Atlanta Perimeter July 2021 – Key Take-Aways
• Things continue to be very busy, with lots of activity. Have had more leases this year than have had in the last two years. No summer slowdown this year. (Menden Freiman)
• Many speculative deals – people have cash to spend, are chasing deals/transactions and are wanting to close deals quickly, without conducting inspections or addressing environmental issues; “irrational exuberance”; definitely in unchartered territory. (Multiple)
• There is some caution in the development sector due to the high cost of materials and the timeline for getting those materials. (Ackerman & Co.)
• Six West project is moving along. Infrastructure RFP is going out soon to build Main Street. We expect increased activity in the second half of the year. (Ackerman & Co.)
• 1031 business is exploding. In May 2021 we had 123 transactions compared to 47 transactions in May 2019. Factors contributing to this include: economy doing well and the publicity about the Biden proposal to curb 1031 (although we are not concerned about this). We are having to turn down business when people are requesting to close within a 2-3 day timeframe to maintain quality product. (Atlanta Deferred Exchange)
• Market Intelligence: Posted several ads for open positions and got almost no responses from qualified individuals. (Atlanta Deferred Exchange; WaterBarriers)
• Market Intelligence: Median home prices are up 22%, but starting to see fewer loan applications. We may have reached the top of the bubble and are starting to come down. (Atlanta Deferred Exchange)
• Seeing cap rates on multi-family and industrial starting in the 3’s – we’ve NEVER seen that before. 40% higher in valuation business than 2019 from transaction activity, estate planning valuation, refinance business, etc. (CBRE)
• Properties that were bought in 2020 are selling now for 100% profit. (CBRE)
• Everything in Savannah is going strong; even office, which is Savannah’s weakest sector; hospitality, multifamily and industrial all going strong. There’s even a Costco finally coming to Savannah. (Colliers Savannah)
• Have 700 acres listed, which is part of two other tracts, which were under contract with others. Received LOI for the entire tract from someone who wanted a short closing. (Colliers Savannah)
• Still great difficulty in getting components needed and pricing quotes are only good for a short window. 20 ft. containers that used to cost $1600 are now $5300 and will probably go to $8k in high season. Some pricing does seem to be coming down, though. (WaterBarriers)
• Send out about one RFP a week on projects ranging from $1 mil – $100 mil. Not so busy with construction – commodities and pricing are the biggest issues. Metrics: $125/ton increase on steel; interior pricing has seen 30% increase. Lead times for glass are 16-20 weeks; acoustic ceiling tiles/interior wall board, 6 weeks; insulation, 10-16 weeks. Hopefully things will cover by year-end. Price of wood is definitely dropping. (Whiting Turner)
• Lead times and pricing requires lots of planning. We have one client who bought products in bulk and then parcelling it out to its projects. (Whiting Turner)
• Single tenant retail continues to be a strong asset and a good investment over time with minimal risk. (Newburger-Andes)
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