Atlanta March 2023 – Key Takeaways
- Seeing some strange retail lease activity; issues with business partners and wanting to sue – some who don’t have written agreements in place. If you are in a business deal of any kind, get things in writing and make sure you have signed documents, including exit provisions for getting out of the deal. Also seeing some interesting economic headwinds and depending on what sector you are in, it’s either great or not so great. (MendenFreiman)
- Seeing a tightness in the insurance market; underwriters for complicated projects are looking multiple times at the associated risk and many times deciding not to back the project. (Emergent Financial Group)
- Currently there is no real estate lending for development – it doesn’t exist, even if it was already in place. You can’t get a loan to build a spec industrial building. The only way to build right now is if you have cash in hand – no lending available. Banks are also refusing to renew/refinance loans that come due. Expect to see distressed properties (Knight Commercial Real Estate)
- Seeing a lull in activity in marketing/branding/promotion side of the business (Tingen Creative; Capitol Photography & Video)
- Seeing investment activity around lithium (EV batteries) and other metals connected with the EV industry.
- Discount grocers are expanding; Instacart and other delivery services are using fulfillment services. Kroger introduced the first one in Arkansas market; using a company called Berst for fulfillment. Seeing self-storage units convert extra space they may have for RV parking. (Benning Construction)
- Seeing pick up in Class C office space: filming industry; doctors/dentists building own facilities. Also seeing a need for private car storage. (ATL Commercial Real Estate)
- Lenders are looking for reasons not to renew/refinance loans. There’s a huge decline in development. On tenant side, seeing shock at the construction costs for build out. Using slower times to meet with clients and educate our associates. (Sheley, Hall & Williams)
- Have seen a bit of slowdown in 1031 exchange work from the peak back in December 2021 – February 2022, but starting to see some upticks. Don’t expect there will be any legislative issues with the Biden administration and 1031 exchange, but we continue to work behind the scenes. (Atlanta Deferred Exchange)
- Industrial deal lending has gone up quickly to 7%. Use to be in the 5-6% range. (AD Commercial Real Estate)
- Pool of buyers in self-storage has diminished. (Commercial Real Services of West Georgia)
Chuck McShane – CoStar Presentation
- 20-25 and 55+ age groups seeing growth in Atlanta which is good for multi-family and senior housing development.
- Job growth in Atlanta has been strong since 2020 – up 5%.
- Uptick in demand for apartments, but that has shifted over past year.
- Inflation is running a little higher in Atlanta than in US overall: 7.2% inflation for Atlanta v. 6% nationwide.
- There’s still some affordability for apartments in Atlanta. Negative absorption rates over last four quarters in apartment rents.
- Construction pipeline near all-time high in Atlanta; and in country re: Multifamily.
- Asking rents started coming down in July 2022.
- Midtown and Buckhead have been hot, but most multi-family construction has been in Gwinnett County.
- Office: companies going to smaller spaces and newer buildings.
- Construction starts have started to slow down; construction loans hard to come by, but space is still under construction (industrial).
- Seen right sizing of retail market.
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