This Week on The Street August 10, 2011
(A more or less regular compilation of news, factoids and observations.)
By Harold V. Shumacher
The Patient is Better but…..
A year, or so ago, we used the analogy of a hospital patient in intensive care when discussing the local and national economy noting that we were out of intensive care and just starting to walk on our own in the hallway. That’s the good new, Bad news is we’re still in the hospital and not back to a “normal life.” That observation seemed to be borne out at the recent Data Bank mid year symposium held July 31, 2011.
Featuring panels of the city’s top retail, multi family, investment and office brokers and developers the overall consensus was that activity remains flat with little chance of significant changes for at least 18 months. The segment with the most activity is apartments, the result of people who’ve been forced out of their individual residences needing a place to live, those still in apartments and house hunting, the continuing in-flow of college kids for new jobs (which has been reduced in recent years) and grand parents who want to be close to their children and grand kids.
The commercial investment segment is still in the bar bell phase. One end of the bar bell is the quality properties (grocery anchored neighborhood centers, heavily occupied Class A office space, nationally leased warehouses) that are selling at or close to their 2007 levels. The other end is the distressed properties, bank owned foreclosures, the properties that have either been on the market for a long period of time or dramatically reduced to “get them off the books.” According to co-star almost 40% of the 1-5 acres land sales in metro Atlanta since 2009 are distressed sales for prices almost 30% less than their independently owned counter-parts.
Some other highlights. Industrial absorption has been positive the past two quarters. An interesting fact-at least to us-is that only six and one-half percent of the vacant industrial space in Atlanta is new. The rest is either existing or build to suit. As Georgia residents we should be aware of the potential impact that deepening the Savannah port will have when the Panama Canal expansion is completed in 2014. Savannah could become one of the major ports on the Eastern Seaboard. Another factoid of note. The average law firm today takes 40 percent less square footage per practicing attorney than ten years ago. Firms are re-configuring space with more open area to encourage a teamwork approach to their practices.
Mercer University economist Roger Tutterow, a frequent lecturer at this event, offered a bit more optimism. According to him, and numerous other economists, the recession officially ended in the first quarter of 2010. The bad news is since then we’ve had virtually no real growth in jobs, retail sales or new housing starts. While energy prices are declining, at least for now, housing values remain flat, or in some cases negative, resulting in less consumer confidence. According to Tutterow it will take two and half percent annual growth for the next 3-4 years to get “healthy.”
Many Atlanta restaurants are doing their part to help grow the economy back. Café at Pharr will soon open their fourth location at Town Brookhaven (along with newcomers Stir Crazy, Swirl Frozen yogurt, Olive Bistro and The Flying Biscuit.) Look for second locations for HankookTaqueria and Café Agora in midtown; Grant’s Tavern, a sports bar concept at Cumberland from former UGA and pro player Charles; the re-opening of Red Fish, Memorial Drive, as Bar One; Chef Ryan Aiken’s Harbor Bar and Fish House, in Decatur. Some other new restaurants of note: Five Napkins, Midtown; a second Verde taco on Collier Road and a second Farm Burger, in Buckhead.
It seemed like a good idea at the time…. As part of a season long promotion Atlanta area Moe’s gives every fan in attendance a free burrito if the Braves hit a home run during a designated inning. At a recent game, featuring the retiring of former manager Bobby Cox’s number, it was bombs away for the brave in front of a packed house. The result, several thousand free burritos served the following day at the 60 Atlanta area locations.
Recent transactions include the purchase of Brooklyn Bagel, Alpharetta; and the opening of a re-located Verizon to Merchant’s Walk, in East Cobb.
