Following a challenging year in 2020, momentum in the Atlanta office market is beginning to trend upwards. The COVID-19 pandemic forced office users and owners to sideline their business plans and made tenants reevaluate their office needs. As government restrictions have lifted and vaccines for COVID-19 have become widely available, many companies in Atlanta are going back to the office and the “new normal” for the workplace is here. There have been several notable office announcements made in Atlanta this year. Two large technology corporations announced they were expanding their plans for major hubs in Atlanta, and companies including Adecco and Minute Maid announced plans to make Atlanta their headquarters or a hub. In total, there have been over 20 major relocation or expansion announcements in the past year, accounting for more than 3 million square feet of recent or anticipated near-term absorption. Atlanta’s most significant office lease in 2021 has been Global Payments’ 206,542 square-foot commitment at 5995 Windward in the North Fulton submarket. Other notable leases include Soliant Health’s 87,419-square-foot deal at Summit at Peachtree Parkway in the Peachtree Corners submarket and ServiceMaster’s 53,440-square-foot lease at One Glenlake in the Central Perimeter submarket. Other companies including Centene and …
By Ben Reinberg, CEO, Alliance Consolidated Group of Cos. Healthcare real estate has proven to be one of the most resilient asset classes, able to bend but not break in the midst of global economic upheaval. Investors have become keenly aware of this fact, perhaps even more so during the latest downturn brought on by COVID-19. According to the 2021 U.S. Medical Office Trends report by CBRE, year-over-year investment volume for medical office properties fell 12.7 percent between the fourth quarters of 2019 and 2020. However, that’s far better than the 27.6 percent, 40.2 percent and 42.8 percent declines in investment sales volume that were respectively felt by the multifamily, office and retail sectors. Medical office buildings (MOBs) even beat out the white-hot industrial sector, which saw a 15.9 percent fall in annual investment volume last year. For developers eager to satiate this investor appetite for medical real estate, what is it that experienced buyers and newcomers to the space actually want in a healthcare asset? Ultimately it comes down to three things: location, size and use of space. Go Where the People Go “If you build it, they will come” may have worked for Kevin Costner’s cornfield baseball diamond, …
By Mark Fogel, founder, ACRES Capital Despite the pandemic-related uncertainty that dominated the markets in 2020, the student housing sector consistently displayed strong pre-lease occupancy rates among properties under construction, suggesting that the asset class would be well-positioned to hit the ground running in 2021. According to RealPage Analytics, students, encouraged by the prospect of fully reopened campuses, fueled a nearly 10 percent nationwide increase in pre-lease occupancy at off-campus housing between March and April of this year. This data in particular seems to support improvement for the student housing sector overall. Research organization RealPage has tracked student housing occupancy rates at 175 major universities across the country, a sort of barometer for the larger industry. As of March, the company’s data showed that 59.6 percent of beds at those universities were preleased for the fall 2021 semester. While that figure is still 200 basis points below the March 2020 level, it seemingly speaks to students’ preference to get back to living on campus. And while this is good news for operators and developers, the resiliency of the student housing market is bringing forth an unintended, but positive effect on one of the hardest-hit rental markets in the country: New …
By Chris Irwin, Colliers International As we begin to lower our masks, breathe fresh air and see smiles on everyone’s faces, there are strong signs that better than pre-COVID retail activity in Chicago is here. With the expanded vaccine rollout, a decrease in unemployment plus the added boost of stimulus checks, the surge in retail sales in the city and surrounding areas has been measurable. The demand for retail space increased in fourth-quarter 2020 and first-quarter 2021 significantly, with the first quarter recording a 650,000-square-foot increase in overall absorption, which pushed the trailing 12-month absorption back to positive territory — and its highest level since 2017. Increased leasing activity continued to drive new demand as net absorption totaled almost 1 million square feet in the first quarter. Vacancy in Chicago retail has flattened and currently is holding at 6.1 percent over the past year compared with a rate of 5.1 percent nationally. Leasing activity was driven by the expansion of essential retailers throughout the first quarter, similar to first-quarter activity levels registered in 2017, 2018 and 2019. However, the most important step toward recovery happened June 11 when the State of Illinois moved its Coronavirus response from Phase 4 to …
By Taylor Williams As consumers throughout the Northeast move closer to returning to their pre-pandemic lifestyles, unleashing pent-up demand on the retail, restaurant and entertainment sectors, owners of mixed-use properties are gaining a renewed appreciation for local concepts that create a special sense of identity. Of course, the inclusion of local uses and concepts in the larger overall retail tenant base is nothing new in the world of mixed-use development. And sources agree that having some marquee, national brands is also a critical ingredient in the recipe for a successful retail roster and experience. “High-quality retail creates places where people want to live and work, but unless you’re committed to doing a couple hundred thousand square feet, most of your retail component is going to be food and beverage (F&B),” says George Banks, founder of Revel, an Atlanta-based firm that provides food hall consulting services. “Everybody loves Shake Shack and Jeni’s [Splendid Ice Creams], but we advise our mixed-use clients to go as hyper-local as possible when it comes to F&B.” But in general, the COVID-19 pandemic hit local mom-and-pop operators, which often lacked the cash and credit to cover their revenue losses, much harder than their national counterparts. More …
Atlanta is a city that is always evolving. Even prior to the pandemic, rapid change seemed to be the one constant thing about the market. This continues to be true today; from downtown to the furthest suburban reaches, Atlanta’s retail landscape is vibrant with new brands and ambitious projects. One of the most notable areas of growth in greater Atlanta is the expansion of single-tenant operators, especially quick-service restaurants. New national players such as Whataburger and Raising Cane’s are entering the metro Atlanta market, as other popular chains such as Freddy’s Frozen Custard & Steakburgers and gusto! continue to expand. Evolving faster than restaurants, however, are discount retailers. Forbes recently noted that The TJX Cos., Ross Dress for Less, Burlington and Five Below are among the chains with active expansion plans. Dollar Tree also recently announced Family Dollar Tree, a new concept that combines its flagship brands into a hybrid shop for more rural communities with less convenient access to necessity retail. While some grocers such as Kroger and Sprouts Farmer Market have slowed growth, Publix is picking up the slack, opening and planning multiple locations throughout greater Atlanta. German discount grocer Lidl, which opened its first U.S. store just …
By Billy Eagle and Erik Olson, Senior Vice Presidents of Investment Properties, Multifamily, CBRE In Albuquerque, New Mexico’s largest city, multifamily demand remains high. Rents have steadily increased, though multifamily development remains sluggish due to the lack of developable land sites and geographic constraints. Most other New Mexico cities are also seeing a small pipeline of new multifamily projects due to increased material costs. However, contrary to other cities in New Mexico, the northern New Mexico City of Santa Fe has seen a boom in multifamily development. Santa Fe’s highly resilient and fundamentally sound multifamily market is highlighted throughout the pandemic. The state capitol is renowned for its Southwest culture, luxurious resorts and world-class art markets. Its economic drivers include, but are not limited to, tourism (more than 1 million visitors per year), government (Los Alamos National Labs is located nearby), medical and boutique financial services. The Santa Fe apartment market had record occupancies at 96.91 percent in January 2021 and year-over-year rent growth of 7.6 percent. The average weighted rent was $1,102 per month among a total of 3,385 market-rate units. Nearly 16 months later, they are averaging almost $1,300 per month, an 18 percent increase. Santa Fe also added 503 market-rate units to …
By Stuart Zall, President, The Zall Company No matter how you look at it, Colorado is in a great position for strong post-pandemic recovery and growth. People are moving here from around the country at historic numbers. With low interest rates and an influx of buyers prepared to pay well over asking prices, the residential real estate market is experiencing unprecedented activity, and we expect the commercial market to follow suit. Now that the vaccine has created less concern about COVID-19, people are getting out again and we’re seeing a lot of pent-up demand as businesses reopen, eateries expand capacity and restrictions on crowd size are lifted. Downtown Denver Takes Action To Lure People Back Within the Front Range retail market, downtown Denver took the biggest pandemic hit by far. Prior to 2020, downtown served a population of more than 150,000 daytime workers, the convention center was booked for years out, bringing thousands of conventioneers from all over the country, and sports and tourist venues like Elitch Gardens attracted huge crowds. Now the city is working hard to bring back workers. The Downtown Denver Partnership recently launched the Denver’s Ready campaign to encourage employers and employees to return to in-person work. Enticements include extension …
By Joel Marcus, partner, Marcus & Pollack LLP What happens when an irresistible force meets an immovable object? The longstanding physics conundrum encapsulates the situation in which New York City property owners currently find themselves, and for better or worse, they’re about to discover the answer to the age-old question. City government has squeezed increasing sums of property taxes from its real estate stock in each of the past 25 years, but the pandemic is changing everything. The basic fact is that 53 percent of New York City revenues come from real estate taxes. Fueled by rising rents that are tied to high costs of new construction, the city property tax base has grown and enjoyed record tax revenues in recent years. Total real property tax revenue was almost $30 billion in 2020, according to the city’s annual property tax report. Historically speaking, no major event in recent memory has been responsible for a pause in the year-over-year tax increases — not the Financial Crisis of 2018, nor Hurricane Sandy, nor even the events of September 11. It seems as though only a global pandemic has this particular power. COVID-19 has affected every element of New York City’s economy, but …
Atlanta is a hot spot for investing in multifamily assets as the market emerges from the COVID-19 pandemic. The apartment market’s fundamentals, including occupancy and rent growth, have held up considerably well, making the market extremely attractive to buyers. Because the Atlanta market has an abundance of capital looking to be deployed, prices are being driven up significantly and cap rates driven down. Multifamily has outperformed many other commercial real estate sectors during the pandemic, considered a “hot-ticket asset class” by investors, which leads to new capital swarming the Atlanta apartment market. Many multifamily properties are now routinely trading at a sub-4 percent cap rate, indicative of the vast amount of available capital and the confidence that investors have in the product type. However, rather than clearing the market and searching for as many prospective buyers as they can, sellers are looking at a smaller subset of dominant, well-known investors that they know will deliver and get the transaction done. They are seeking six to 12 well-recognized, established players that can execute a deal at top prices. It is an extremely competitive process, and all buyers know they have to swing high on pricing. Oftentimes, no one broker is selected …