This Week on The Street
(A more or less regular compilation of news, factoids and observations.)
It’s been a strange couple of days, or maybe it just seems that way. One morning, I read about the increase in restaurant and retail sales –including luxury goods-and a strong start to the Christmas season. Unemployment is finally beginning to decline and there have been several months of new job growth.
Other sectors-hotels and apartments- are also showing renewed life. Cap rates are stabilizing, especially for “trophy assets.” Seemingly every Landlord or agent we talk to has just leased the space we’re interested in, has a lease working or lots of interested prospects. A definite change from a scant few months back. SBA lending is loosening up with an increased push to get more funds into the hands of prospective borrowers.
There remains a keen interest in restaurant expansion-especially inside I-285 and going into the central city. Fast casual concepts featuring burgers, pizza and Mexican fare still lead the way. If a landlord has an existing restaurant space, preferably with adequate surface parking, it won’t remain vacant for long.
Yet something is still amiss. By the end of last week we hear of several restaurants of note closing including Il Mulino, Toulouse, Nickiemoto’s (midtown), Vickery’s, Eurasia Bistro, One Star Barbecue (Alpharetta) and Dynamic Dish. While some of these are slated for replacement uses others will sit vacant. The number of foreclosed properties remains at an all time high with others soon to follow.
With few exceptions, retail development, especially in the suburbs, is at a dead standstill. We don’t anticipate seeing any significant increase in new development until 2012. Those developers that have projects underway are showing more creativity. Medical, off-price, thrift and consignment stores are being treated as “anchors.” Developers continue to cram as many restaurants as possible into developments. As an old uncle once said “you’re in a good business, people always have to eat.” (We hope he’s right.)
There are some newcomers to keep an eye on. Look for a second Tome, Buckhead; a third Highland Bakery, also in Buckhead; a third Café at Pharr, Brookhaven; noted Szechuan Chef Peter Chang opening in the former Olive’s Waterside (Powers Ferry area) and a new suburban steakhouse-Viende Rouge-from the owners of Trattoria 141 in John’s Creek.