Retail Update from CoStar Group

CoStar Group periodically has webinars called State of the Markets where analysts discuss what is going on in certain submarkets of the commercial real estate industry. I attended one this past week on the Atlanta retail industry. Below are some of the main points brought up by the analysts, David Kahn and Trenton Turner.

The first notable trend they discussed is the leasing activity for retail properties in Atlanta. There has a big decline in 2020 (~150,000 sqft in April) compared to previous years (300,000 sqft, 370,000 sqft, and 350,000 sqft in April of 2017, 2018, and 2019, respectively. This is likely due to companies ceasing their leasing negotiations on projects that were in the beginning stages of the real estate development process. With so much uncertainty in the market right now, people are hesitant to make any plans for the future.

The analysts also discussed the percent change in retail sales and food services. the beginning of 2020 had a -20% growth in this area. The only other time the growth was negative was between 2008 and 2010, after the 2008 financial crisis.

On the contrary, e-commerce has had a nearly 35% change since the beginning of 2020. The next highest percent change for e-commerce is about 25% at the beginning of the century. 35% is a huge change since e-commerce appears to typically have about a 10%-20% growth over the past 20 years. Market analysts have been optimistic about e-commerce during this pandemic as people are trying to stay safe at home yet still need to order necessities.

The CoStar analysts have kept a positive attitude about the Atlanta market as a whole during this pandemic. Because Atlanta has such a diverse market (industrial, retail, hospitality, airlines, etc.), the pandemic has not affected Metro Atlanta as much as other metro cities in the United States. Atlanta had sort of a cushion because of its diversity. Because of that, when one industry was negatively affected, other industries that were doing well helped balance it out. Be sure to check out the recent podcast with David Kahn, one of the analysts from CoStar Group, to hear more about commercial real estate in Metro Atlanta!

Data from CoStar Group

Photo of an undetermined Georgia Tech home game during the 1918 college football season. That's when the sport was hit by the Spanish flu and the end of World War I.

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