Category: Industrial

Leasing holding up ‘remarkably well’ but market changes could curb unprecedented momentum.

Ackerman & Co.’s Braselton Crossroads project

An uncertain economy combined with an increase in project deliveries hasn’t done much to slow down the industrial sector. The Atlanta industrial market – the fifth largest market in the country with an inventory of 794 million SF – continues to chug along, with strong demand keeping vacancy levels at near-historic lows.

Despite a significant uptick in construction activity in metro Atlanta, the vacancy rate registered an impressively low 3.3% in November, according to CoStar, near the record low of 3.1% set in the Atlanta market in late 2021. The construction pipeline has been growing to meet rising demand, with 40,548,868 SF of industrial space under construction in the third quarter of 2022 compared to 30,487,470 SF at the same time last year.

E-commerce, 3PLs, cold storage, retail, biomedical, construction and automotive are among the industries boosting demand and contributing to low vacancy levels.

However, troubling economic signs – including two quarters of negative economic growth in 1Q and 2Q 2022 – and the increase in project deliveries are among the trends that could limit leasing velocity.

“U.S industrial leasing has held up remarkably well in recent months, even as rising inflation and interest rates have begun to wear on the broader economy,” CoStar reports in its 3Q 2022 National Industrial Report. However, the report added, “Risks that industrial leasing will moderate back down toward more normal levels in 2023 are accumulating. In addition, the report continues, “Leading indicators of economic growth… have been flashing warning signs since the Federal Reserve began raising interest rates in early 2022.”

Rising construction activity in the sector is likely to produce a slight increase in vacancies. “Barring a severe shock to the U.S. economy and industrial leasing, the volume of space under construction looks set to drive a modest increase in vacancy, but not to dramatically shift the market in tenants’ favor,” CoStar reports.

Ackerman & Co.’s current developments are leasing fast
Ackerman & Co. is among the developers of industrial space that heightened investment in new development in response to surging demand, and the firm anticipates continued steady demand for distribution space.

The firm’s current industrial projects include three distribution facilities at Braselton Crossroads in Atlanta’s I-85 North corridor totaling 460,000 SF, and a 168,000 SF distribution facility at Rockdale Technology Center in Atlanta’s I-20 East corridor.

Ackerman has also expanded into Texas, where it is developing Doerr Lane Logistics Center, a 307,000 SF Class A distribution center located in the fast-growing market between San Antonio and Austin.

“We have leased 260,000 SF before completion of the buildings at Braselton. Activity is very strong,” said Brett Buckner, Senior Vice President of Ackerman & Co.’s Industrial Services Group.

He and Chris Miller, Vice President of Industrial Leasing at Ackerman, have succeeded in pre-leasing all of 160,000 SF Building 200 at Braselton Crossroads and have pre-leased two spaces totaling 100,000 SF in 150,000 SF Building 300.

At Doerr Lane, Ackerman is in the process of negotiating leases that could soon fill up the 307,000 SF facility.

“We’re optimistic that demand will remain strong from a wide mix of users, particularly for Class A properties with high ceiling heights and strong Interstate access like the facilities Ackerman is currently developing,” Chris Miller said.

The economic news has been a bit gloomy in recent months.

Inflation has reached a 40-year high. The Federal Reserve raised interest rates twice in a two-month span to fight inflation. Consumer confidence is shaky.

At this time of economic uncertainty, it was a perfect opportunity for the NAIOP Georgia May Breakfast panel topic focusing on trends in commercial real estate investment.

Moderator Lance Patterson of Patterson Real Estate Advisory Group, started off the panel by quoting some famous opening lines from literature: “It was the best of times, it was the worst of times… It was the spring of hope, it was the winter of despair…”

Those lines from A Tale of Two Cities, he said, are a reminder that our current circumstances aren’t uniquely challenging. “We always think these times are hard, and no doubt they are, but we also think there are some good opportunities. So we’re going to try to be positive as well as realistic about what’s going on,” Patterson said.

He was joined in a wide-ranging and lively discussion on the current state of CRE investment by Kris Miller, President of Ackerman & Co., Tuba Malinowski, COO of Stockbridge, and Travis Johnson, Investment Director of Principal.

The panelists agreed that it’s important not to get carried away by the doom and gloom of today’s headlines.

“Ultimately, nothing’s as good as we think it is and nothing’s as bad as we think it is,” said Tuba Malinowski.

Kris Miller emphasized that, as a real estate investor, you shouldn’t become too distracted by economic and capital market considerations.

“Run the real estate as real estate. Make real estate decisions and the capital market issues will sort themselves out. Overall, you will be much more profitable in the long run doing what’s right for the real estate and you’ll also have way less angst,” he said.

Office investment opportunities
Buoyed in part by the boom of e-commerce, demand for industrial space has reached historic highs and made the sector a favorite among investors. While the office sector faces significant challenges, including an abundance of sublease availabilities, there is good reason for investors to keep office investment on their radar.

“The positive thing to me about the office market is that many of us decided we like going to work. We like consuming the product of office space and we don’t like working in our basement. We don’t like not seeing other people,” Miller said.

Opinions from some experts that the work-from-home model would become commonplace in a post-COVID world were likely overstated. Strong leasing volumes nationwide over the past three quarters demonstrate that companies are definitely returning to the office.

“They [office users] are looking for office space that is memorable,” Miller said. “You have to offer something that’s better than other office product, and that can be a lot of different things.”

Malinowski said Stockbridge continues to pursue office investment, but added her firm tends to be more selective in its office acquisitions than its industrial investments.

“It’s a matter of looking on an asset-by-asset basis, looking at the historical vacancy, and is it an asset that people want to come to, whether because of the people who are there or the amenities around it or the general surrounding area. I think all of our decisions about office properties are really on an asset-by-asset basis, whereas for industrial we can make more of a broad market decision,” she said.

Travis Johnson of Principal noted his firm is taking precautions by factoring in economic conditions when evaluating assets.

“We do a simulation of a moderate recession where we take each asset and plug it in… and see how that property performs under that type of stress,” he said.

While Kris Miller said his firm is keeping an eye on economic and capital market conditions, he added: “Our view is that inflation and interest rates are going to bump up, but it shouldn’t really change which properties you like and which you don’t.”

In other words, keep your focus on the fundamentals of real estate in the best of times and worst of times.

Demand for industrial space has reached record levels, and developers are moving fast to keep up with demand.

In a recent report, “The Race for Industrial Space,” JLL notes that “given the heightened demand experienced in 2020 and 2021 and the velocity at which it is going forward, we are starting to see the first wave of a supply crunch.”

Ackerman & Co. is one of those developers jumping in to meet the need for Class A industrial space, and the firm is making sure to offer design features that are highly sought after by today’s modern distribution operations.

“Companies in industries such as e-commerce, 3PL and logistics and distribution companies are leading the way with… utilization of modern facilities to attract labor as well as move goods in and out,” the JLL report states. Particular features today’s distributors are seeking include high ceiling heights, plenty of auto and truck parking, and convenient access to major interstate corridors.

Providing the most efficient space
New projects Ackerman & Co. is currently developing new projects from Georgia to Texas that offer the key advantages today’s distributors seek.

In metro Atlanta in the I-85 North corridor, Ackerman & Co. is developing Braselton Crossroads, a Class A master-planned park that will feature three distribution buildings totaling 470,000 square feet – two 160,000-square-foot buildings and a 150,00-square-foot building. Now under construction, the facilities will feature 30 to 32 feet clear heights and rear-road configurations. A crucial benefit is the direct access to Interstate 85 less one-half mile from the project, and the buildings will offer abundant parking.

Also in the Atlanta market in the I-20 East distribution corridor, Ackerman & Co. is developing facilities of 168,480-square feet and 50,000 square feet. The site, part of the Ackerman-developed Rockdale Technology Center development in Conyers, GA, offers high visibility along the Interstate and convenient access to the nearby full-diamond interchange, only one mile away. It also will feature the crucial high ceilings (30 feet).

The features that Ackerman & Co. is incorporating at its projects are important for e-commerce, logistics and other industrial space users looking for space with the most efficient designs and strategic locations to reach customers quicker than ever before.

As Ackerman continues to heighten its presence in strategic logistics markets, it is expanding in Texas. The firm has begun construction on Doerr Lane Logistics Center, a 307,000-square-foot, Class A distribution center positioned between San Antonio and Austin in an area known as the Texas Triangle, the fastest-growing region in Texas.

The state-of-the-art facility will feature 32-foot clear heights, extensive auto and trailer parking and quick access to I-35, Loop 1604 and I-10.

In another Texas project in the same submarket, Ackerman is planning more than 500,000-square-feet of distribution space with 32-foot clear heights at a site providing great access to the I-35 access road, only ½ mile away.

“We’re seeing strong interest for our available space from users ranging from retailers, food distributors and medical supply companies to e-commerce operations and manufacturers,” said Brett Buckner, Senior Vice President of Ackerman & Co.’s Industrial Services Group, who is leading the leasing efforts at Ackerman’s Georgia industrial properties along with Vice President Chris Miller.

Industrial market outlook remains strong
As Ackerman & Co. moves forward with these projects – with more planned developments coming up in Texas, Alabama and its core market of metro Atlanta – developers nationwide are also ramping up their development pipelines.

There is certainly good reason to pursue development given the ongoing robust demand. Atlanta set a record for annual absorption in 2021, registering more than 39 million square feet of positive net absorption for the year, according to CoStar. Nationwide, vacancy rates have hit a record low of 4.0 percent.

Although there is a significant uptick in the construction pipeline – to a record of 816 million square feet nationwide – the additional inventory is not expected to tilt the market unfavorably, CoStar states. However, the rise in inflation has the potential to “erode consumers’ purchasing power and dent the current boom in consumer goods spending and industrial leasing.”

Still, the outlook for industrial demand remains positive for developers.

“National rents are poised to continue growing well ahead of inflation over the next several months given the current near-record low level of vacancy,” CoStar reports.

Developers say they are committed to incorporating affordable options and community-focused services to offset potential gentrification.

Adaptive reuse projects are booming across metro Atlanta.

The projects range from repurposing old warehouse properties into mixed-use developments to converting factory buildings into loft-office space and restoring small retail spaces housed in historic buildings, among other examples.

Although adaptive reuse development was largely concentrated in intown Atlanta when the trend took off in the 1990s – with King Plow Arts Center in West Midtown one of the prominent examples – it is now increasingly common in the suburbs as well.

In a recent Bisnow adaptive reuse event, representatives of several Atlanta commercial real estate companies discussed notable adaptive reuse projects – both completed and under development – and the challenges of bringing these projects to fruition.

Developers are increasingly being called upon to address gentrification. Projects can face opposition over concerns that they will price out residents and businesses who were part of neighborhoods before developers arrived on the scene.

No stranger to those concerns are developers such as Jamestown, credited with energizing the adaptive reuse movement in Atlanta with its hugely successful Ponce City Market redevelopment and Newport RE, whose Hotel Row project is part of its larger vision of revitalizing the once-bustling commercial districts on Mitchell and Broad Streets in South Downtown.

“About 20 percent of the square footage we purchased was occupied, probably half of those to tenants that no one in the neighborhood wanted,” said April Stammel, Senior Vice President at Newport. “I think it’s about telling the right story and letting people know what the real impact is.”

The story Newport is emphasizing to the community is how their development will revitalize a historic but long-neglected part of the city’s urban core.

“This story is about the opportunity. We’re turning the lights back on. We’re bringing life back to these buildings,” she said.

Creating Affordability
Michael Phillips, President of Jamestown, said his company is committed to integrating community-focused features into its projects such as workforce housing and more affordable business rates.

“You can’t whitewash the fact that we’re changing the demographics of neighborhoods,” Phillips said. “We all have to be committed to creating opportunities and economic benefits for everyone. We’re just starting… but we all have to find our ways to do it.”

Tapping into local, state and federal incentives can provide funding that developers can use to pass along savings to prospective residents and businesses. Newport received $8 million in Tax Allocation District (TAD) funding for their South Downtown project.

“What that’s going to give us the ability to do is offer affordability in both the residential and commercial components,” said April Stammel. “When you think about what that means in the diversity of tenancy, not only diversity of residents, it’s incredible. We can now offer certain spaces for tenants like arts groups who can’t pay market rent or new restauranteurs who can’t afford market rent.”

Arun Nijhawan, Managing Principal of Lucror Resources – which renovated and repositioned Downtown Atlanta’s famous Flatiron Building – said there are also plenty of examples of projects receiving community support. Such was the case with the company’s $80-million Waldo’s Old Fourth Ward, a mixed-use development featuring a hotel, office space, retail and townhomes.

“To the surprise of our team, we got zero resistance. The question was, ‘when are you going to start?’” he said, noting that the project’s location several blocks away from the BeltLine in an area where “you had a certain amount of urban blight” contributed to the support from the community.

From the West End to Northlake
Ackerman & Co. is also active in adaptive reuse development. With partner MDH Partners, Ackerman is investing $85 million in its Lee + White project, an adaptive reuse redevelopment of the former “Warehouse Row” buildings in the historic West End neighborhood of Atlanta. Already home to popular breweries, a whiskey tasting room, a rock climbing gym, among other retailers and businesses, the partners are in the process of adding loft office space, a food hall, unique retail and a Great Lawn fronting the BeltLine.

“Our goal in continuing the redevelopment of Lee + White is to diversify this project beyond its popularity as an entertainment destination to serve the practical and daily needs of the community, as well as offer affordable business opportunities. New businesses and services coming to Lee + White include a family dental practice and Beya Salon Studios, which will open its newest flagship location at Lee + White, giving stylists and other salon professionals the opportunity to grow their businesses,” said Evan Ziegler, Senior Vice President of Investments for Ackerman.

“Lee + White’s container pop-up village will also open this year, providing small businesses high-visibility locations to sell their products at shorter-term lease commitments than traditional retail,” he added.

In addition, the project’s Great Lawn will be a gathering spot for the community, hosting a variety of events throughout the year.

Another adaptive reuse project Ackerman & Co. is involved in is Northlake, the transformation of the former mall northeast of Downtown Atlanta into a mixed-use project featuring offices, retail and restaurants. Ackerman Retail’s Kelly Wilson and Suzanne Shank are currently leading leasing efforts for the project’s restaurants and food stall spaces.

“With its 300,000 square feet of new medical office and office space, this redevelopment has attracted new offices for Emory Healthcare and CDC Credit Union that will bring 1,800-plus employees to the property,” said Suzanne. “For the restaurant spaces, we envision a mix of fast-casual restaurants, full-service eateries, chef-driven concepts, coffee shops and brewpubs. In revitalizing this property, this redevelopment is bringing new businesses and new retail and restaurant offerings that will benefit the surrounding community.”

Braselton Crossroads industrial park provides direct access to I-85, a corridor connecting Atlanta submarkets & Southeast economic hubs.

Some of the highest performing industrial submarkets in metro Atlanta straddle Interstate 85, one of the busiest transportation corridors in the U.S. The ability to conveniently access fast-growing consumer markets in Atlanta and beyond has made the I-85 corridor an increasingly important location for distribution and logistics.

Ackerman & Co. has long recognized the strategic advantages of this corridor and has extensive experience developing and acquiring distribution centers along I-85 in Northeast Atlanta. The company constructed a 1 MSF speculative distribution center leased to and later purchased by Uline Inc., one of the country’s top business supply companies. Located in Braselton, Ga., the facility has become the consolidated hub for the company’s Southeast distribution operations and benefits from convenient access to two nearby I-85 interchanges.

As Ackerman & Co. strives to meet the growing demand for industrial space along the corridor, the company continues to pursue development of new Class A facilities.

Ackerman & Co.’s latest project in this area is Braselton Crossroads, positioned on a 65-acre site providing direct access to I-85. Ackerman plans to begin construction later this year on three facilities totaling nearly 500,000 SF: 161,000-SF Building 200, 150,000 SF Building 300 and 150,000-SF Building 400.

The Class A facilities will feature clear heights up to 32 feet, six-inch ProSlab concrete floors, white TPO roofing, abundant auto parking and truck loading bays.

“The I-85 corridor is a much sought-after location for retailers, distributors and manufacturers thanks to its strong population and economic growth,” said Brett Buckner, Senior Vice President in Ackerman & Co.’s Industrial Services Group. He’s teaming with VP Chris Miller to lease the space. “Braselton Crossroads provides a strategic location and will offer the most modern design features for today’s high-efficiency distribution operations.”

The neighboring Duluth/Suwanee/Buford industrial submarket has a lengthy stretch of I-85 access. Ackerman’s new project is located in the far northwest corner of the South Bartow submarket in the only section offering direct I-85 access, making it a highly desirable distribution location.

Demand for industrial space along I-85 in metro Atlanta is only expected to rise in the future. In fact, the portion of the I-85 corridor stretching from Atlanta to the North Carolina-Virginia border is increasingly recognized as an economic powerhouse.

“With strong demographic growth, locational and infrastructure advantages and pro-growth government entities, the corridor is primed to emerge as a ‘megaregion’ over the next several years,” according to a recent CoStar analysis. This stretch of I-85 already has a nickname – “Charlanta” for its two biggest cities, Atlanta and Charlotte. I-95.

Economic activity in Georgia, North Carolina and South Carolina is largely concentrated along I-85, with the 33 counties in this corridor accounting for $543.5 billion in gross regional product (GRP), or 43% of the GRP in the three states, according to CoStar.

Along I-85 and across metro Atlanta, demand is booming for well-located distribution, e-commerce and manufacturing space. The 29.1 million square feet of space absorbed in the past year in Atlanta is second- highest in the nation, behind only Dallas-Fort Worth.

The Class A facilities at Braselton Crossroads are expected to be completed by the end of 2022. In addition to leasing space at Braselton Crossroads, Brett Buckner and Chris Miller are also leading leasing efforts at two sites Ackerman & Co. has retained at the Class A Rockdale Technology Center in the I-20 East industrial submarket. Build-to-suit and pre-lease opportunities are now available.

Seeking industrial space? Contact Brett at bbuckner@ackermanco.net or Chris at cmiller@ackermanco.net

There’s no doubt that the COVID-19 crisis created unexpected challenges for the commercial real estate industry in 2020.

Despite the uncertain environment, there were many bright spots at Ackerman & Co. throughout the year, thanks to the hard work of our experienced and diverse team of brokers and professional advisors.

From industrial and office leases to building and land sales to deals for restaurant and retail space, our brokers completed a steady flow of transactions.

Some of our major transactions during the year included a 710,962-square-foot lease of an e-commerce distribution facility in Florida; a 325,000-square-foot build-to-suit project at Ackerman’s Rockdale Technology Center for a regional distribution center; and a 75,205-square-foot lease with Goodwill of North Georgia for their new distribution and donation center.

Our Ackerman Retail brokers had a successful year completing a number of high-profile restaurant and retail leases. These included lease signings that will bring gourmet food market Savi Provisions and workout studio Twisted Cycle to Crabapple Market in Milton, Ga., this spring; a 17,850-square-foot lease for a new Shoe Gallery store in Cumming, Ga.; lease signings that added Henri’s Bakery & Café, Siete Tacos + Tequila, and The Original Hot Dog Factory to Marietta Square Market; and a lease for a new location of the upscale brunch spot Gocha’s Breakfast Bar in Fayetteville, Ga.

Also, our Investment Sales team was busy in 2020, with transactions that included a 30,000 square foot medical office building in Newnan, Ga., where Ackerman Medical also completed lease extensions to maintain 100 percent occupancy.

These represent just a sampling of our transactions.

And Ackerman & Co. and its partner MDH Partners are moving forward with the $85-million redevelopment and expansion of the Lee + White mixed-use project in Atlanta’s West End. The next phase of development at the popular entertainment destination will include loft offices, a food hall, public spaces, additional retail options and multifamily units.

Congratulations to our brokers of the year
Continuing an annual tradition, Ackerman & Co. also recognized the achievements of our brokers with our Broker of the Year and Young Broker of the Year awards.

The leader of our Land Group John Speros enjoyed another banner year, earning him the Broker of the Year honor – for the second year in a row. The dollar value of his deals exceeded $100 million. John works closely with his colleagues Kyle Gable and JT Speros in the Land Group.

“John really didn’t skip a beat this past year in his deal-making, which is a testament to his experience and the proven process he and his team have developed to complete land sales on behalf of their clients,” said Kris Miller.

In 2020, John’s biggest deal was the sale of 14.8 acres at Sandy Plains Marketplace for $42 million. Another major deal, completed with David Branch of SSG Realty partners, was the sale of a 4.6-acre parcel for $15.8 million that will become Porter on Peachtree, a mixed-use project featuring 291 multifamily units and 17,600 square feet of ground-level retail.

Other significant transactions for John included the sale of 67.9 acres for $5.8 million for a Meritage Homes development of 152 single-family homes and 20.37 acres for $5.6 million for the next phase of the Exchange at Gwinnett mixed-use project.

In addition to recognizing the top producer, Ackerman is also excited to announce that our Young Broker of the Year for 2020 is Will Goff.

Will’s main focus is brokering raw land and redevelopment sites, along with providing site selection services. Since joining Ackerman in 2017, Will has been involved in brokering land transactions for a wide range of uses, including residential, retail, mixed-use and industrial projects. His transactions during that time total nearly $40 million.

“Will is one of our hardest-working brokers. He can often be seen in his office at 7:30 in the morning to get started on his work, and he always has a positive attitude,” said F. Keene Miller. “In addition to his commitment to helping his clients achieve their business goals, Will is always trying to expand his knowledge. These qualities will serve him well as he grows his career in commercial real estate.”

A large portion of Will’s business is currently focused on representing developers to identify sites for multifamily and industrial projects. Will has carved out a niche in Low-Income Housing Tax Credit (LIHTC) and outside storage space, with current projects spanning across the Sunbelt from Atlanta to Houston and Charlotte to Tampa.

Will is pursuing a Master of Real Estate Development at Georgia Tech and is a CCIM candidate, having completed all course work and portfolio requirements for the designation. He plans to take the final qualifying exam at the next availability.

Read more about our brokerage group here: https://www.ackermanco.com/real-estate-services/overview/

Facebook, Lidl and other leading companies commit to opening large distribution hubs in the submarket

When Ackerman & Co. moved forward with plans for Rockdale Technology Center, a 1-million-square-foot master-planned industrial park in Conyers, Ga., the site’s strategic location in the Rockdale/Newton County submarket of Atlanta was a big selling point.

Most importantly, the property offers convenient access to I-20, a major east-west highway that connects to Atlanta’s dense population centers to the west and to the ports of Savannah and Charleston to the east.

To date, Ackerman & Co. has developed two Class A distribution facilities on the 92-acre site of 135,000 square feet and 185,000 square feet. Later this quarter, Ackerman will begin development on its largest project so far on the site – a 325,000-square-foot facility that will serve a prominent manufacturing company.

“As land availability becomes more limited in industrial submarkets close-in to Atlanta, Rockdale County will continue attracting the interest of companies seeking modern, efficient distribution space,” said Brett Buckner, Senior Vice President of Ackerman & Co.’s Industrial Services group. “At Rockdale Technology Center, the ability for distributors to gain quick access to I-20 as well as connect to a CSX rail line are strategic advantages.”

Some big-name consumer companies are choosing to locate major distribution operations in the submarket for the same reasons.

Construction is expected to be completed this summer in Social Circle on a 970,000-square-foot flex data center for social media giant Facebook that will create an estimated 100 jobs, and Germany-based grocer Lidl recently announced plans for a 925,000-square-foot distribution center in Covington that will create 270 jobs and serve as its regional headquarters.

These major projects indicate that Rockdale/Newton County is becoming an increasingly prominent distribution hub for metro Atlanta. There is currently 1.7 million square feet under construction in the submarket, significantly higher than typical construction levels in a submarket that boasts one of the lowest vacancy rates in metro Atlanta at 3.7 percent. That compares to a market-wide vacancy rate of 7.2 percent as of 2Q 2020.

The Rockdale/Newton County submarket is part of Atlanta’s Snapfinger/I-20 East market, which totals 49,637,758-square-feet of industrial space. As of 2Q 2020, the market had the lowest vacancy rate in metro Atlanta at 3.2% and total year-to-date absorption of 473,594 square feet– one of the highest absorption rates in the market.

Although the COVID-19 pandemic initially resulted in a slowdown in leasing activity in the Atlanta industrial market at the start of the second quarter, leasing volumes have surged in recent weeks, and CoStar predicts vacancies are likely to remain below Atlanta’s historic average.

During Atlanta’s post-recession economic boom, its industrial market posted some of the strongest numbers in the nation, registering positive absorption for nearly nine years in a row.

Along with a thriving economy, Atlanta’s low business costs, extensive transportation infrastructure, and one-day access to the fast-growing Southeast ports seemed to have the industrial sector positioned to continue the positive momentum.

Of course, the ongoing coronavirus emergency has changed the landscape for the industrial sector, along with every other property type. But there are signs that the impact on the industrial real estate may be less severe.

A strong foundation
As one of the nation’s most important distribution hubs, Atlanta has continued to attract major e-commerce operations along with a full range of consumer goods companies and logistics providers.

The Atlanta market’s major lease deals in the past six months include Amazon’s 2.8 million-square-foot distribution center in Stone Mountain and its 1 million-square-foot lease in Newnan, Ga.

Other big deals and projects include Goodyear Tires’ 1.5-million-square-foot build-to-suit project in Newnan, Ga. Online personal styling service Stitch Fix leased 925,800 square feet in the I-20 West/Douglasville submarket, while XPO Logistics leased 673,818 square feet in the Airport/South Atlanta submarket and SBS Transportation leased 517,500 square feet in Palmetto, Ga.

The surging demand for industrial space in Atlanta led investors to ramp up new construction, which currently totals approximately 19 million square feet, according to CoStar. Vacancy levels as of mid-April remained low at 6.4% and the overall rental rate was $6.16, a 6.4% increase from the previous year.

What’s next?
Those numbers don’t yet reflect the changes taking place throughout the economy. The big question now is: How much will industrial demand be impacted by the COVID-19 crisis?

“You’ve got your recession-proof types of businesses – companies needing refrigeration for food products and manufacturers of essential goods. And, of course, there continues to be strong demand from e-commerce companies like Amazon,” said Chris Miller, Senior Vice President in Ackerman & Co.’s Industrial Services group.

In addition to Amazon, other e-commerce retailers are experiencing skyrocketing sales due to the millions of Americans who have turned to online shopping to purchase everything from health products and clothing to toilet paper and canned foods. There could also be a long-range movement toward the on-shoring of manufacturing due to disruptions in the supply chain for products such as pharmaceuticals.

However, there are definitely issues of concern. Cargo volumes at the Port of Savannah, now the nation’s third-busiest container port, declined by nearly 20 percent in March following a lengthy period of record increases. In addition, the retail shutdown that has spurred widespread layoffs will also impact demand levels, although the extent is not yet known.

Even so, CoStar expects fundamentals to stay afloat. Based on Oxford Economics forecasts, CoStar currently anticipates that – even in a severe downside scenario – Atlanta industrial vacancies will likely remain below the market’s long-term historical average.

“Deal volume through the first quarter was roughly equal to the metro’s quarterly average. We expect deal volume to slow, but CoStar clients remain active in sourcing and performing due diligence on deals during the crisis,” said David Kahn, Managing Analyst at CoStar, in a recent video report. “If the situation improves in the coming months, it wouldn’t be surprising to see an uptick in transaction activity in the second half of 2020.”

Chris Miller echoed that cautiously optimistic outlook.

“The industrial sector is historically the last to see a downturn and the first to recover,” he said. “When we get the all-clear, there will be a lot of activity because people are buckled in and ready to see this situation improve so they can get deals done. I think there is optimism that we’ll come out of this strong.”

As Ackerman & Co. steadily strengthens its services platform and adds talent to its brokerage group, the firm continues to solidify its position as a leading commercial real estate firm in the Southeast.

One way to measure a firm’s success is by the number of its brokers who are named to the Atlanta Commercial Board of Realtors (ACBR) Million Dollar Club. A total of 11 Ackerman brokers were named to the Million Dollar Club at the recent 2020 ACBR awards.

“This is the most brokers we’ve ever had named to the Million Dollar Club,” said Kris Miller. “Our brokerage team is producing great results for our clients and we’ll continue building our team and the quality of our services to keep those results coming.”

The Ackerman brokers added to the 2020 Million Dollar Club include Courtney Brumbelow, Brett Buckner, Bryan Davis, Brian Lefkoff, Chris Miller, Kris Redding, Sean Patrick, John Speros, Jimmy Stevens, Kelly Wilson and Larry Wood.

Three of Ackerman’s 2020 Million Dollar Club members took home Top 10 Broker honors – Brian Lefkoff (the No. 5 Retail Broker), Courtney Brumbelow (the No. 8 Retail Broker) and John Speros (the No. 5 Land Broker).

As leader of Ackerman Retail’s Tenant Representation Group, Brian’s major deals included a 30,000-square-foot lease on behalf of Painted Tree Marketplace in Buford, Ga., which marked the retailer’s first store in Georgia, while Courtney completed nearly 100 real estate transactions as the head of the Landlord Representation Group.

A long-time high producer for Ackerman as Senior Vice President of the Land Group, John’s biggest transaction was the $18 million, 65-acre land sale for the Exchange at Gwinnett mixed-use project, which he brokered with Senior Vice President Larry Wood. The project, also named one of the three finalists for ACBR’s 2020 Alvin B. Cates Award, will feature Top Golf, Andretti Indoor Karting & Games, Rooms To Go and more.

The Million Dollar Club recognizes brokers with production of $5 million or more in annual commercial transactions.

Don’t sleep on South Metro Atlanta.

That was the message from speakers at the 2020 South Metro Development Outlook conference recently held at the Georgia International Convention Center. The conference, now in its 18th year, gathers commercial real estate professionals, business leaders and elected officials to discuss the latest economic development trends in the region.

South Metro communities have tended to lag behind Atlanta’s bustling submarkets to the north like Midtown, Buckhead, Central Perimeter, Alpharetta and Cumberland-Galleria, which have become some of the most prominent business hubs in the Southeast. But the South Metro – a six-county area south of I-20 – is increasingly attracting the interest of investors, including regional, national and international players.

Ackerman & Co. is one of those investors bullish on South Metro. The company, with partner MDH Partners, purchased the 423,000-square-foot Lee + White project in the West End area just south of I-20 and is currently diversifying the popular entertainment and food & beverage destination to include loft offices, retail and a food hall.

In addition to Lee + White, Ackerman is involved in the $1-billion Airport City project in College Park as the exclusive land broker marketing the 320-acre property adjacent to the airport for a mix of office, hotel, retail, entertainment, residential and other uses.

“The time is right for this type of mixed-use development in South Atlanta. This area has traditionally been underserved by retail in particular, but the opportunity to serve the local community as well as the millions of Hartsfield-Jackson passengers who visit annually makes it ideal for the local, national and international end users we’re seeking to attract,” said Steve Langford, Ackerman & Co. Senior Vice President and land broker for Airport City.

Investing in Future Growth
The South Metro region is home to the biggest economic driver in the state – Hartsfield-Jackson International Airport, which serves 100 million passengers a year, employs 63,000 on-site workers and generates a $34.8-billion annual economic impact.

Speakers pointed to a number of trends and developments that position the region to attract economic development while leveraging its strategic location at the gateway to the world’s busiest airport.

South Atlanta is the largest industrial submarket in metro Atlanta, with a total of 196 million square feet of warehouse and manufacturing space. It is also home to global headquarters such as Delta International and Chick-fil-A. More recently, South Metro attracted the relocation of Porsche Cars North America headquarters from Sandy Springs, a $100-million project that includes the Experience Center race track.

The region is preparing for much more success. Aerotropolis Atlanta, a public-private partnership representing 13 South Atlanta communities, aims to create the region’s next premier business district. Aerotropolis is working with other agencies on a variety of infrastructure improvements, including a $13-million diverging diamond interchange at Camp Creek Parkway and I-285 designed to improve traffic flows around the Airport.

“We don’t want to duplicate the traffic congestion of other parts of the metro,” said Gerald McDowell, executive director of the Aerotropolis Atlanta CID.

Another project being proposed is a “pod car” network that would provide speedy connections to Airport terminals and nearby destinations such as the Porsche and Delta headquarters via dedicated cars holding up to eight passengers. This project would cost roughly $15 million per mile, McDowell said, which is far less than other public transportation initiatives.

“We have been denied transportation solutions because we’ve been told it’s not affordable,” he said. “This is affordable, and we believe this is a solution that could provide an example of how to expand throughout the region.”

Adding Amenities to Attract Talent & Businesses
The film industry has a growing presence in the South Metro region, and it’s generating some exciting spin-off development. Pinewood Forest, a 235-acre mega project near Pinewood Atlanta Studios, will ultimately feature 700 homes, 600 apartments, 300 hotel rooms, and 270,000 square feet of commercial space with restaurants, retail and a 9-screen theater featuring a rooftop cinema.

“This type of development is setting the stage for attracting talent, and the companies that employ them will follow,” said Joan Young, president of the Fayette County Development Authority.

Christopher Pike, economic development director for the City of South Fulton, discussed two major projects planned in the newly formed city, including a town center mixed-use development and a 200-acre riverfront district.

“These are quality of life projects that will bring a different flavor to South Fulton,” Pike said.

In addition to new amenities that will help the South Metro better compete with northern communities, the region has another major selling point – its lower development costs.

Shannon James, president and CEO of the Aerotropolis Atlanta Alliance, said the relatively low cost of land – which includes 50,000 acres of undeveloped land around Hartsfield-Jackson – impressed his colleagues from Beijing, China’s, Aerotropolis.

“They salivated over the opportunities here compared to the cost in their neck of the woods,” he said