Atlanta Intown February 2021 – Key Takeaways

• Activity and deals are starting to pick up:  apartment complex closing in Chamblee; vet clinic in Athens being developed; representing seller with 1.5 acres in Midtown for student housing (Chamberlain Hrdlicka); deal working on for last 15 months scheduled to close tomorrow; several other properties under contract. (Oakhurst Realty)
• Private investment firm indicated that while office leasing and development may be “on hold” right now, not abandoning it completely because it offers a better cashflow model. (Chamberlain Hrdlicka)
• Starting to see the back side of COVID, out of 200 tenants, only lost one due to bankruptcy. (Crim & Associates)
• Starting to see some movement in office space market – cautiously optimistic. (Oakhurst Realty)
• Cousins states that over its entire portfolio they are 85-90% leased, but occupancy is at 20%.  Social distancing requires more space per employee, so employers my require more space to protect employees.  (Multiple)
• Needs:  value add office properties and light industrial/mixed use retail/office in smaller downtowns (Tucker, Lawrenceville, Decatur, etc.); looking for tenants for a mixed use development in Avondale and 23,000 square feet in Decatur we’re marketing.  (Oakhurst Realty)
• When doing your due diligence, particularly on multi-family projects, insurance costs are now running $400-$500/unit, about double what they used to be.  Construction costs are also a factor when figuring your replacement costs for insurance.   A blanket limit not tied to replacement costs may be best.  (Gallagher)
• Lessons learned from Texas:  $18-20 billion losses.  Water damage Is huge factor and the deductibles for water damage are higher.    Those that drained their pipes and sprinkler systems fared much better.  (Gallagher)
• Building costs are extremely high now, not just lumber, but everything.    (Knight Commercial Real Estate)
• Cap rates on QSRs, etc. are compressing due to fewer deals with lots of potential buyers.  (Knight Commercial Real Estate)
• Drive-thrus are in hot demand and needed/wanted.  Many QSRs are going to drive-thru only models; no inside dining.  (Knight Commercial Real Estate)
• A recent research study done by Market Graphics Research shows a significant need for residential properties in and around Savannah over the next five years. (Colliers)
• New resident liability program that allows owners to build risk of liability into leases and helps control risks.  (Gallagher)
• Owner needs to be aware and keep control over what tenants put on roofs (HVAC systems, DISH satellites, etc.) because it can lead to liability and insurance issues. (WaterBarriers, Gallagher)