Michael A. Crawford, research director in the local office of Bullock Mannelly Partners, tells GlobeSt.com, "Based on our first-quarter report, we are calling for slower, more stable growth in the retail sector."
For starters, Crawford envisions availability of Atlanta's 140 million sf of retail product to rise over the course of 2002. Compared to Q1 of 2001, the vacancy rate for all classes of space jumped 2.7% to 9%, Bullock Mannelly's research indicates.
The recession sent absorption rates downward and resulted in the closing of several local under-performing stores. As excess supply continues to fill the market and consumer spending remains depressed, Crawford expects the vacancy rate to remain above 9% for the remainder of '02.
"South Atlanta should continue to grow this year driven by the strength of the housing market," Crawford says. South Metro's submarket, for instance, reports a current vacancy rate of 6.3%.
Stimulating business activity even further south is the construction of a $90-million power center being developed by North American Properties. Site work has already begun on the 750,000-sf Camp Creek MarketPlace this month, with a Q2 2003 opening scheduled. In all, some 3.5 million sf of space is being developed across Atlanta at the moment, Crawford says.
As for overall investment sales, Crawford says sales of neighborhood and community centers will slow further. "There are lots of concessions being offered and tenant retentions," he says. "Instead of selling assets, investors are taking advantage of low mortgage rates and refinancing their properties."
The current average sales price for multi-tenant retail centers is $75.80 per sf. Specific property types being negatively impacted are power centers. "Unless located in a strong demographic area with less competition, I think power centers, as a whole, will struggle until we see stronger economic activity," Crawford says. "The income streams are harder to maintain than grocery-anchored centers."
Meanwhile, well-positioned, grocery-anchored centers will perform well this year. "These are the retail properties of choice," he says. "Big box and shadow-anchored centers are still in favor but require more equity to be put in or left in the deal to achieve attractive financing."
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