeing casualties of condo projects that are being canceled due to unrealistic pricing or not having the right market strategy. “Pricing is just one of the factors to a successful condo project,” she said. “Lower pricing doesn’t guarantee success.”
She pointed to a developer client of hers who recently purchased the entire 40th floor of an older condo building and is building out three modern penthouses with high end finishes, branded as Chateau Des Peres. “This is something that’s done quite a bit in other large markets, but it’s a first for Atlanta,” she said.
The most difficult price range to find is one for a younger, first-time buyer, Lane reported. “Developing new construction projects in the $200,000 to $300,000s is just not attainable in key Intown markets. The cost of land and construction would need to drop significantly, and there isn’t much chance of that happening,” she said.
Airline, a hot condo project in O4W, offers 739 to 1,335 square feet for $356,900 to $625,900. Construction has begun “…and is full speed ahead with a summer 2019 delivery,” Lane said. “It’s really the only new construction condominium project in O4W at this time with such a premier location and proximity to the BeltLine, Krog Street, Edge Development, Downtown/Midtown and MARTA.” Of the 29 Airline condos under construction, only 19 remain available.
While the number of new construction developments in Atlanta continues to increase, Schwall said that rising construction costs and the constraints of construction bank financing will limit the number of new deals that come to the market, keeping the supply of new product low. This will help maintain values for new construction homes and prevent the market from becoming overbuilt, she explained.
“For condominium developers, the increase in construction costs and liability insurance required to build a high-rise tower is pushing minimum condo sales prices close to $700 per square foot, making new condos attainable only for the affluent buyer,” Schwall said.
The Charles, a collection of 57 exclusive two- and three-bedroom residences located in Buckhead Village, start at $1.6 million for 2,460 to 3,800+ square feet. Currently over 60 percent sold and beginning closings in September 2019, “…sales success at The Charles confirms the demand for new condo product in Buckhead and across the city,” Schwall said. All The Charles’ penthouse units and 75 percent of the two-bedroom units are already sold out.
New construction townhomes and condos are in high demand across the board, according to Huffstickler, “…but we’re seeing a lapse in already-tight inventory for those buyers looking in the $500,000s to $600,000s price range.” She said that the market has seen a lot of activity in both the more affordable new construction price range in the low $300,000s to mid $500,000s and the ultra-luxury market starting from $1 million and up, but there’s not much new construction for buyers looking for an Intown condo with luxury finishes, great amenities and other bells and whistles without the sky-high price tag.
“40 West 12th is a great example of a planned project with condos in that range, and other Midtown projects like the forthcoming No2 Opus Place have also adjusted their pricing to reflect this missing link,” she said.
There are 64 condos — one, two, three and four bedrooms — in the 40 West 12th project, priced from $599,000 to $1.4 million. It’s part of the Selig mixed-use development at 1105 West Peachtree and is set to deliver in 2020.
Tufts also noted that there’s little to no new high-rise availability under $600,000. “Seven88 West Midtown, under construction now, will meet that need,” he said. The luxury condos will be walking distance to Georgia Tech and offer gorgeous views in all directions.
“Townhomes in the $300,000s are also elusive, however we have some beautiful alternatives coming soon,” Tufts continued. Moda Lavista features new three-, four- and five-bedroom open-concept townhomes starting in the $500,000s. And at Ironside East Atlanta Village, located at Flat Shoals and Glenwood, 50 percent of the 24 modern townhomes priced in the high $400,000s are already under contract.
There’s no better time to buy than now, advised Tufts. “Construction and land costs are skyrocketing. What’s offered today will likely be a bargain compared to the next wave.”
Baldus said that larger townhome plans are hard to find under $800,000. “Skyland Brookhaven, a townhome project, has two 2,800 square foot plans in the mid $500,000s which has made us so successful,” he said.
Skyland Brookhaven will have 167 total homes, and 58 are already sold. The townhomes are priced from $500,000 to $600,000.
Right now, the most sought-after Intown condos and townhomes are in the mid-level luxury price point from $600,000 to $1-2 million, according to Rodriguez. “This price point appeals to both affluent, older millennials as well as baby boomers,” she said. “For luxury consumers, security is in the top three on the list of must-haves, along with features like smart home technology, high ceilings and lux items like waterfall islands with quartzite countertops.”
That popular price range is still one of the least available, however. “And while there are a few projected luxury projects on the horizon, some of these won’t happen, so there’s still the potential for developers to offer smaller, boutique projects,” she said. “In the ultra-luxury market, now that projects like St. Regis, Mandarin Oriental and Lowes are sold out, there really isn’t a project serving those buyers, with the exception of The Charles, which seems to be doing well.” Still, buyers would prefer to have more than one new construction option.
The first penthouse condo at Chateau Des Peres, located on the 40th floor at 1280 West in Midtown, will be completed by mid-October with the next two a few months later. Sizes range from 2,000 to 3,000 square feet, and pricing is extremely affordable, despite the size, views and finishes in the penthouses, as they’re located in an older building. The three large, ultra-modern penthouses will feature large terraces, contemporary kitchens designed by Leicht, the number-one luxury German brand.
“Pricing would be doubled if you were to have these same features in a newer building,” Rodriguez said. “We think it’s a genius concept and hope other developers follow suit, however finding a building that offers the option for a developer to buy an entire floor are limited.”
Buyers are looking for the ability to extend their living space outdoors, Combs said. It’s just one of the features at The Heritage on Memorial, a gated townhome community just steps from the BeltLine’s Eastside Trail extension and the upcoming Madison Yards.
“Our four-story townhomes offer sky terraces,” she said. “Many of our purchasers are adding outdoor fireplaces, TVs and kitchens.” The development will feature a total of 20 four-story townhomes with sky terraces offering city views. Two floor plans, The Ashley and The Barrett, offer 3,390-plus square feet, each with four bedrooms, four and a half baths and two-car garages.
“Kitchens are the focal point of any home, and we offer custom cabinetry, soft close draws, double ovens and, of course, statement center islands,” Combs added. “We include site finished hardwood floors, built-in bookcases, custom soft-close cabinetry and elevators.” With homes tending to be more vertical now, elevators or homes that are elevator-ready are more in demand, she reported.
It’s not hard to imagine where things are headed. Schwall said that Intown’s real estate market is likely to see a continuation of higher prices and tighter inventory. “While townhome communities have flourished in the past five years, the increase in land costs as well as the limits on construction financing will affect the number of townhome communities that builders can build.” She noted that this will likely cause builders to be more selective in choosing new projects and drive them towards newer markets such as the west side where land is more plentiful and less expensive.
“As construction costs continue to rise, new condos with pricing below $600,000 are becoming a thing of the past,” Schwall said. She predicted that as the glut of the apartment market begins to stall out, apartment rentals and apartment projects will likely begin to convert to condominiums. As a result, condo conversions will present a new opportunity for more attainable pricing to come to the market.