It’s hard not to get excited about the intensity of metro Atlanta’s growth during this current real estate cycle. Even I look back at the data these past several years and only one word comes to mind – WOW!
Here in metro Atlanta, I believe this cycle is actually much different from past ones which were fueled largely by speculation mania. I look back at the early 2000s cycle (2001-2008) here and think of the 1989 movie “Field of Dreams” starring Kevin Costner and James Earl Jones. “If you build it, they will come.” In the previous cycle, we witnessed a plethora of “speculative” construction of all types, from office buildings and strip retail centers, to spec houses and subdivision “pipe farms” dotted all over the metro area.
The good news is that during this current cycle, Atlanta’s population growth has been supported by documented job growth. According to a recent study by Atlanta Regional Commission using Bureau of Labor Statistics data, only Boston, Minneapolis and San Francisco had lower rates of unemployment as of November 2018. That same study points out that Atlanta’s regional GDP is up nearly 24 percent since 2010, making it the fifth strongest GDP growth rate in the country after San Jose, Dallas, San Francisco and Seattle. Since 2010, metro Atlanta has experienced a net job gain of 500,000. Most importantly, over this cycle, the relationship between population growth and job growth has been very healthy – a ratio of 1:3 since 2010 compared to a scary 4:6 from 2000 to 2007 according to a recent Haddow & Company report.
Unlike past cycles, real estate development has not been the big economic driver, but rather has filled the need created directly and indirectly by other industries. Atlanta has experienced growth due to advances in a variety of technology fields, including payment processing, healthcare, internet security and more. Other growth industries include higher education, logistics, various corporate relocations, and entertainment/film/TV. The fundamentals of supply/demand and absorption are strong in almost all real estate sectors, although dynamics in individual submarkets vary tremendously. After all, real estate is a very local business.
Also different from past cycles, our current elected officials have finally gotten serious about long overdue issues of traffic, infrastructure and transit. Our growth over the past few decades has exceeded the capacity of our roads and infrastructure. The funding appropriations that were passed last year by the Georgia state legislature won’t be a quick fix, but at least we’re heading in the right direction with public support for spending money on infrastructure and transit.
Even someone like me with caution in my DNA can get excited about this new Atlanta. What do you think? If you have thoughts you’d like to share, please message me at ckaufman@kaufmaninc.com or call me at 404-816-5534.
Take a look at part two of this blog where I follow up with the other side of the coin – Why I am worried about this Atlanta real estate cycle.