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SOUTHEAST SNAPSHOT, OCTOBER 2005
Atlanta Retail Market
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Alan Joel
Principal
Alan Joel Partners, a member of CORFAC International
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Atlanta's retail occupancy currently holds steady, and we anticipate continued strong demand, with the metro area's projected population and job growth over the next 12 months. With about 40,000 new jobs expected for the metro area in 2005 and a number of infill projects underway or recently completed, Atlanta retail is poised to set the pace both in terms of demand and innovation, especially with urban infill developments such as Atlantic Station, Camp Creek Marketplace and the Edgewood Retail District. However, some suburban markets, specifically pockets of Cobb, Gwinnett and North Fulton counties, still have plenty of available land and few barriers to entry, allowing competing retail developments to emerge and potential cannibalization.
Overall, the market is not underserved at the moment, as vacancy rates hover around 8 percent. Rental rates will continue to grow due to lack of supply and increased construction costs for new centers. Still, compared to other major markets across the U.S., Atlanta offers some of the most affordable retail rates in the country. Currently, rates run from $15 per square foot to $18 per square foot for neighborhood centers, $16 per square foot to $19 per square foot for power centers and $25 per square foot to $35 per square foot for mall properties.
Across the metro area, new retailers to the market include Nordstrom, Dillard's and IKEA. Nordstrom is locating at The Mall of Georgia, Perimeter Mall and Phipps Plaza; Dillard's has stores at The Mall at Stonecrest, The Mall of Georgia, North Point Mall and Atlantic Station; IKEA, too, is at Atlantic Station.
The majority of new development is taking place in Atlanta's in-town markets, which have been underserved for years. Like many other cities across the country, Atlanta is seeing a rise in residential relocation into the in-town markets, which has pushed demand for new retail in those submarkets. As retail demand grows and remains high, several significant projects are underway or near completion in these submarkets.
North American Properties is developing Camp Creek Marketplace, which includes up to 1 million square feet. Camp Creek Marketplace is the first major retail endeavor to come on line in the south Atlanta submarket in decades, providing a dynamic impact to the area. Major tenants include Target, Marshalls, Lowe's Home Improvement Warehouse, Barnes & Noble and Linens ‘n Things.
Atlantic Station, an expansive mixed-use project located in the Midtown submarket, also features up to 1 million square feet of retail. The grand opening for this project is October 20, and the city expects Atlantic Station to revitalize the west side of this submarket. IKEA opened a 300,000-square-foot store at Atlantic Station in June, its first Atlanta store, marking one of the metro area's most significant retail leases and store openings in recent memory. (For more information on Atlantic Station, please see “Atlanta's Newest Community” on the cover.)
In Atlanta's Buckhead submarket, The Sembler Company is developing Lindbergh City Center, which is a ground-up project including up to 500,000 square feet of retail. Additionally, Sembler has developed the Edgewood Retail District, a 520,000-square-foot retail center anchored by Kroger, Best Buy, Bed Bath & Beyond, Lowe's Home Improvement Warehouse, Office Depot, Ross Dress for Less and Target. This project opened July 13, and it is expected to revitalize the Edgewood district in the Midtown East submarket.
In addition to The Sembler Company and North American Properties' developments, Selig Enterprises also is active in Atlanta infill retail development with The District, a 260,000-square-foot, Wal-Mart-anchored retail project located at Interstate 75 and Howell Mill Road. At one of its first urban locations in metro Atlanta, Wal-Mart will open a 125,000-square-foot store at The District, which is in the Midtown West submarket.
The Midtown West submarket offers a number of intriguing opportunities. An emerging submarket bound by Interstate 285 to the north, Buckhead to the east, Midtown to the south and Cobb County to the west, ancillary development is imminent in Midtown West due to ample available land and a sparse retail presence. There has been a huge influx of residential condominium and loft development and single-family redevelopment in this submarket, naturally spurring retail demand. Currently, Selig has the area's only neighborhood shopping center under contract for redevelopment, and the rest of the area is primed for redevelopment endeavors as well.
— Alan Joel, principal, Alan Joel Partners, a member of CORFAC International
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