Gary Saykaly, first vice president of the division, tells GlobeSt.com that although there has been a slowdown in retail investment activity since 1998, the overall market has been relatively healthy.
For starters, Atlanta has a large base of shopping centers: 1,500 in the metro Atlanta area, making it one of the largest retail markets in the Southeast, Saykaly states.
"Basically, the best year we had in Atlanta was 1997-1998," he says. "Following that period, the retail investment market sort of fell in line with the retail investment market on a macro level. There was a pullback by certain buyer types."
Saykaly says, "Given Atlanta's historically favorable population, employment and demographic figures, the city has always peaked investors' interest." He says, "There are always new investors in this area, whether they are 1031 buyers, private REITs, pension fund advisors or foreign investors."
For instance, Saykaly says Houston-based REIT Weingarten Realty is currently making a push in Atlanta. Lately, the trust has been busy in Tennessee and Florida. "Inland Real Estate of Chicago has also been very active in this market," Saykaly says.
Geographically speaking, CB Richard Ellis' team has witnessed a slight increase in activity this year on the South Side and in Gwinnett County because of their bargain sales prices. Also indicative of continued investor interest are the low cap rates for single-tenant net-leased properties in favorable locations, such as the North Fulton market.
In fact, assets anchored by such giants as Publix and Kroger currently have cap rates ranging from 8.75 to 9.25, Saykaly says. "That's not just institutional money (changing hands), a lot of it is 1031 exchange money."
A Q1 CBRE report says credit tenants are "trading at a premium price for two reasons: credibility/stability of the tenant and ability to finance. Over the last two quarters, lenders have become very conservative in underwriting non-investment grade tenants, making these deal less attractive to trade buyers looking to leverage," the report says.
As 2002 progresses, CBRE's study states, the debt market should begin to become more aggressive when it comes to financing non-investment deals, giving savvy buyers the chance to achieve above-market returns on well-located properties.
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