Market Reports

Atlanta’s Industrial Market Continues Historic Pace of Sales, Leasing Activity

by John Nelson January 11, 2016

Atlanta’s industrial market is hotter than the proverbial pistol. Second-quarter activity set a single-quarter record with more than 18.2 million square feet leased or sold. When added to the activity from the previous three quarters, Atlanta strung together more than 59.6 million square feet of completed transactions. This represents the second highest activity level ever recorded for a four-quarter period. There was more than 6.3 million square feet of positive net absorption. Combined with the previous three quarters, Atlanta shows a total of more than 19.7 million square feet of positive net absorption for the last four quarters. For the second quarter, the availability rate dropped one-tenth of a percent to 14 percent — the lowest it has been since the fourth quarter of 2000. And just four to five years ago, the overall availability rate was above 20 percent. Development and construction are absolutely booming. With more than 7 million square feet of new construction recorded during the second quarter, the market also set a record for new construction in a single quarter. When looking at the four-quarter total, we see more than 18.8 million square feet of new construction — a level not seen since 1998. Of that …

January 11, 2016

Georgia Market Reports Office Southeast Southeast Market Reports

Surging Atlanta Office Market Attracts Heightened Investor Interest

by John Nelson July 6, 2015

The Atlanta office market continues to gain steam. Although Atlanta was slower to rebound from the recession than many U.S. markets, it was only a matter of time before the city’s numerous strengths — including its low cost of living, pro-business environment, excellent labor pool, above-average household income and strong university systems — placed it on a path of sustained recovery. The Atlanta office market has posted 13 consecutive quarters of occupancy gains. Strong absorption and limited development are exerting upward pressure on rental rates, particularly in the Class A market. There are also some significant new trends. While there was previously a clear “flight to quality” that enabled tenants to take advantage of rent bargains and concessions at Class A properties, diminishing space options and the pricier rental rate environment are causing tenants to consider Class B properties as a more economically viable alternative. Still, it is yet another sign of the overall recovery in Atlanta’s office sector that we are seeing an increase in rental rates and a decrease in landlord concessions in the Class B sector as well. The rebound of Atlanta’s office sector is not lost on investors. Strong tenant demand and the rise in rental …

July 6, 2015

Georgia Market Reports Multifamily Southeast Southeast Market Reports

Multifamily Owners in Atlanta are Enjoying Surging Rental Rate Increases

by John Nelson June 22, 2015

Atlanta’s healthy multifamily market exhibits strong fundamentals, such as rising rental rates, and continued job creation. Last year alone, the city added more than 100,000 jobs and 2015 seems to be on track to surpass 2014 based on weekly announcements of companies moving to Atlanta. A decent amount of multifamily inventory hit the for-sale market in the first quarter of 2015, and those deals are now in the process of closing. We are seeing a lull in the number of listings across the market early in the second quarter. As owners attempt to capitalize on top-line collection, an increase in listings is expected in the latter portion of the second quarter in conjunction with the spring leasing months coming to an end. As most know, commercial real estate has peaks and valleys, with our last peak in 2007 and the valley landing somewhere in 2010. From 2010 to early 2015, investors were presented with a great opportunity to capitalize quickly from the rising rental rates even without implementing any value-add platforms. This quick rise in rental rates coupled with historically low interest rates has been the catalyst for the surge in trades. That said, as the REO bucket has all …

June 22, 2015

Georgia Industrial Market Reports Southeast Southeast Market Reports

Expansion Imminent After Atlanta Industrial Sector’s Near-Historic Absorption in 2014, 2015

by John Nelson June 15, 2015

The Atlanta industrial market is in the beginning stages of its third growth cycle since 1990. Vacancy has declined over the past 18 quarters, and asking rates have seen a positive trend over the same time period, increasing by 14.9 percent. These improving metrics should come as no surprise to those familiar with the history of Atlanta’s industrial market. Although the Atlanta metro is the nation’s ninth-largest metropolitan area, its industrial market represents the fourth-largest by volume. Total vacant space in the market has fallen to a 13-year low 8.7 percent, meaning the metro is once again poised for industrial expansion. Cycles One, Two and Three Atlanta’s growth cycle in the 1990s lasted just under 8 years, from 1994 until 2002, where 135 million square feet of new product was added to the market. That constitutes almost a quarter of the total 549 million square feet in the metro today. Total vacancy had fallen to 9.2 percent in the middle of 1994 and asking rates hit what was then an all-time high of $3.26 per square foot. These factors triggered a 40 percent rise in construction volume. As this cycle closed in 2001, vacancy rose back above 10 percent in …

June 15, 2015

Georgia Market Reports Retail Southeast Southeast Market Reports Uncategorized

Corporate Relocations to Atlanta Prove the City is a Destination Market

by John Nelson June 8, 2015

Atlanta is experiencing an influx of human capital, corporate relocations and development of distribution networks that are combining to create a robust expansionary cycle in our real estate markets. One of the most positive elements of this expansion is that it appears the underlying structure of the growth is creating stability for our city and state well into the future. It is the structure of the growth that will be a long-term difference maker. CNBC annually conducts a study and ranks the top states for doing business. These rankings are a result of assessing various criteria, including but not limited to the cost of doing business, workforce quality, access to capital and business friendliness. CNBC’s results in 2014 were very telling. Four of the top 10 states are located in the south. The South’s top 10 finalists in CNBC’s study were Georgia (1), Texas (2), North Carolina (5) and Virginia (8). In addition to these empirical studies, major corporations are voting as well. The verdict is that many organizations are choosing to relocate corporate headquarters to Atlanta. Recently, marquee brands such as Mercedes-Benz USA and State Farm all have made plans to open or expand major corporate centers in our …

June 8, 2015

Georgia Market Reports Retail Southeast Southeast Market Reports

New Year Promises Expanding Retailers, Improving Fundamentals in Atlanta

by John Nelson January 19, 2015

The overall snapshot is that Atlanta’s economy is on a growth tract in terms of employment and corporate growth, and has definitely rebounded from the recession and its previous overbuilding. Economic growth and the current lack of speculative development are driving the improvement in the retail market. Rental rates, occupancy levels, absorption, leasing momentum and pricing are increasing. In addition, new retailers are entering or looking to enter the market. However, the retail market’s improvement varies across the metro region. Vacancy and Rental Rates Due to positive absorption and leasing momentum in both vacant and sublease space, the overall occupancy rate and average rental rate for Atlanta’s retail inventory have been increasing. According to CoStar’s third quarter retail market update, the overall vacancy rate is now down to 8.8 percent and the average rental rate is $12.78 per square foot. However, when you break it down by submarket and property types, rental rate and occupancy gains vary significantly. Quality shopping centers in strong submarkets and locations have experienced very strong gains, yet Class B and C centers and those located in certain submarkets are still lagging the overall market. The Buckhead, Central Atlanta, Central Perimeter and Georgia 400 submarkets are …

January 19, 2015

Georgia Market Reports Office Southeast Southeast Market Reports

Continued Job Growth, Limited Development Boost Atlanta Office Market’s Fundamentals

by John Nelson October 13, 2014

Atlanta is the economic engine of the Southeast, which is the fastest growing region in the country. With a population of 5.5 million across the 28-county metro area, the city is the ninth-largest metro nationally and is projected to be the sixth most populated by 2020. Atlanta’s high quality of life and low cost of living make it an ideal destination for young and educated talent around the region, as well as growing companies. Atlanta is home to 16 Fortune 500 companies and the busiest airport in the world — the recipe for a business boom and hot office real estate sector. According to Georgia State University’s Economic Forecasting Center, Atlanta is projected to add 305,000 new jobs between 2010 and 2016, with a drop in the unemployment rate to 5.7 percent in the same timeframe from the current rate of 7.5. That is a 13.5 percent increase in job growth over six years. The technology, homebuilding and service sectors are returning to health, if not climbing to new heights. According to CBRE’s U.S. Tech-Twenty research report, tech employment in Atlanta rose nearly 11 percent between 2011 and 2013. CBRE Research also finds that Atlanta’s recovery is underpinned by an …

October 13, 2014

Georgia Market Reports Southeast Southeast Market Reports

Supply/Demand Fundamentals in Atlanta Boost Hotel Rates

by admin June 16, 2014

The U.S. hotel market continues to gain strength following the Great Recession, where in 2009, revenue per available room (RevPAR) fell by 17 percent making it the single-worst performing year in the history of the hotel industry. Atlanta, which is one of the top 25 hotel markets in the U.S., as defined by Smith Travel Research (STR), the hotel industry’s leading performance data provider, experienced a similar decline with RevPAR falling by 18 percent in 2009. Since that time, across the country RevPAR has grown at a compounded average growth rate (CAGR) of 6.4 percent. Atlanta’s RevPAR CAGR during this time period has been 6.1 percent. The main reason Atlanta’s recovery has trailed the nation is related to its average daily rate (ADR). Atlanta’s ADR CAGR has been just 1.3 percent since 2009 as compared to 3 percent for the U.S. Put simply, hotels in Atlanta have not been able to grow their average rate as much as the U.S. average coming out of the recession. The Atlanta hotel market, like other segments of the Atlanta real estate market, has historically tended to get overbuilt when times are good. While hotels often do not represent the “highest and best use” …

June 16, 2014

Georgia Market Reports Southeast Southeast Market Reports

In-Town Multifamily Developments Emerge in Atlanta

by admin June 2, 2014

Though Atlanta has had a reputation as a boom-or-bust town for many years, it has struggled to maintain a thriving multifamily development business. However, an in-depth look at the current local trends shows a strengthening multifamily market, and with it, an evolution of many lower-cost neighborhoods into desirable development and residential sites. Now, the city is poised for a more sustainable future as demand for apartment housing inside the Perimeter continues to increase. Classic institutional developers are seeking to use this increasing demand as a platform to boost Atlanta to a new strata in line with New York, Boston and other metropolises such as Houston and Dallas. With no significant barriers to entry, active merchant buyers are taking advantage of Atlanta’s large developable land supply to support new high-density multifamily developments. Developers are working to stabilize the supply in response to the overwhelming demand; three- to five-year waves of building and development will help grow the market steadily. Amid the current five to 10 percent growth rate, some in-town projects are predicted to trade at higher levels than ever before. For example, 77 12th Street is widely expected to trade for more than $300,000 per unit — a robust figure …

June 2, 2014

Georgia Market Reports Southeast Market Reports

Improving Retail Fundamentals Show Bright Future Ahead For Atlanta

by admin February 27, 2014

With an economy that’s normalizing with improving fundamentals, the Atlanta retail market is on the right track for sustained growth. Throughout 2013, Atlanta experienced a drop in vacancy rates along with the unemployment rate. In addition, retail sales rose nearly 3.5 percent over last year, provoking a rise in consumer confidence. The unemployment rate in Georgia fell from 9 percent in 2012 to 8.3 percent in 2013. This is still a full point below the national average. For 2014, the unemployment rate in Georgia is expected to reach well under 8 percent. During the last 12 months, Atlanta has experienced job growth of 2.5 percent. Retail payrolls are also expected to continue improving in 2014, pushing a near 3 percent gain as a result of both increasing existing stores sales as well as modest new store opening growth. Vacancy Rates, Rent Growth Since the beginning of the year, overall metro retail vacancy rates have dropped below 11 percent, which is a 50 basis point decrease over last year. Neighborhood and community retail centers still maintain the highest vacancy of just under 15 percent. Power centers have experienced a strong year-over-year recovery, averaging a 7.5 percent vacancy across the region. Tenant …

February 27, 2014

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