This Week on The Street March 12, 2013 (A more or less regular compilation of news, factoids and observations.)
Despite politician’s –of both parties-ideological fervor to undermine the American economy we continue to muddle on. At least that’s the conclusion from several experiences and conversations over the past few weeks. First up was Data Bank’s semi-annual symposium, a four hour barrage of updates on all the key commercial real estate sectors (Residential, Office, Industrial, Investment Markets and Retail) a succinct political overview from State Attorney General Sam Olens and an economic overview from the ever prescient Dr. Donald Ratajczak.
Sam Olens, serving his first term as Georgia’s Attorney General, claims this is the perfect job for him, deflecting talk about a race for the soon to be vacant Senate seat. Olens focused on two big issues the status of the water wars with Florida and Alabama and an update of the status of the Savannah port. While it would be nice to think Tennessee is going to give up rights to half the river separating the two states that’s likely not going to happen. Olens noted the bigger issue is not the amount of rain Atlanta receives but how it is managed and saved-putting in a plug for a slow to develop systems of reservoirs throughout the state.
He also summarized the status of the legislation around the deepening of the port in Savannah. The case is wending it’s way through the court system but all indications are the port project will be completed and complement the Atlanta airport, establishing Georgia as a major logistics and transportation market. Banks are back in the lending business, noted the finance panel, but primarily for permanent financing. Construction loans remain a challenge. On the individual, smaller borrower front there are new, aggressive SBA based programs that smaller community and regional banks are pushing. The industrial sector has benefitted from the growing number of internet shoppers, usually at the expense of bricks and stick locations.
The good news is that in the 56 markets with 100 million or more square feet of industrial space 55/56 had positive absorption in 2012. In addition the number of sales transactions completed is still half of those in 2007 but has showed a steady increase over the past few years. If you think you haven’t seen new office construction for a while in Atlanta you’re right.
For the first time since the early 1990’s the metro Atlanta will go five years between new office buildings being constructed. That condition is not expected to last much longer, however, as discussion continues about potential new projects in Midtown, Buckhead and Central Perimeter (the poster child for how quickly a lagging market can turn around.) We’ve heard Dr. Ratajczak speak for a number of years and it seems, at least to me, that he’s getting more candid, dropping some of the academic language that used to characterize his presentations. Despite problems with European debt, the slowdown of the Chinese economy and our seemingly on-going inability to formulate meaningful economic policy things are on the uptick.
The real estate sector is beginning/continuing to be of interest to investors. Inflation, while a future problem, perhaps two to three years out, is not a problem for now. Fed borrowing rates are expected to stay low, at least through 2015. Rising energy and labor costs abroad are beginning to drive manufacturing back to the U.S. from abroad-especially China. The media’s fascination with “made in America” is also helping smaller retailers and manufacturers.
Another discussion, with one of Atlanta’s leading residential experts confirmed some recent trends as well. Existing residential properties, especially inside I-285 are showing marked increases in price, beginning to approach the market highs of 5 years back A growing number of older buyers-rightsizing as the new euphemism calls it- are driving condo sales with average prices approaching $250/sq. ft. inside the city and immediately adjacent in areas like Sandy Springs and Decatur.
Recent Transactions for the Shumacher Group, Inc. include:
Golden Corral Ground Lease-Valdosta,
Georgia Happy’s Pizza-Hairston & Redan Stone Mountain, Candler Road and I-20 Decatur
ZZZ’s by Ashley Furniture -John’s Creek
Lease of former Mrs. Winner’s Wade Green Road-Kennesaw, Ga. To Sammy’s Southern Eatery.
Lease of former Toulouse/ Taqueria Tsunami at 2293 Peachtree Road NE Atlanta, GA 30309
Lease of former Olde Towne Tavern & Grille at Suwanee Town Center
Sale of Two Five Guys – Lawrenceville and Loganville
Sale of The Oar House & 20 Acres, Dahlonega Lease to Subway Corporate and National Restaurant Development at CNN Center