A lack of retail space and high construction costs have provided shopping centers in metro Atlanta with more rent-setting power than anywhere else in the U.S., making it the best market for retail development. According to a CBRE forecast released prior to the COVID-19 impact, retail landlords could expect annualized rental rate increases over the following five years of about 4.1 percent. This is roughly 80 basis points higher than runner-up Fort Worth, Texas, and about 100 basis points better than third-place Portland, Oregon.
First, though, a shopping center developer in Atlanta needs to find a site. “Retail generally occupies some of the most intrinsically valuable real estate in any community,” said Christopher Decoufle, an executive vice president with CBRE’s National Retail Partners, “but there’s a shortage of it in Atlanta and to the extent you can assemble a site, it will be priced very expensively.”
Jeff Fuqua, principal of mixed-use developer Fuqua Development, which has a handful of projects under construction, echoes that sentiment. Many of Fuqua Development’s projects sit on former school, church and office sites, but the potential payoff is well worth it, he says. “If you can find a site in those places and create something special, you’ll get a lot of demand from retailers, restaurants and entertainment users.”
While some planned openings at new developments have been delayed because of the pandemic, many tenants continue to open.
Fuqua Development recently completed its 17-acre, $300 million Madison Yards project on the city’s east side. Madison Yards features 156,000 square feet of retail, fitness and restaurant space, plus 500 apartments and some 80,000 square feet of office. A 53,000-square-foot Publix opened there in mid-2019, and a 40,00-square-foot AMC movie theater opened in March. More recently, Fuqua Development started leasing the residential units.
Fuqua Development’s recently delivered on Atlanta’s east side with retail, fitness and restaurant space, as well as apartments and office
Fuqua Development also is building a $350 million, 1.6 million-square-foot apartment and entertainment project on 100 acres near the Mall of Georgia in Gwinnett County, northeast of Atlanta. Called Exchange @ Gwinnett, the project will feature Andretti Indoor Karting & Games, Sprouts Farmers Market, a Rooms To Go furniture store, Topgolf and an 18-kitchen food hall, among other users. Construction is ongoing, and the bulk of tenants should begin opening in the second quarter of 2021, Fuqua says. Plans also call for about 1,000 residential units.
HEAR FIRSTHAND: Representatives from CIM, Newport RE and Selig Enterprises laid out their major Atlanta projects on an ICSC Connect Local Talk recorded Nov. 4. Listen here (fast-forward to one minute in)
Elsewhere, Eden Rock Real Estate Partners spearheaded the development of Westside Village. A warehouse converted and expanded into 100,000 square feet of retail will anchor the mixed-use project, which began opening last year. Located in northwest Atlanta, in the area now called the Upper Westside, the endeavor includes Primrose Schools, The Refinery Fitness and a yoga studio. The project also features a handful of restaurants, including Marlow’s Tavern and Westside Pizza, both of which opened earlier this year, as well as Ted’s Montana Grill, which just opened in late October.
Further north, RocaPoint Partners continues to develop Halcyon, a 135-acre, $370 million upscale neighborhood in the Atlanta suburb of Alpharetta that eventually will encompass 260,000 square feet of retail, restaurant and entertainment; 300,000 square feet of office; apartments; town homes; and single-family houses. Tenants open so far include the 37,760-square-foot CMX CineBistro, a 13,320-square-foot food hall capped by two full-service restaurants, and around 30 specialty and service-oriented users. Much of the project is situated around a village green gathering spot and connects to an extensive greenway trail, a design that has differentiated the project during the pandemic, says RocaPoint Partners principal Phil Mays.
“Metro Atlanta has a vibrant economy and an expanding job base, which makes for a good retail market,” he said, “but you still have to deliver retail in an interesting and compelling way or it won’t work, given the massive changes in the sector right now.”
With a little more than 470,000 square feet of inventory, Downtown is the smallest of the Atlanta metro area’s 13 retail submarkets. What it lacks in size, it makes up for in landlord leverage: Over the 12 months ended Sept. 30, rental rates surged by 29 percent to $22.66 per square foot, the largest percentage rise in the metro area, according to Avison Young.
“It’s an old adage that retail follows rooftops, and Downtown is finally experiencing residential growth,” said John Schupp, a principal with the Avison Young retail project management team in Atlanta.
Some of the biggest retail and residential changes are occurring within Downtown’s Summerhill district, where Carter is overseeing the redevelopment of 40 acres — including parking lots at Turner Field, which was home of the Atlanta Braves until 2016 — into a mixed-use neighborhood. The initial refurbishment of old buildings into 36,500 square feet of restaurants, coffee shops and bars helped catalyze the broader development, which to date includes the ongoing construction of 306 apartments and a 675-bed student housing facility serving nearby Georgia State University.
Carter senior director Jack Murphy expects to finalize a 50,000-square-foot grocery store lease there by the end of the year. Office and hotel are among the uses planned for this decade-long project. “There are a lot of people in Atlanta craving experiences where they can spend an entire evening or day in one space without having to get in the car,” Murphy said. “That’s what we’re trying to create.”
Wood’s Chapel BBQ opened in Summerhill, three blocks east of the former Turner Field, in June
By Joe Gose
Contributor, Shopping Centers Today