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Metro Incomes Drive Retail Success

ATLANTA-Suburbs stung by job losses will see weak sales this year, but Buckhead should outperform.

By Carl Cronan | Updated on March 19, 2009

ATLANTA-It may be stating the obvious that retail centers in blue-collar suburbs will have a tougher time than those in wealthier neighborhoods, but neither is it necessarily a given. In fact, the only certainty in 2009 is that local vacancy rates will rise and rents will fall as unemployment increases and those who still have jobs tighten their spending habits.

Marcus & Millichap’s new National Retail Report states that vacancy in the Atlanta market is forecast to rise 280 basis points this year to 12.6%, after already going up 170 basis points in 2008. Asking rents are expected to drop 3.5% over the year to $16.87 per square foot, while effective rents will decline 4.5% to $15.01 per square foot because of weaker tenant demand. Household income is expected to dip just below $60,000 this year.

Job losses will continue to take a toll on Atlanta and other metropolitan areas statewide, with the Georgia Department of Labor on Thursday posting a record high unemployment rate of 9.3% in February. At least 111,000 jobs have been lost in the Atlanta area over the past year, a decline of nearly 5%, with Marcus & Millichap predicting a loss of 37,500 jobs or 1.6% this year.

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