Hot-lanta Commercial Real Estate Is Only Getting Hotter
As the nation reopens, commercial real estate is one sector that is ready for a resurgence, and opportunities are available across the country. Atlanta is one of seven states that is poised to present the most opportunities for investment. A-Town is an attractive city for many Americans looking to relocate, whether that be for work, affordability, or a change of scenery. The city’s growth has been steady, which tells investors this market is sustainable and stable, signaling that their investments here could provide returns as sweet as a Georgia peach.
2021’s Commercial Real Estate Outlook
Though retail, hotels, and office space prices declined 5-10% over the last year, industrial sectors, data/research centers (specifically related to life science), and rental properties have all increased in value. Demand has transitioned to these areas as novel remote work opportunities and increased rates of travel and tourism influence the current commercial real estate market.
According to the National Association of REALTORS®, properties or portfolios of at least $2.5 million fell 28% year-over-year in the first quarter of 2021, with declines across all commercial property types except for hotels. Across the country, commercial real estate is scraping by to make a comeback, as reopening unfolds slowly but surely. Companies reported a gross dollar volume of $78.7 billion in 2020, which was down ~8% from $85.8 billion in 2019. Yet, Atlanta remains a top market for both office and industrial spaces. According to the Federal Reserve Bank of Atlanta, Atlanta has upward trending momentum in office, industrial, and retail spaces.
"The top commercial real estate markets that are expected to outperform the rest of the nation are generally affordable and able to draw new residents with a greater flexibility to work from home," said NAR's Chief Economist Lawrence Yun.
What Makes Atlanta So Appealing?
Atlanta has been outperforming other major U.S. cities in terms of its recovery post-pandemic with growth in population, jobs added, and local economic stability. The city’s population has been growing steadily for years, and Atlanta’s geographical location has helped the city’s standing as a major distribution hub for the country. Through heavily trafficked airports and trucking ports, quality jobs have been created, affording a motivated workforce even more opportunities. In the Atlanta Metro Area, there have been over 250,000 jobs added with leisure and hospitality boasting the largest job gain (+79,800 jobs), a 48% increase year over year.
Large corporations recognize this too, and many want to move their operations to this well-positioned hub as a result. Recent notable companies moving to Atlanta include Kellogg’s, Google, Microsoft, and Norfolk Southern.
This consistent job growth lends itself well to a growing rental market — which is great news for commercial real estate agents. After all, residential rentals with five or more units are considered commercial properties, and CBRE expects rent to increase by 4% in Atlanta over the next few years, a greater projected increase than any other city in the U.S. Between the history, wealth of jobs, and the cuisine, it should be no surprise that people are flocking to the Peach State. As an added sweet incentive, Atlanta’s city design focuses on foot traffic over cars. This mixed-use layout has ushered in waves of millennial renters excited about living in neighborhoods full of culture like Decatur and Alpharetta without breaking the bank and enduring long commutes.
Though 2020 left many across the country feeling hopeless and scared, there’s plenty to celebrate in Georgia this year. Our commercial real estate market is full of promise, and our post-pandemic recovery points to a bright, peachy keen future.