ATLANTA—Atlanta has made one of the strongest recoveries in the Southeast. But there is still one struggle. So says Auction.com chief economist Peter Muoio.

In part one of our exclusive interview, Muoio talked about why we should watch post-housing bust markets. In the second installment, he talks about struggling Southeast cities and what he expects in the quarters ahead.

GlobeSt.com: What Southeast cities are still struggling and why?

Muoio: Memphis is really the standout. It's economy is struggling and it has poor demographics and this is holding back each of its commercial real estate segments, except for multifamily, which is healthy and has benefitted like many other markets across the country form the shift from owning to rental.  

GlobeSt.com: Are you seeing any "negative" trends or major challenges in the Southeast?

Muoio: Individual markets have issues but no cross-regional negatives. Atlanta will struggle with its own previous success in terms of traffic. 

Memphis is not very well diversified. DC will continue to struggle from federal spending constraint, and the population boom it has enjoyed appears to be cooling as the local economy cools and other parts of the economy heat up, shifting migration flows. 

GlobeSt.com: How do you expect commercial real estate climates in the Southeast market to change in the quarters ahead?

Muoio: Generally better! This region benefits from low oil and that will boost growth and commercial real estate demand. Improved population inflows will also boost growth.

While some segments in some markets, particularly apartment, are seeing increased development, those are mostly high demand, low vacancy markets where new supply does not look out of whack. Otherwise supply does not look threatening, enabling improving demand to pull vacancies down in coming quarters and years.