"The retail sector across the country is going to slow, in part, because consumer confidence is falling off, but we don't see Atlanta as worse off than any other markets," William Hughes, senior vice president, tells Globest.com. Vacancies should increase only 0.1% to 8.5%. Retail rent growth should continue to slow in 2002, dropping to 1.5% from 2.2% last year.

Metro Atlanta will see another three million sf of regional mall space this year. Both Discover Mills in Gwinnett County and the Mall at Stonecrest in DeKalb County are opening up.

The major impact of any downturn, Hughes says, will fall on single-tenant retail and big-box stores as well as unanchored centers. Large regional malls and centers providing basic products such as food should continue to do well despite the downturn.

"People still need food and they still need clothing," Hughes says. "The prime mall creates it's own energy and they're going to do just fine."

He predicts adequate capital will continue to be available for most types of retail, with the exception of non-credit, single-tenant retail properties. "Lenders are reporting no appetite in the current market" for that product, Hughes says.

Atlanta's growth from 1995 to 2000 brought in 427,000 new residents. Job growth was also strong, 3.1% for the year 2000, but that is now slowing, which, in turn, is impacting retail, the study says.

There was about 4.7 million sf of retail space completed in 2000. Startups totaled 8.6 million sf, but that number is expected to decline this year to 5.6 million sf or 35% less than last year.

"The slowdown in construction is expected to allow time for the absorption of new product," Hughes says.

The study notes single-tenant investment opportunities are becoming more popular among conservative and mature investors, "many of whom have owned multifamily properties in the past but have grown tired of working to keep them leased and maintained."

One other factor that could soften any slowdown is action by the Federal Reserve. "Almost anything the Fed does in a positive manner to the equity markets will improve consumer confidence and have a positive impact on retail sales," Hughes says.

Instant Insights /

Three Mil SF of New Mall Product Surfacing

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