Atlanta Intown October 2020 – Key Takeaways

• Banking:  a voluminous amount of transactions are currently sitting idle waiting until after the election to either pull the trigger on the deal or walk away from it.  It’s not just about the Presidential election, but also what will happen in the House and Senate.  November and December should be very busy.  There are also problem assets that were deferred during the 6 month grace period that will now be coming in.  The buck stops at the bank and it remains to be seen how forgiving the regulators will be and how appraisals will be affected.
• 1031 exchanges have been positively effected by low interest rates, primarily on smaller transactions.
• Guidance is needed from Treasury, IRS and Congress on how to treat the PPP loan money that companies received.
• Seeing some restaurants who are “winning” during this time and expanding, with the right business model; drive-thrus are key.
• Seeing subcontractors going out of business on construction side:   just not enough work to stay in business.
• Seeing a huge surge in VRBOs and rental vacation properties.    Lake and mountain properties don’t stay on the market for very long.
• Environmental Bankers Association predicts a huge wave of portfolio foreclosures before the Election; already seeing this in the MidWest.
• Multifamily and industrial are still going strong.
• Buyers have money and looking for properties for multifamily, industrial, ; still not seeing any budge from sellers on pricing.
• Sixwestcollegepark.com is new mixed used development in College Park:  1/3 of parcels are either under contract or have LOI.
• Uncertainty is worse than a positive or negative economy.
• Construction costs seem to be easing; price of wood is getting back to where it was.
• Finding sites for development is very difficult
• West Coast developers coming into Atlanta for opportunities
• New trend:  Building single family subdivisions, small cottages for rent.   This is the only type of single family development in Illinois happening right now.
• Georgia Port expansion has contributed to major development and creation of over 12,000 jobs in area.
• Residential is really moving; typically selling in 2 months time or less
• Brownfields Program is a great program and useful, but they are all working remotely and some may take time to get commercial deals through
• Office space leasing – 40% of leases expiring aren’t renewing because of remote working or downsizing size of space.  Landlords are being flexible, even doing one year or 18 month deals.   Also seeing lots of concessions in TI and free rent.
• Single story and less than 3-5 story office space doing okay:  buildings with elevators are an issue.
• 5 million square feet of space is on sublease market.  This number will grow over the next several quarters.    Atlanta is still cheap compared to the Northeast and other areas; we are still in a good position to recover.
• Rob Brawner gave an excellent presentation and update on the work that is being done on the Atlanta Beltline.