(A more or less regular compilation of news, factoids and observations.)
Six in Seven
Amidst seemingly daily reports about the economy’s woes it’s easy to overlook some salient facts. First a significant number of Americans are employed, anywhere from 85 to 90 plus percent depending on how and what you measure. Housing prices are creeping back, especially in desirable neighborhoods and apartment development seems to be booming (though it’s beginning to have characteristics of a bubble.) There’s even talk of one or more speculative office buildings starting construction in some key Atlanta markets.
Quietly lurking in the background are six large scale development projects that could have a significant impact on the local landscape by the end of the decade. These include the re-developments of Fort Gillem and Fort McPherson, the G.M. plant in Doraville, Ponce Market (formerly known as City Hall East) the Multi-Modal Station in downtown Atlanta and the Atlanta Beltline. The two projects furthest along are the beltline (at least some of the walking paths and public spaces) and Ponce Market where demolition has begun in anticipation of a 2014 debut. While the Beltline project was rocked by the defeat of the metro TSPLOST (transportation vote) and the recent resignation of CEO Brian Leary the project always had its own funding sources ( a combination of foundation and tax dollars) and was always intended as a long term development project. We wouldn’t be surprised to see Beltline champion, and former Atlanta City Council President, Cathy Woolard emerge as the new CEO by year’s end.
The multi-modal station is also preliminarily funded but won’t make its debut for several more years. There’s already talk of additional development on the project’s periphery especially along historic Mitchell Street. The two forts are longer term projects as local developers continue to negotiate with the military but we expect to see activity at both of these projects crank up soon as well. The G.M. plant may be the most challenging of all these projects. It’s location is hard to beat -basically at the interchange of I-85 and 285, plus an on site MARTA station and good access from arterial streets like Buford Highway and Peachtree Industrial. The steep sale price ($60 million) plus several million more for remediation are hurdles as well as determining what is the highest and best use.
Winners and Losers
The dictionary divides bifurcate as to divide or separate into two parts or branches. In the real estate world it seems to have become short hand for winners and losers. Better products or core assets are clearly winners. Record cap rates for free-standing properties and well anchored retail centers are becoming common place. Rates are bumping or exceeding what was paid in the halcyon days of 2006-2007. Meanwhile less attractive properties sit, in some cases for several years, waiting for a buyer willing to take a chance.
There is a similar effect underway in the selection of retail and restaurant sites Core markets like Midtown, Buckhead, Perimeter, Sandy Springs, Alpharetta, and Decatur continue to draw keen interest. We know of numerous concepts, including several we’re working with targeting these markets . The dilemma is many of us (tenant brokers) are turning over the same rocks hoping to find a gem overlooked by others.
Several Atlanta chefs are on the move. Kevin Gillespie is leaving Woodfire Grill and sous chef E.J. Hodgkinson has been promoted. Gillespie is rumored to be opening a barbecue concept but no location has been identified publicly. Terry Koval, founding chef at Farm Burger has departed and will soon take over range duties at Inman Park’s Wrecking Bar while Top Flr’s Shane Deveraux will become chef at the Peasant Bistro. Former Buckhead Life Chef Brett Maddox will be top toque at Modern, expected to open in Buckhead in mid-October.
In an interesting collaboration Bennigan’s and developer Brixmor have announced pre-approved locations in key markets around the country in Brixmor developments. The goal is to accelerate the franchisee process by offering already approved locations plus pre-approved funding. A half dozen markets have been targeted but not Georgia as of yet. It will be interesting to note if this concept works if we’ll see further alliances from other major developers.
As new restaurants continue to proliferate what are some trends we can expect. Ultra local is one new buzzword where restaurants are owning and managing their own oyster and vegetable farms, beehives and made on premises beer and other spirits. Also look for a growing number of preserved or pickled items on trendy menus along with sweet dessert style cocktails, more gluten free offerings, the emergence of Bahn Mi (or Vietnamese style) sandwiches, veggie burgers, mini street tacos and create your own pizzas (like those served at fast growing Uncle Maddio’s.)
I read an interesting article in Nation’s Restaurant News recently about international development of restaurant chains. In the United States there is approximately one restaurant for every 17,241 residents. In other parts of the world there is one restaurant for as many as 500,000 patrons. Before you pack up your knives and head overseas here are some other factoids to consider. McDonald’s and Yum Brands already have a significant head start on you with 56 % and 78% of their gross revenues already collected overseas. In fact, U.S. based companies far out-perform their counter-parts from other parts of the world. Over the long run, international sales will continue to grow especially in countries with emerging middle classes like Brazil, Russia, India, and China (the BRIC markets as they’ve been dubbed.) Of note, McDonald’s has just opened its first all vegetarian restaurant in India.
Closer to home new comers to keep an eye on include Salt Yard, from Christian Favalli (La Grotta) and wife Kristy Jones at the Brookwood; a second Fado, opening in midtown West; a 5th Hudson Grill in downtown Atlanta, a fifth Café Pharr, in Vinings, May’s Bakery Lenox Road. Recently closed restaurants include Stir Crazy, Town Center Brookhaven.
And finally, a tip of the hat to Cardamon Hill and Cakes and Ale named to Bon Appetite magazine’s list of top 50 best new restaurants.
Recent transactions for The Shumacher Group include:
Lease of Saltyard at the Brookwood –Peachtree Road
Sale of Jagger’s, Atlanta to Pizza Bella
Sale of Mezza and Rafeedie’s to Antico Pizza