"As the local economy gains steam this year, we expect the market's improvement to intensify in 2005, leading to accelerating retail sales and a heightened demand for space, which bodes well for owners and investors," says John M. Leonard, vice president and regional manager of Marcus & Millichap's Atlanta office. "The 2004 investment outlook remains robust."

He points to 2003 total sales volume of $1 billion-plus, 60% higher than the dollar volume recorded in 2002. Multi-tenant sales jumped in 2003 with the media price rising 12% to $112 per sf. "Strong buyer demand in the single-tenant, net-lease sector will keep cap rates in the low-7% range," Leonard predicts.

He adds, "While the northern portion of the metro area will remain a favorite among investors, the affordability and higher returns found in the south will continue to prompt additional investment in that area."

The average asking rent is project to increase by 2.5% this year to $16.62 per sf. The overall vacancy rate is expected to ease 20 basis points in 2004 to 9.3%. "Rent growth will likely by greatest in Midtown, where asking rents will range from $25 to $30 per sf, similar to rents commanded by high-end properties in Buckhead," Leonard says.

Investors are particularly impressed with job growth projections in the metro region which are expected to grow to 2% this year. "The growing number of job opportunities will result in net in-migration of more than 50,000 people," the Marcus & Millichap executive says. Gross metro product is expected to expand by 4.8%, "in line with the nation's favorable GDP forecast of 4% to 5%," Leonard says.

Atlanta was ranked 17th nationally in Marcus & Millichap's National Retail Research Report for 2004. It was ranked as the 21st best retail market in 2003. The rankings are based on a series of 12-month forward-looking supply and demand indicators. Orange County, CA edged out Washington, DC for the top spot this year.