Atlanta January 2023 – Key Takeaways
• January has been a weird month – bank overnighted loan documents for a closing and had completely underwritten the loan for the wrong borrower. Have had a few leases come in; few contracts with LOI, two older hotels in SC under contract. Month started off a little slow but has now gotten busy. (MendenFreiman)
• It’s hard to say what the market is going to look at – things are still holiday hangover but surprised at the amount of activity we are seeing at our firm over the course of the past three weeks. (Sheley, Hall & Williams)
• Seeing activity for investor real estate and medical properties (Southern First)
• 2022 Ten-X had 800 deals with the average size of $4million over all asset classes. Last summer we had 150 confidential agreements per deal; now that number is about 110: we were getting 15 fully approved bidders per deal; now that number is 10, so we’re definitely seeing a small drop off. Not seeing a lot of distress yet, 95% of our deals in 2022 were not distressed. 52% of deals are bought by someone from out of state. (Ten-X Commercial Real Estate)
• Tax credits, energy deductions and accelerated depreciation are available for residential and commercial developments. As much as $5000/unit tax credits and $5 sq.ft tax savings on residential. With cost segregation you can go back 20 years. (Source Advisors)
• Small office space leasing has picked up, but sales of smaller buildings has slowed. Becoming more and more difficult to put a report together because no one is quoting rates on CoStar; you can’t contact the broker and owners don’t know what to quote because rates change so much. (ATL Commercial Real Estate)
• RPN is expanding in a number of new markets: Twin Cities, Cleveland, Cincinnati and we’re starting these new groups with virtual meetings first. Encourage you all to participate in the network-wide events. (Rick Lackey)
• Expect to see sports betting pass this session with the casino piece tagged on to it. (Rick Lackey)
• EV Charging Business is accelerating dramatically and will continue to do so. Apartment complexes, office buildings, hotels will have to install charging stations as we move towards electric vehicles (Rick Lackey)
• Virtual offices have exploded and larger companies that we haven’t had in the past want the flexibility of shorter term leases: they don’t want to sign the traditional 10 year lease. (Office Space Atlanta)
• Deals are getting harder to make, but construction costs are starting to stabilize. Prices are still going up, but not at the rate that they were. .25% – .50% v. 1.5% per month. Supply chain still causing some problems. It’s important to ensure that all members of the team are on the same page: get the contractor involved early on. Staffing shortages also prevent you from getting projects done on time and expeditiously. (DA Barrett Construction)
• Also bring your lawyer in on the deal early on. When executing a lease, look at your force majeure clauses – supply chain issues need to be addressed in there; be communicative with your lawyers regarding your delays . Basic force majeure language is unenforceable, you have to explicitly state what you deem force majeure to be. (Sheley, Hall & Williams, PC)
• Seeing long inspection periods for land deals and because buyers can’t get financing. Hope financing will start loosening up middle to latter part of this year. (AD Commercial Real Estate)
• Partner is working on lease renewal for a tenant. The new landlord has added “energy efficiency” and “green” language to the lease to ensure tenant is operating as efficiently as possible. (AD Commercial Real Estate)
• This group has been a lot of fun, with a lot of profit! I’ve started thinking about slowing down and retiring, but people keep interrupting me about this! Self-storage is still a strong market, but are seeing some decompression (Commercial Real Estate Services of West Georgia).
• Starting to see some relief on supply chain issues on bigger deals and well as drop in costs; on smaller deals, though, costs are still an issue. Closed on 35 acres in the City of Stonecrest for built-to-suit to a Fortune 50 company. Hopefully it will be announced in the next few weeks. Also bought some land in Bartow County, near Shaw Industries and have learned that the new battery plant that’s going in is two parcels from our site. Cap rates have gone up a little on industrial and rent rates continue to go up. (Knight Commercial Real Estate).
• Completed three leases in King Plow over the past several weeks so glad to that those leases coming back. (Atlanta Leasing & Investment)
• 2022 all work was Class A office buildings; now seeing projects for Class B and C and in secondary markets (Capitol Photography & Video)
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