Atlanta was ranked highest among "markets to avoid" through mid-2002, along with Dallas, San Francisco, Houston and San Jose.
"Areas to avoid have had significant increases in supply and not enough demand to absorb the supply in the pipeline," says the ULI study. "These areas are already seeing rising vacancy."
If that's not enough bad news, there's more. The pace of economic activity in the Federal Reserve district that covers Atlanta and other parts of the Southeast remains "subdued," according to the Fed's latest report.
Commercial real estate markets in the area have softened, except in Florida, and manufacturing has contracted. Even single-family real estate markets were below last year's levels, the report says.
The Federal Reserve's "beige book" says that's not unusual anywhere in the country, however. "Almost all districts report a slow pace of economic activity," the report says.
The book compiles anecdotal reports on economic development in the regional Fed bank districts. It's used by members of the Fed's policy-setting Open Market Committee in their interest-rate deliberations, a group that has set its next meeting for May 15.
Whatever that group does, the ULI's mid-year Real Estate Forecast says real estate over the next year will not see the best of times, but not the worst, either.
The forecast said real estate would remain healthier and more stable than most other industries. A second positive factor is that real estate "looks like a defensive investment in a bear stock market and should not suffer from a capital crunch as it did during the most recent economic downturn," the report says.
Multi-family rentals in the middle-income, high-income and low-income categories scored highest in terms of prospects for attractive rent increases. They were followed by downtown office buildings, warehouse industrial properties and upscale/luxury hotels.
Power centers, regional malls and mid-price/economy hotels were rated the least potential for attractive rent increases.
The ULI forecast calls for two to three quarters of zero to 1.5% growth in the economy followed by a gradual increase, resulting in an overall economic growth rate of about 2% for mid 2001 through mid 2002.
The Urban Land Institute is a nonprofit education and research institute supported by members. Its mission is to provide leadership in the use of land to enhance the total environment. The group, established in 1936, has 17,000 members.
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David Wilkening
David Wilkening began his long journalism career as a police reporter for Chicago-area newspapers. He became a writer-editor for major newspapers in Chicago, Washington, Detroit and Florida. He has been a business editor, political editor and travel editor for newspapers and magazines. He tried for a while to be a political operative but did better as an adjunct college professor teaching English and journalism. He is the author of several books, both ghost-written and under his own name. He is also a widely published freelance writer who currently lives in Orlando.
