For the almost 300commercial real estate developers and brokers who attended, the most interestwas in what four experts in the field had to say about the present and nearfuture of the office market, multi-family housing, retail, hotel and industrialproperties.
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| Three of the five members of the Bisnow real estate panel were, left to right, Mark Toro, John Heagy and Jatin Desai |
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| The other two members of the real estate panel were, left to right, Gordon Buchmiller and moderator Wes Hudson. |
Heagy, Toro and Buchmillerall agreed that the future emphasis on commercial development centers oncreating urban, transit-oriented, walkable environments with connectivity toliving and work spaces and retail and entertainment opportunities.
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| Hines' John Heagy |
An 8 percent increase injobs is just not enough” to make a major impact, Heagy added.
The Hines executive saidthe hot market areas for office space leasing is around transit stations andareas that provide easy access to housing, retail and restaurants. He saidconnections to all these things is of utmost importance to employers and theiremployees.
“Leasing metrics areimproving in the city, but only mildly,” Heagy told the audience. In order toget to the place where office developers are going to consider building new orrenovating existing properties, he said, rental rates need to get to the mid-$20sto high-$20s and that is without major concessions being offered.
Toro said the strategyat North American Properties goes beyond Atlantic Station, which it purchased,and Avalon in Alpharetta, which it is developing “to virtually everything thatwe are doing.. “It all revolves around transit, walkability and the propensityfor a new generation of Americans to seek a walkable urban environment.”
He pointed out thatAvalon is not near transit, but it is creating a walkable suburbanenvironment. “The idea is that the 80million or so “echo boomers”—kids in their 20s—are driving decisions.”
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| North American Properties' Mark Toro |
He suggested people inthe audience should become familiar with the website walkscore.com. He said itis a site these echo boomers are using to find where they want to locate—to rentapartments, work in offices, shop and find entertainment—all within easy walkingdistance.
Toro said that 20-year-oldwho comes here from a real city—who grew up in Chicago and went to college inBoston—doesn’t see getting into a car to go to work. “Atlanta may someday be areal city,” Toro added, but he doesn’t believe it is there now.
He told the audience notto expect to reach these echo boomers with fax machines or even through websites. “We not only have to build what they want, we have to speak theirlanguage.” He said echo boomers communicate through Twitter, Facebook and suchservices through their smart phones. They don’t even go to websites anymore, headded.
Toro said the firstthing North American Properties did when it bought Atlantic station was to “bequiet and listen. We reached out to the community to find out what to do with theAtlantic Station property. In 22 months, we have driven sales up 26 percent,”he explained. “You cannot attribute that to the economy.”
Toro said North AmericanProperties is “using Atlantic Station as an incubator. We have retooled ourentire company around this concept.”
Toro had something tosay about both the retail and multi-family housing markets too.
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| Childress Klein's Gordon Buchmiller |
Toro did say, however, “Wesee online retailers now coming into brick and mortar….seeking urban intownenvironments for retail stores.”
On the subject ofmulti-family housing development, Toro said, “Everyone in the business shouldjust stop,” suggesting overbuilding may very soon be a reality.
But Buchmiller saw multi-familyhousing as the only hot market. He said there also are some opportunities forspeculative industrial development in smaller Southeast markets, but he doesnot see any office market in the Southeast that is healthy, except possiblyRaleigh.
He said he is worriedabout what foreclosures in the office marketplace might do to lease rates, butthen offered the suggestion there could be some real opportunities forpurchases. “The economy will improve,” Buchmiller said. The question is how itwill affect the properties.
When asked about thebiggest challenges facing Atlanta, Buchmiller, Toro and Heagy all agreed onthree items: expanding mass transit and spending on transportation needs,cooperation between governmental entities, and getting to Plan B as quickly aspossible after the failure this past summer of the T-SPLOST.
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| Georgia State University Economist Rajeev Dhawan |
They all agreed thefailure of the T-SPLOST is being used against Atlanta in efforts to attract newbusiness to the area. “Just because we have had successes doesn’t mean we willcontinue to succeed,” Toro said in answer to a question.
Of the two headlinersfor the Economic Forecast part of Bisnow’s Tuesday program, Dhawan,
Vitner, however, wassomewhat more optimistic. He said the first half of 2013 is going to bechallenging. But he is predicting the economy will pick up by mid-year. Vitner saidthere is not a lot of strength in the economy, but it is better than it was ayear ago. He added that the strength seems to be broadening across industries.
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| Wells Fargo Economist Mark Vitner |
Vitner said thatapartment construction has come a long way, but that single-family is stilloff.
Vitner said mid-Novembershowed the largest drop in small business confidence since 2008 “when the worldwas coming to an end. Small business sees no growth in revenues and is actuallyworried revenues will fall.
He pointed out that theemployment numbers “have a very strong bias in them. We are losing 700,000 jobsa month.” He said seasonal employers add back jobs in the fall, beginning inaround September. “In the springs and summer it is going to look likeemployment has hit a wall again.”
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