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Higher rates dim Atlanta developers' outlook for new projects
A Fed 25 basis point hike and signals of more potential increases are weighing on whether new developments can generate rents high enough to justify construction, leading at least one firm to prioritize buying existing properties.
Bisnow reports that turmoil in the U.S. bond market is dampening the outlook for Atlanta developers who had been hoping for interest rate relief this year. After a series of Fed cuts between late 2024 and 2025, the Federal Reserve raised its benchmark rate by 25 basis points last month to help curb inflation, undercutting optimism for new development.
The Federal Reserve chairman, Kevin Warsh, also signaled that additional rate hikes are possible, which Bisnow says is eroding near term confidence. Coro Realty President Robert Fransen said he does not see many near term green shoots for development.
Bisnow adds that developers also face labor shortages, elevated inflation, and rising construction costs, all of which make it harder to secure rents sufficient to justify building. Fransen told Bisnow that Coro is prioritizing buying existing real estate rather than pursuing significant new development at this time.