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ATLANTA-The area’s 165-million-sf retail market remains robust as even more new product is added to the lineup, according to a new market analysis by Atlanta-based Bullock Mannelly Partners Inc.

A trend surfacing here has developers and users searching for prime in-town sites to benefit from the dense population and escalating household incomes, notes Erik Pawloski, research director at Bullock Mannelly. “After being out of favor with investors through the greater part of the 1990s, the retail sector continues to transition into the most sought-after property type in 2004,” says Pawloski.

Vacancies in the CBD and Midtown are down to 6.4% from 7.4% a year ago. Overall vacancies in the third quarter stood at 8.3%, fractionally higher than 8.2% in the second period. “Part of this increase can be attributed to the more than 14 million sf of space that has been delivered over the past three years,” the researcher says.

Additionally, after absorption levels averaged around four million sf for the past two years, only 1.3 million feet has been absorbed year-to-date. Of all submarkets, Buckhead continues to register the lowest vacancy rate of 4% while the South Metro submarket recorded the highest vacancy rate of 13.6%.

In the supermarket category, Kroger continues as the local leader in market share; Publix Supermarkets of Lakeland, FL is second. “The slowing economy of the past few years did little to impede the expansion of top grocers in metro Atlanta,” say Pawloski. Kroger added two stores this year; Publix, 14.

“Grocers continue to open traditional strip-style stores in the outer suburbs,” says the researcher. “However, the new trend is non-traditional stores within the Interstate 285 Perimeter.” Publix expects to open a new smaller urban-market concept in Midtown, while Wal-Mart anticipates opening four urban stores.

In the sales department, retail investment has remained active in Atlanta properties. Total sales volume over the past four quarters was $1.3 billion versus $1.2 billion in 2003. “While pension funds and wealthy individual buyers actively pursue retail deals, REITs continue to show the greatest interest,” says Pawloski.

Inland Real Estate of Oak Brook, IL is the area’s most aggressive buyer. Inland closed four deals this year, including the first-phase purchase of the newly built, 191,475-sf Johns Creek Village from local developer Hendon Properties for $42.5 million or $222 per sf. It was the largest deal of the year based on sales price.

The largest recorded sales transaction, based on sf-price, was the $11.4-million sale of the 28,452-sf Thomasville Furniture showroom in Buford, GA. The property went for $401 per sf.

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