SPRING 2012 | RETAIL
ATLANTA
MARKET REPORT
Atlanta Retail Market Remains Stagnant; Vacancy Rate Unchanged
Updated May 2012
MARKET INDICATORS SPRING 2012*
FALL ‘12 Proj.*
—
—
VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE
—
CAP RATES
*As compared to the previous bi-annual period.
UPDATE Atlanta Retail Rental Rates Overall Market (per sq. ft. NNN) $16.50 $16.50 $16.00 $16.00 $15.50 $15.50 $15.00 $15.00 $14.50 $14.50 $14.00 $14.00 $13.50 $13.50
2012 2012
$12.50 $12.50
2011 2011
2010 2010
2009 2009
2007 2007
2008 2008
2005 2005
2006 2006
2003 2003
2004 2004
$13.00 $13.00
AVG Rental Rate NNN SOURCE: COSTAR PROPERTY
www.colliers.com/atlanta
The Atlanta retail market finished 2011 with positive absorption, but only by a modest amount given historical occupancy gains in past years. For the year as a whole, retailers filled almost 320,000 square feet of retail space; a far cry from the millions of square feet absorbed annually prior to the economic downturn. As of early 2012, it appears the positive activity has carried over, although at the same modest pace. On the whole, retail absorption topped 240,000 square feet in the first quarter of 2012 with shopping centers seeing the bulk of the occupancy gains. The largest move-ins during the quarter are indicative of the type of tenants currently active in the market. These include Woodstock Market, a consignment furniture showroom, moving into 59,000 SF at Cherokee Corners Shopping Center; Hobby Lobby occupying 57,000 SF at Lawrenceville Market Shopping Center; and Old Town Bargain Thrift Store taking 45,000 SF at Fieldstone Plaza in Conyers, Georgia. There were significant move-outs as well in the quarter including Food Lion which announced in January it was closing and vacating twenty-nine of its grocery stores in Georgia including ten in metro Atlanta. Since the end of 2009, the overall retail vacancy rate in the Atlanta region has essentially remained unchanged. The occupancy gains experienced during this period of time have been matched almost equally by the amount of vacant space added to the market. This stagnant environment can be attributed to the persistent sluggishness in the local economy due to weak housing and job growth numbers. Housing starts which peaked at 60,000 per year in metro Atlanta in 2005 have been averaging 6,000 per year since 2009. Nevertheless, there are reasons for optimism as market conditions are showing improvement. High retail vacancy in many of the outlying trade areas is masking the strength of closer-in markets where occupancy rates are solid and rents are running at or near pre-recession highs. These areas include: Sandy Springs, East Cobb, West Cobb and Buckhead. In addition, retail tenant activity in the metro area is plentiful. Retailers actively opening new locations in metro Atlanta include Academy Sports, LA Fitness, Mattress Firm, Family Dollar and Von Maur which recently added its second Atlanta location in the former Bloomingdale’s at Perimeter Mall. Additionally, vacancies recently put on the market by bankrupt retailers such as Borders are being backfilled at a better-than-expected pace, especially in high retail traffic areas. Specific examples of former Borders’ locations already backfilled include Midtown Place (leased by TJ Maxx), Johns Creek Town Center (leased by Stein Mart) and Buckhead Triangle (leased by The Container Store). While housing starts are only just beginning to show an uptick, anecdotal evidence indicates supply for new housing in desirable locations is running low. Also, after three consecutive years of losses, job growth in metro Atlanta has finally returned as indicated by the Bureau of Labor Statistics data revision January 2012 which shows the region added 28,900 jobs in 2011.
MARKET REPORT | Q1 2012 | RETAIL | ATLANTA
Total SF
NEW SUPPLY, ABSORPTION AND VACANCY RATES 12%
14
Vacancy Rate
12
Square Feet (millions)
344,943,813
522 offices in 62 countries on 6 continents
10%
10%
10
2011 Absorption SF
319,781
2011 Deliveries SF
692,771
4%
Under Construction
754,949
2%
Avg. Rental Rate NNN
$13.26/sf
8 8%
6 4
6%
United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118
2 0 2006
(2)
2007
2008
2009
2010
2011
2012
(4)
Absorption
Deliveries
Vacancy
•
$1.8 billion in annual revenue
• Over 2.5 billion square feet under
NOTE: 2012 DATA IS YEAR TO DATE
SOURCE: COSTAR PROPERTY
management • Over 12,000 professionals
ATLANTA-MSA | Annual Housing Permits
ATLANTA RETAIL | Investment Cap Rates UNITED STATES:
60,000
8.5%
50,000
8.0%
40,000
Jon Barry President, Principal | Atlanta 5871 Glenridge Drive, NE Suite 400 Atlanta, Georgia, 30328 TEL +1 404 574 1018 FAX +1 404 574 1118
7.5%
30,000 7.0%
20,000 6.5%
10,000
6.0%
0 2007
2008
2009
Single-Unit
2010
Multi-Unit
2011
2012 YTD
2007
2008
2009
Atlanta Qrtly AVG
SOURCE: U.S. CENSUS BUREAU
2010
2011
2012 YTD
US Qrtly AVG
SOURCE: REAL CAPITAL ANALYTICS
UPDATE Recent Transactions in the Market RESEARCHER:
SALES ACTIVITY PROPERTY
SALES DATE
SALE PRICE
SIZE SF
PRICE/SF
BUYER
Southlake Pavilion
12/15/2011
$22,750,000
561,266
$40.53
US Properties Group
Banks Crossing
1/27/2012
$19,475,000
256,930
$75.80
The Nightingale Group
Summit Point - Fayette Co.
12/21/2011
$18,250,000
104,572
$174.52
TNP Strategic Retail
Centennial Village
11/29/2011
$14,600,000
117,392
$124.37
Rothenberg Rosenfield
1955 Buford Mill Dr - Lowes
11/1/2011
$13,125,000
128,997
$101.75
Arloma Corporation
Renaissance Walk - Atlanta
12/16/2011
$12,500,000
61,400
$203.58
Cohen & Associates
Atlanta Scott Amoson Vice President | Director of Research Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 877 9286 FAX +1 404 870 2845 This market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International-Atlanta, Inc., and certain of its subsidiaries, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 520 offices throughout 62 countries worldwide.
Accelerating success.
www.colliers.com/atlanta