CPN - March 2009 - (Page 11) ATLANTA MARKET PROFILE MARKET INTELLIGENCE What Goes Up … Atlanta’s Retail Overbuilding Comes to a Head as Demand Stalls By Jennifer Duell fter several years of explosive growth, Atlanta’s economy is mirroring that of the country,trudging through job losses and decreased retail spending.Thus, demand for space is weak and a number of national and local retailers are shuttering stores. Though Atlanta retail property owners and developers are loathe to admit it, the market is overbuilt, and its prospects for low vacancies and rental growth are not all that great, considering that another 5.8 million square feet of retail space is under development.In fact, Reis Inc.expects Atlanta’s retail market to underperform the nation over the next five years. The Atlanta metropolitan area continued to add new residents at a rate of nearly 2 percent last year,but it lost almost 90,000 jobs, catapulting the unemployment rate by A 3.1 percent to 7.6 percent from December 2007 to December 2008, according to the Georgia Department of Labor. Meanwhile, local reports predict that sales tax revenues for the city’s home of Fulton County, Ga., will sink 9 percent this year. Across the city, housing-related outlets like Crate and Barrel, Pier 1 Imports and The Home Depot’s EXPO Design Center, along with high-profile bankrupt retailers Circuit City Stores Inc. and Linens ’n Things Inc., are closing stores. Apparel shops are struggling, as well: Pacific Sunwear of California Inc., Goody’s Family Clothing, Ann Taylor Retail Inc. and Lane Bryant have all announced plans to shutter stores throughout Atlanta. “The thing that worries me the most is the level of exposure Atlanta has to the big boxes that are going Vacancy Gap (retail inventory for the Atlanta metropolitan area) 6 5 Millions of Square Feet 4 3 1 0 -1 -2 2007 H 2 8.7% 11.0% H 13.1% H H 14.4% 2008 Absorption Source: Reis Inc. 2009 Forecast Deliveries H 2010 Forecast Vacancy out of business,” said Lyle Darnall, vice president of development for Edens & Avant’s Southeast division. “There are an awful lot of power centers here with those tenants, and there aren’t a lot of retailers www.cpnonline.com • March 2009 • Commercial Property News 11 http://www.flaglerdev.com http://www.flaglerdev.com http://www.cpnonline.com
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