Atlanta’s retail market outperformed similar markets, reaching a record level of investment activity in the second quarter of 2021.
Meanwhile, consumer demand, sales volume and rental activity continued to climb in the third quarter, with no signs of abating until the end of the year.
Sales volume grew significantly by 50.41%, totaling over $ 1 billion from Q1 to Q2 in Atlanta, According to Franklin Street Atlanta Retail Report Q2-21. Sales volume increased 91.99% since the first quarter of 2019, indicating a strong market recovery. The average price per square foot also increased 6.78% quarter over quarter. Franklin Street expects this strong investment activity to continue throughout the year.
Atlanta’s retail market continues to show strong resilience and strong growth. This historic strength is due to high levels of foot traffic and increased net migration, as consumer demand has steadily returned and, in some cases, exceeded pre-pandemic levels, the report notes.
“Activity for all types of retail products, whether net rental, strip retailing, anchored grocery stores or food centers, continued to generate interest from stronger and stronger investors as the year progressed. The opportunities that we bring to the market that would normally receive two or three offers are now attracting more than 10 qualified offers from investors, ”said Bryan belk, Senior Manager, Retail Investment Sales for Franklin Street.
Rental activity has picked up in most asset classes, with neighborhood centers leading the pack. Rental rates have increased 4.64% year over year. Overall, the Atlanta retail market continues to be a dominant force, with data indicating continued resilience and growth relative to other markets.
Second Quarter 2021 Snapshot
5.2% vacancy rate
3.9% unemployment in Atlanta
920 199 FS Absorption
$ 1,048,329,521 Total investment sales
The results show that Atlanta’s retail rental market is thriving. Neighborhood centers, including food centers anchored in grocery stores, outperformed other types of retail assets in the second quarter, maintaining the highest positive net absorption rate at an absorbed value of 181 693 square feet. Neighborhood centers also saw the biggest increase in foot traffic, surpassing pre-pandemic levels.
Strip centers saw positive net absorption with a total of 171,107 square feet. Energy centers maintained the lowest vacancy rate at 4.3 percent and represent the largest amount of new retail construction under development in the market. Regional shopping centers continue to be among the weakest retail assets, posting negative net absorption of -177,715 square feet with a vacancy rate above 20%.
“In addition to experience-based retailers, medical users have continued to disrupt the retail market, leasing centrally located, highly visible retail spaces that allow them to deliver a high customer experience. Franklin Street Senior Retail Manager added. Greg Eisenman.
Other factors contributing to the boom in the retail market include heavy foot traffic in retail centers with tenants related to home improvement, electronics, spa and beauty, to clothing, groceries and health care, all of which are above pre-COVID levels. Home improvement saw the largest percentage increase, while recreation, hotels, casinos and restaurants lagged behind other categories.
The Atlanta market is also benefiting from an explosion in population growth; a resumption of the unemployment rate of 3.9% from a peak of 12.6% at the start of the pandemic and increases in the growth of market rents. Large retail projects, including the $ 5 billion Centennial Yards mixed-use development in the downtown south; the $ 350 million Exchange @ Gwinnett project and the potential Atlanta retail entries of Whataburger and Raising Canes, for example, continue to fuel the market.
“While Kroger has no plans for any new net stores to hit the market, we are aware of at least a dozen new developments anchored by Publix in the greater Atlanta MSA area,” said John Tennant, senior director of sales of retail investments at Franklin Street.
While the outlook for Atlanta’s booming retail market remains strong in the near term, market participants are likely to face headwinds from construction costs and inflationary pressures for at least the next 12 months. Construction prices remained high in the second quarter.
With the Atlanta market continually trending toward positive economic fundamentals, this market is poised to outperform other comparable metro markets through 2021 and beyond.
PHOTOS: The Franklin Street team represents retailers like gusto !, which just opened a new store in Chamblee, Freddy’s Frozen Custard & Steakburgers opening across Georgia, Daily Dose Coffee and First Watch which opened at Madison Yards in Atlanta, Hero Donuts & Buns which opened in the Summerhill neighborhood of Atlanta, and Serena Pastificio (specializing in authentic Italian cuisine, including homemade pasta) and IPIC (a concept of dinner and film) which opened in Colony Square in Atlanta.
The team also represents owners and landlords in their rental and investment sales needs. Some of their current listings include Hammond Springs and Perimeter Pointe in Sandy Springs, available for rent, and Eagle Village in Stockbridge, available for sale.