3 Pandemic Influenced Trends In Commercial Real Estate
1. Workspace changes
Based on the Center for Disease Control (CDC) recommendation to maintain a six foot social distance, many companies will be making changes to their office space before reopening. What are some things we are recommending our clients consider?
What is your daily maximum capacity? Rearranging your workspace may not be possible. Once you have determined which desks can be utilized and additional areas, like conference rooms, have been converted into additional desk space or left as is, what is the maximum number of employees that can safely occupy your office space?
What is the cost? Each company will have to decide how much to spend and where. The health and safety of employees is at the forefront. We advise our clients to ask their landlord what protocols have been implemented for their safety and what ongoing initiatives are planned to continually promote health and wellness.
Who’s the authority for oversight and accountability? Once you have reconfigured your office space to ensure your employees are safe, consider appointing a “Pandemic Officer”, ideally with decision-making authority, to answer questions, make sure office space continues to meet CDC guidelines and employees are considering the safety of others.
2. Increase in available subleases
At Wildmor Advisors, we are actively tracking the submarket subleasing fluctuations, as well as vacancy rate changes since March 16, 2020. The amount of available sublease office space on the Atlanta market has increased by 3.8% over the past 60 days. Our clients who are subleasing office space at this time are doing so as a cost recovery strategy. Besides cost savings, what are some other things to consider before deciding to sublease your space?
How much office space do you need? This is the million dollar question most of our clients are seeking an answer to. Many companies have reported employees being more productive and happy working from home. Can those companies realistically plan to part with the extra square footage or even forgo office space all together? Large companies that have announced their employees will be working from home for the foreseeable future, haven’t made any major real estate changes yet. As we see shifts in the commercial real estate market, we will continue to update our clients.
Sublease recovery? Now that we have seen a spike in sublease activity (39 new office space subleases totalling 2,244,879 square feet have been added to the Atlanta market in the past 60 days), our clients need to consider how their space compares with other available subleases and the recovery they can expect. Wildmor specializes in helping our clients strategically analyze the various scenarios associated with subleasing all or a portion of their office space.
3. Rise in demand for Industrial Space
According to Adobe’s Digital Economy Index, e-commerce was up 49% in April, compared to the baseline in early March when the stay at home orders were not fully in place. As e-commerce ramps up, manufacturing and distribution companies are looking to expand their warehouse/industrial operations to keep up with demand. Atlanta has more than 400 million square feet of Industrial space and is the second leading city in the U.S. for this real estate class. What should you consider if you’re looking into acquiring additional industrial space?
Will the amount of available Industrial space on the market decrease? We believe that it likely will. The graph below is the availability rate of industrial spaces in the greater Atlanta area. We did see a brief spike in mid Q1, but are expecting to see the availability of industrial space trend downward in months to come.
How much leverage is there for negotiations? Due to basic economic supply and demand factors, tenant leverage could tighten in negotiations for a more limited supply of available industrial space. Overall, the asking rental rates per square foot for industrial space are expected to continue to increase through Q2 of 2020.
Mixed-Use Dunwoody Project to Commence This Year.
‘High Street’ is set to become a reality this year in Dunwoody’s Perimeter Center.
The ‘High Street’ developers are hoping to update the Perimeter Mall area with the trendy shops, entertainment and restaurants that come along with a mixed-use project. Notably, this project with not rely on the traditional department store “anchor”- The trendy food-hall style dining and central outdoor space, along with a movie theater, will be he focal points of this modern center. A 25,000 SF center space, along with a boasted “Grand Staircase” will bring the wow-factor to the public and outdoor spaces.
‘High Street’ is set to become a reality this year in Dunwoody’s Perimeter Center.
The ‘High Street’ developers are hoping to update the Perimeter Mall area with the trendy shops, entertainment and restaurants that come along with a mixed-use project. Notably, this project with not rely on the traditional department store “anchor”- The trendy food-hall style dining and central outdoor space, along with a movie theater, will be he focal points of this modern center. A 25,000 SF center space, along with a boasted “Grand Staircase” will bring the wow-factor to the public and outdoor spaces.
“Our intent is that this really becomes the primary social hub, one of the core elements, of the entire Dunwoody community, and (we) really want the community and its residents to have a sense of ownership over it,” said James Linsley, the president of GID Development Group, standing over a 3D model of the High Street design on Wednesday.
With current plans to see the first phase opening sometime in 2022, demolition of two near-by office buildings will make way for the second phase of the project. The second phase will include office, retail, and hotel space, along with 2,400 residences.
Discover Dunwoody, the official destination marketing organization for the city of Dunwoody, released research showing that visitors as well as residents are looking for dining and entertainment venues where they can spend more time. High Street is currently set to fit the bill, with comparisons to its neighbors The Avalon in Alpharetta and The Battery in Cobb.
“There’s the mall, which is great, but it’s a little bit of a different generation of product. This is where the new world of retail and mixed-use real estate is headed.” James Linsley.
Armour Yards
Armour Yards is described as being located at the convergence of car and foot access- where highway, Beltline, and Path 400 meet. This is the newest in mixed use development that has been trending all throughout Atlanta recently.
Armour Yards is described as being located at the convergence of car and foot access- where highway, Beltline, and Path 400 meet. This is the newest in mixed use development that has been trending all throughout Atlanta recently.
"What makes Armour Yards so attractive is that it offers creative, loft-office type space that is so popular with tech firms; and it is sandwiched conveniently between Buckhead and Midtown and alongside the Beltline and a major interstate. As the planned projects continue to deliver, it will become one of the most thriving districts in the city." -Jon Christensen, SVP Wildmor Advisors.
Phase 1 of the project promises four buildings totaling 190,000 SF, with plans to expand to 300,000 SF. As with most mixed-use projects, Armor Yards boasts a work/life balanced environment. No completion date has been released from the developers at the time of this blog.
Notable Amenities
Flexible, Loft-office workspaces
Covered parking
Outdoor patio and terrace space (both public and private)
Coffee house and unique restaurants
Social events in partnership with SweetWater Brewery, American Spirit Works, and Fox Brothers BBQ
Direct Access to Beltline and Path 400
“Planned” Marta Shuttle
Bike Rentals
Fitness Studio
No. 18: A New Co- Working Space in Buckhead
No. 18 is the newest spot to be in Atlanta Co- working spaces. With another two locations in Stockholm, this will be the first No. 18 office in the United States.
No. 18 is the newest spot to be in Atlanta Co- working spaces. With another two locations in Stockholm, this will be the first No. 18 office in the United States. The Wildmor Advisors team had a chance to tour the new offices located in the Shops of Buckhead. Upon walking in, you feel as if you have left Atlanta and entered into another country or century. This feeling comes from the eclectic design, which was done by a European interior designer. We learned that he travelled to numerous antique stores across the country to purchase pieces for this location. There is a mix of bright colors, fun artwork, and professional offices. Coined “A cosmopolitan members’ club for businesses”, this new co- working space is definitely unlike anything we have seen before.
Companies can rent anywhere from 1 to 14 person offices. There is also a membership ($330/ month) that will allow access to the open areas to work as you please. Additionally, there are 5 conference rooms and different event spaces available for members to rent out. Breakfast and lunch will be available for members and guests daily. The chef, Desmon Short, will focus on seasonal meals with organic and locally sourced foods. There are outdoor patios to work on as well as private “telephone rooms”. Overall No.18 is stepping up the co- working space game. Let us know if you are interested in becoming a member or touring and we can help you get that set up!
Summerhill
Established in 1865, Summerhill started as one of the first African-American and Jewish communities post-civil war. For years, the neighborhood prospered and local businesses thrived until the 50’s when political and economic pressures afflicted the area
Established in 1865, Summerhill started as one of the first African-American and Jewish communities post-civil war. For years, the neighborhood prospered and local businesses thrived until the 50’s when political and economic pressures afflicted the area. With the addition of Turner field in ‘97, Summerhill saw more activity, but after only two decades, the field was permanently closed. After the closing, the neighborhood organization jumped at the opportunity to bring back life to the community.
The revitalization of Summerhill is in full swing: Walking down the streets, you can see preserved architecture with modern murals, allusions to original establishments such as Wood’s Chapel BBQ, named after one of the first churches established after the war, and most importantly, the emphasis on a home for local businesses.
Transwestern handles the leasing while Carter is on the development side. There are a few phases; the current one is all about pioneer establishments, which we can expect to see fully operating by the fall of 2019. On Georgia Avenue, new retail shops are popping up while Georgia State takes over Turner Field for a new Football and Athletics field.
The next few years will be focused on larger projects such as a hotel and multifamily housing. There will also be more retail projects, like restaurants, shops, and a grocery store, making this a truly versatile district.
In the future we can expect 15,000 SF of office and retail spaces, along with further university expansions and a baseball field for GSU.
The growth of Summerhill adds to the connectivity of the city, as it is blocks away from Grant park and Downtown and will be a source of innovation for GSU. It is exciting to see new growth that maintains local culture and sense of community in this historic neighborhood.
The future of Summerhill