Buckhead is known to be one of the top retail shopping areas in the Atlanta region. Vacancy rates are some of the lowest seen; however, it is not exempt from the effects of the pandemic. Starting in mid March to the first week of May in 2020, Simon Property group closed both Lenox and the Phipps malls. The property group also halted construction on the One Phipps Plaza. There have been minimal to no new constructions in the retail sector. In fact, there have been a few demolitions in order to make space for construction of mutli family real estate. One of the largest recent transactions was Jamestown Properties $190million purchase of the Shops at Buckhead Atlanta. There were plans for redevelopment of the property which have been affected by the pandemic. Sales transactions of properties have mostly halted since the pandemic. The occupancy of the submarket is one of the highest in Atlanta, which gives landlords a benefit. The average asking rent price has been relatively expensive at about $30 per SQ and in some areas it is over $40 per SQ. On the contrary due effects of the pandemic, rent growth has been in the negative in recent quarters.
The area is home to many offices and companies largely driven by financial firms and some in the technology industry. Even though this has been a growing submarket several factors have affected rent growth and vacancy rates. There is competition of leasing space with the Midtown submarket, as well as future move outs from the Buckhead area. Two large move outs include AT&T and Blue Cross Blue Shield vacating large spaces. There should be a large increase in supply from the One Phipps Plaza project, which is currently halted and projected to be completed in 2021. These factors along with the effects of the pandemic will put a downward pressure on rent prices. The availability rate of 25.8% is well above the vacancy rate of 15.5% which indicates more future move outs and vacancy rates increasing into 2021. Property sales were beginning to slow down and since the pandemic transaction activity will remain low or non existent, which will lead price appreciation to stall or go negative. The sales volume has also slowed since most high esteemed properties have already sold and yet to be back on the market for trade.
Multi Family Market
There is approximately 40% of Buckhead’s workforce living within ten miles of the submarket. The median household income for people in the area is over $100,000. Due to a high median household income, many people are renting by choice and are employed close to home. The submarket is also located close to many affluent neighborhoods which makes it an attractive sport to downsize and move to for empty nesters. This demand has driven many investors towards building multi family real estate. The vacancy rates have been above the average for metro Atlanta, due to continuous construction activity, so now there will be pressure from the supply side especially due to the effects of the pandemic. Even though the absorption rates have been high the rent growth has not kept up and prices have fallen since the pandemic started. This will all most likely cause many planned and proposed construction projects to halt until the market stabilizes.
All data from CoStar Group