Atlanta’s Resilient Restaurant Sector is on the Rebound Post-Pandemic

Diners and bar patrons have helped Atlanta’s retail sector to recover. Sales are on the rebound for restaurants as the recovery from the COVID-19 pandemic continues.

When I recently looked into a prime site in Atlanta’s bustling West Midtown district on behalf of one of my restaurant clients, I quickly realized that several restaurants were eyeing the space. There were six other restaurant groups interested in leasing the space, creating a bidding war at rental rates far higher than my client wanted to pay.

Heated competition for available restaurant spaces is by no means unusual in the Atlanta market these days, particularly for intown Atlanta, or the portion of the city located within the Interstate 285 loop and containing some of the city’s most urban, in-demand neighborhoods including Old Fourth Ward, EAV (East Atlanta Village) and Poncey-Highland.

Bryan Davis of Ackerman & Co.

It’s been a rollercoaster stretch for the retail and restaurant sectors since the onset of the COVID-19 pandemic. Large decreases in sales at the outset were followed by a substantial recovery by early 2021, only to be followed by a setback in some markets over the summer caused by the more contagious Delta variant.

Despite the challenging conditions, Davis said his clients have been forging ahead with their expansion plans. These clients have benefitted from their history of strong sales and the ability to adjust their service models (such as increasing takeout service and outdoor seating options), enabling them to weather the worst of the pandemic’s impacts.

Demand among clients seeking space in 2020 and 2021 was incredible. It didn’t dip at all for me. The problem now is finding space. Second-generation space is practically non-existent, and when it becomes available, it’s being backfilled immediately. And first-generation space is increasingly expensive.

The fundamentals for retail and restaurants are improving. Restaurants and bars registered total sales of $72.4 billion in the United States in September, an increase from $72.1 billion in July and $72.2 billion in August, according to the National Restaurant Association. In the overall retail sector, sales rose by 0.7 percent in September compared to the previous month, and the vacancy rate stood at 4.7 percent, just slightly higher than pre-pandemic levels, according to CoStar Group research.

Strong demand for space
I specialize in tenant representation for full-service restaurant clients, many of them Black-owned businesses. Some of mt prominent clients and lease deals include Old Lady Gang, Slutty Vegan, Fin & Feathers, Blaze Steak and Seafood and Gocha’s Breakfast Bar.

I recently completed a lease with Fin & Feathers at a building offering a couple of major advantages — second-generation space and a location in the heart of Midtown Atlanta’s business and nightlife district on Crescent Avenue. My relationship with the landlord broker was one of the keys to completing that deal.

In today’s market, the landlord has the pick of the litter for new tenants. A lot of clients want to be intown, but space is limited.

Due to challenges in finding intown space, some of my clients are opening new locations in suburban submarkets, a move that enables them to expand their customer base while obtaining a more favorable lease arrangement. Those clients include Slutty Vegan, which recently opened a new location in the northeast suburb of Duluth in Gwinnett County. There’s a huge demand among Black-owned businesses for restaurant space in the city of Atlanta. There just isn’t enough space for all of them to open in. Restaurateurs are starting to consider other areas that aren’t as saturated.

Creating an experience
During the pandemic, customers increasingly relied on takeout and delivery to enjoy their favorite restaurants. As customers return to dine at their favorite restaurants instead of eating takeout at home, a memorable experience can help differentiate a restaurant and attract customers.

We’re starting to see more restaurants focus on chef-driven concepts that provide a unique experience and atmosphere for the customer. You’ll see more experience-driven food concepts coming to the Atlanta market and beyond.

Increasingly called “vibe dining,” this concept combines a creative food and beverage menu with an in-house musical soundtrack, ambient lighting and a relaxing environment that encourages diners to hang out.

Restaurants providing this experience include STK Atlanta in Midtown Atlanta, the James Room in downtown Atlanta near Atlanta’s BeltLine pedestrian trail and Fin & Feathers in the popular Edgewood Avenue nightlife corridor (the Midtown location is scheduled to open later this year). Pinky Cole has branched out from her successful Slutty Vegan burger restaurant to a new concept called Bar Vegan that emphasizes an experience that is “vegan, but a vibe.”

As the restaurant and retail sectors continue to recover from the impacts of the pandemic, challenges remain. One is the ongoing labor shortage. According to the National Restaurant Association, 75 percent of restaurant operators say recruiting employees is their top challenge.

Restaurants are trying to find ways to navigate the labor shortage. Once a restaurant provides a certain experience, it’s difficult to pivot away from that, and they’re trying to figure out how to make it work with the staffing levels they have.

— By Bryan Davis, Senior Vice President of Ackerman & Co. This article was penned by Steve Webb, media relations and communications for Ackerman & Co., and originally appeared in the October 2021 issue of Southeast Real Estate Business.

Content Partners
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