Savannah’s industrial market has a symbiotic relationship with the ships that navigate the city’s much-debated river channel. In the fiscal year of 2011, $54.1 billion in value and 8.7 percent of U.S. containerized cargo moved through the port of Savannah. This makes Savannah the fourth largest container port in the nation. The U.S. Army Corps of Engineers gave its final recommendation to deepen the channel to 47 feet and the president recently signed an executive order fast-tracking approvals by no later than November. This will keep the port competitive for larger Post-Panamax ships that will need to access the Savannah port after the Panama Canal is widened. The channel deepening project will not be completed prior to the completion of the Panama Canal widening, but Panama officials just announced the opening has been delayed by at least six months to April 2015. With port activity continuing to improve, so goes the area economy and warehouse occupancies. Market-wide, vacancy rates have ticked down to around 15 percent from highs in the low 20s just two years ago. There is a good supply of high-quality distribution space, thanks to the building boom started in 2005, which nearly doubled the inventory. There is …
Georgia
Tenants and landlords forge into 2012 confronting many of the same challenges they had going into 2011. Atlanta’s office market still has a great deal of excess supply and demand remains below its pre-recession levels. The entire market has not pushed fully past concerns about properties with significant vacancy and looming debt obligations. Doubts about the broader economy also inhibit long-term strategic planning. The office market closed out 2011 largely unchanged from a year ago. The overall availability rate only fell by 1.1 pp from 26.5% to 25.4% over the course of the last four quarters. ““Vacancy rates remain high throughout the market and the vast majority of tenants have many options to choose from when negotiating leases,” says Andrew Lechter, executive vice president and branch manager of Studley Inc. The U.S. economy has shown signs of minimal gains in momentum and remains vulnerable to a sharp shock such as what has been called Europe’s “Lehman moment” or a spike in oil prices precipitated by a Mideast crisis. Some of the chronic problems that hampered U.S. growth – weak labor and housing markets – remain particularly acute in Atlanta and registered minimal improvement in 2011. Until employment and labor markets …
With low rental rates and available square footage, Atlanta’s industrial market remains a favorable environment for tenants and buyers interested in discounted real estate. Many are taking the opportunity to renegotiate leases on existing space or upgrade in terms of size, quality and location. With its close proximity to Hartsfield-Jackson Atlanta International Airport, CoStar Property reports South Atlanta’s Industrial Submarket is leading the metro area, with net absorption year-to-date in the third quarter of 2011 of 4.64 million square feet at an average quoted rental rate of $3.05 per square foot. The Northeast Atlanta submarket followed by posting year-to-date net absorption of 1.12 million square feet in the third quarter of 2011 at a higher quoted rental rates averaging $4.60 per square foot. Total year-to-date net absorption in the third quarter of 2011 for the metro area was 5.52 million square feet, with average quoted rental rates of $3.83 per square foot. This is in spite of the fact that flex space experienced negative net absorption, which accounts for approximately 10 percent of industrial inventory. The third quarter 2011 average vacancy rate of 13.3 percent has dropped relative to previous periods due in part to positive absorption and anemic new …
The Atlanta retail market took a slight hit in the second quarter of 2011, but is still seeing improvement. Although available space in areas is starting to fill up, absorption in the second quarter of 2011 fell from positive absorption of 648,692 square feet in the first quarter to negative absorption of 726,174 square feet, according to CoStar Group’s Mid-Year 2011 Atlanta Retail Report. However, the vacancy rate only rose slightly, from 10.1 percent to 10.4 percent. Greg Eisenman, associate with Colliers International’s Atlanta office and a member of the Retail Services Group, says many tenants are looking to do deals. While speculative development is on hold, he expects the available amount of space to drop. Tony Cerniglia, vice president of retail services with CB Richard Ellis’ Atlanta office, says recovery has been spotty, although there are pocketed areas of the city that are doing well. Buckhead, Midtown and Cobb County have seen the most traffic, which Cerniglia says is not surprising because of the solid demographics and good locations. Some retailers have even been competing for space in these markets. Cobb County has seen some leasing traffic. In fact, according to Colliers International’s Atlanta Retail Market Report, the two …
The writing was on the wall. Some read it; others ignored it. Regardless of the strategy, retail development came to a halt in 2008. A few single-tenant buildings were developed, but most ground-up projects went into a holding pattern. Two years later, most of those projects are still on hold or moving very slowly at best. From power centers and mixed-use developments to strip centers and grocery-anchored centers, development activity remains stagnant throughout the Peach State. Hardest hit are the secondary and tertiary markets where developers built shopping centers based primarily on residential growth projections. Unfortunately, those projected communities were never built. Many retailers in those markets have struggled, and some have closed their doors. As national retailers look for space again, shopping centers in those markets will be low on their list, furthering the decline of these centers. How Will Developers Survive? The old cliché — location, location, location — holds true. Developers with good projects in prime locations will make it through the cycle by adapting to the changing market conditions with the short-term focus on cash flow and long-term focus on value. However, several fundamental tactics are needed to survive this economic cycle: • Asset Stabilization: One …
Increasing vacancies mean increased worries for Atlanta’s commercial property owners, but also more options for the city’s tenants. How soon will the market regain some stability? Office The big uncertainty facing the 125 million-square-foot and 22 percent-vacant Atlanta office market in 2010 is whether or not increased leasing activity will outpace recession-induced tenant downsizing/rightsizing and result in occupancy growth. On the demand side, the approximately 1.5 million square feet of leases signed during fourth quarter 2009 represented a nearly 30 percent drop from the previous quarter. Notable transactions inked include those by KPMG, with a multi-floor renewal at SunTrust Plaza in downtown Atlanta. In Buckhead, SunTrust Robinson Humphrey decreased its footprint, renewing 92,000 square feet at Atlanta Financial Center. In the suburbs, Cox Enterprises committed to approximately 95,000 square feet at 9000 Central Park, with its subsidiary, AutoTrader, in negotiations at 3003 Summit Blvd. for up to 400,000 square feet. Meanwhile, increasing vacancy and downward pressure on rental rates are luring tenants into the market to search for deals. Major tenants checking out Atlanta space at the start of 2010 included Alston & Bird, with a 400,000-square-foot requirement; Kilpatrick Stockton (240,000 square feet); and an unnamed corporate relocation, dubbed “Project …
Do you remember how it feels to be on a wild rollercoaster ride, excited and confused, trying to make sense of the ride yet wondering when it will end? That’s exactly what developers, brokers, retailers and landowners are feeling in the commercial retail market. Although Macon finds itself somewhat insulated from what major retail markets are feeling during the “Great Recession,” it is certainly not immune to the prolonged effect of this economic downturn. With the lack of financing, local and regional developers have had to adjust the delivery of their projects in the wealthy submarket of North Macon and the South Bibb County area. While they too recognize Macon as somewhat of an insulated market, they are not blind to the fact that nationally some major retailers have closed, rental rates are declining, vacancy exceeds 20 percent and negative absorption is beginning to rear its ugly head. The Shoppes at River Crossing, Macon’s newest lifestyle center on Riverside Drive, hit a speed bump with the departure of Circuit City, but has quickly recovered with the recent announcement of Jo-Ann Fabrics & Crafts’ lease of a 20,331-square-foot building. With a commitment from a major anchor, Fickling and Co. is moving …
The Atlanta multifamily market has experienced a 200-point jump in its vacancy rate when compared to the fourth quarter of last year. The market-wide total rate is sitting at 12. 5 percent, and the rate for Class B and Class C properties is a few percentage points higher. These numbers are, of course, a function of the recession and the overall lack of job stability in the city. When the jobs return, says Andrew Mays of Marcus & Millichap’s Atlanta office, the vacancy rate will start to recede. “Unemployment is the main deterrent to multifamily growth,” he says. “It’s such a function of the job market right now, and until we work our way through this, it’s going to take a little while to get that number back in check. Ideally, Atlanta performs much better around the high single digits.” Increased transactions from high net-worth buyers from South Florida, the Northeast and Chicago, along with the occasional foreign spender, has helped prevent a complete shutdown of the market. Mays says the number of transactions, and interest from international investors, will increase once lenders release more distressed assets onto the market. “Moving forward, It’s not going to be ‘06 or ‘07 …
These haven’t been the easiest times to maintain optimism or even a somewhat sunny outlook, which is a crucial characteristic for those of us who lease office properties in Atlanta or anywhere else in the United States. Everywhere we turn, we’re constantly pounded with negative economic news as the pillars of American industry teeter and equity markets gyrate. But unlike the frozen credit markets, at least the reeling equity markets aren’t completely stagnant. We’re starting to see signs of life, and the main question on everybody’s mind is have we hit bottom? Let’s hope so. There are a few early indicators pointing up, and long-term prospects suggest that metro Atlanta can maintain the growth that transformed the city during the past 30 years. First, Jones Lang LaSalle research has found that metro Atlanta’s office markets, including sublease space, absorbed 182,432 square feet in the first quarter of this year. That would’ve been a bad quarter in 2006, but coming off a year where the office market had negative net absorption of more than 850,000 square feet, we’ll take it. Unfortunately, the urban markets — Buckhead, Midtown and Downtown — posted negative net absorption of 47,640 square feet in the first …
A barrage of national and local coverage has detailed the nation’s housing woes and economic uncertainty – which are clearly having an impact on Atlanta’s multifamily for-sale market. Average absorption rates slowed in all Atlanta submarkets during the first quarter to less than one sale per month, and many projects are struggling to make up for lost contracts as buyers cut their losses, get cold feet or discover they are unable to secure financing or sell their existing homes. The good news is that the necessary steps are underway to correct the supply-demand imbalance. Projects with standing inventory are increasingly employing new strategies to gain traction by enticing buyers with reduced prices and increased incentives; being more open to negotiation on price; and attracting the broker community by providing a portion of commission for properties under construction at the end of the recission period, rather than all at closing. More proposed developments in the pre-construction phase are going on hold until the market recovers, being converted to rentals or cancelled altogether. For example, The Related Group has placed its One Cityplace project on hold; John Weiland announced that plans for One Museum Place are on hold until at least next …