Suburban retail in cities along Georgia State Route 400, north of Atlanta, has become a bright spot in the commercial real estate market.
Cities like Alpharetta and Cumming, with their location 30 miles from downtown Atlanta, substantial growth in population and average household incomes nearing $170,000, have attracted developers for years, the Atlanta Business Chronicle reported.
After the Covid-19 pandemic and rise of remote work many residents stopped commuting to the city, opting to dine and shop closer to home, which further boosted suburban retail.
Retailers are making the most of this. They are increasingly expanding into suburban retail centers rather than traditional regional malls, many of which continue to struggle. Developers are focusing on new or revitalized lifestyle centers. The overall suburban availability rate was lower than that of downtown areas in the U.S. for the fourth consecutive quarter in June, according to CBRE statistics.
CTO Realty Growth, for one, acquired 10.6 acres near The Collection at Forsyth, its mixed-use lifestyle center, where rents for new and comparable leases have increased by over 35%. The company plans to develop additional restaurants, entertainment venues and retail spaces on the acquired land.
Southside Atlanta neighborhoods have also seen the benefits of suburban retail growth, with rejuvenated downtown areas featuring thriving restaurant scenes. Food and grocery concepts have shown consistent demand for suburban retail space, while apparel is growing less rapidly.
The next opportunity for retail landlords in suburban areas is competitive entertainment.
Concepts like putt-putt courses, baseball facilities and interactive spaces are gaining popularity. Surf ATL aims to transform miles of Lake Lanier shoreline into an outdoor adventure park. Forsyth County officials have also considered proposals for a $2 billion entertainment complex featuring a 20,000-seat arena.
Despite the retail surge on the outskirts, Downtown Atlanta is experiencing uncertainty.
In August, German real estate behemoth Newport RE announced a deal to sell its South Downtown portfolio, which includes 50 buildings and several acres of parking lots across 10 blocks of downtown Atlanta.
The buyer is Braden Fellman Group, a well-known Atlanta developer with a reputation for revitalizing industrial properties, the Atlanta Journal Constitution reported.
The sale marks a significant development for one of the city’s largest adaptive reuse projects, which Newport had undertaken before the disruptions caused by the Covid-19 pandemic in the commercial real estate market.
Several years ago, Newport, initially little-known in Atlanta, set out with a bold plan to purchase historic yet neglected buildings south of the Five Points metro station.
Office space availability in Atlanta is at a recent high, with some office and hotel buildings facing foreclosure or returning to lenders. Furthermore, banks have become cautious about commercial real estate lending, making ground-up development and major renovation projects financially difficult.
— Ted Glanzer
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