As the recession takes a firm grip on Atlanta land development, what does the future look like for this once burgeoning beacon of land development? Getting out the crystal ball, also known as the Atlanta Business Chronicle, and putting a few stories together, we can start to see what’s in store.
Atlanta’s skyline will likely remain unchanged for the next decade or so.
“When will we see the next 50-story building in Buckhead? I would guess that if we see another 50-story building there in the next 10 years, I would be surprised,” said Clark Gore, market director of Jones Lang LaSalle Inc. “The skyline is impacted by where we are in the recovery.”
These is substantial risk in speculative buildings right now and developers are only going forward with projects that have a significant amount of pre-leases in place. There is even talk that LEED certification for buildings will practically be a prerequisite going forward. This makes sense because LEED projects typically are more expensive on the front end, but the back end payoff would appear large because of the points scored for location, reuse of materials and, generally, a more thoughtful approach to a project. LEED certification for buildings seems to be a good litmus checklist for going forward on a project, regardless if the developer’s intention is to be “green”.
As Brian Leary, vice president of design and development for Atlantic Station LLC, points out, these types of projects won’t be exclusively inside the perimeter.
Areas that already offer infrastructure and allow for more dense development will be well-positioned to take advantage of an economic recovery. Those locations don’t just include prominent submarkets such as Buckhead, Midtown and Perimeter Center, but downtowns in Suwanee and Duluth and other suburban areas that offer an opportunity for a higher quality of life.
Another area of strength for the Atlanta market will be the industrial distribution hubs that have been springing up along the interstate corridors for a number of years now. That trend is expected to continue as the Port of Savannah expands.
“When it settles down, we’ll start seeing growth because there’s no new space out there to compete,” said Dave Watson, senior vice president at Grubb & Ellis Co.
It’s also likely to help make industrial real estate here attractive to foreign buyers seeking solid investments.
“There’s going to be a glut of distressed sales and some other opportunities,” said Mike Gray, senior vice president with Panattoni Construction Inc.
Currently, Atlanta’s industrial market has a 17.4% vacancy rate.
So, we’re likely to see, perhaps, something that I discussed in an earlier blog – a move towards social land development. President Obama signaled that he is in favor of this trend. Although, I think his view is overly limited to existing urban centers and fails to see the thriving and successful suburban town centers that are also being created.
In my next blog, we’ll explore the infrastructure side of the future of Atlanta. Infrastructure will be the key to many city’s success or failure in the coming decade. Failure to address the key infrastructure needs of a city will cause it to die. Fortunately, there are some strong voices in metro Atlanta for addressing the area’s sorely lacking infrastructure.
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