By: Felipe Rivas
4 min read December 2020 — The COVID-19 pandemic pressed the reset button for virtually every industry creating direct and indirect influences to the real estate sector. Factors such as the rapid transition to the remote work environment, the bolstering of E-commerce, increased desire for outdoor space, and further reliance on innovation and technology will shape the future of residential, commercial, and industrial real estate moving forward. Sunbelt cities such as Atlanta, however, are poised to continue to attract companies, families, talent and events as the nation begins to emerge from the pandemic landscape. Throughout 2020, Real estate professionals told Focus: Atlanta about how they have rolled with the pandemic-related punches and remained optimistic about the future of the Atlanta market.
Growth cycles in the real estate sector tend to last for about 10 years. Going into 2020, we have had about 10 years of strong growth, following the 2008 financial crash and its aftermath. So we were expecting a slowdown. COVID-19, however, is a black swan event that has caused a nosedive far sharper than we had foreseen. Aviation, tourism and hospitality are all huge contributors to the economy, and until they recover, the economy will continue to suffer. I think it will take a long time.
We have had to reconsider our strategic goals. Instead of our usual three- to four-year plan, we are starting on a short-term one-year plan to take us through to June 2021, because it is so hard to know what is around the corner. Fortunately, the banks have strengthened significantly since 2008, and the government also has capital available to ease the impact of this crisis. For investments, there remains strong sources of US and overseas capital for CRE, so that gives me hope that we may recover faster than expected. Our past shows that the US always finds opportunity and that will open the door for more innovation. As a firm, we have to ensure that we are well-positioned to grasp those opportunities.
Georgia reopened very early in comparison to many states, and there are some concerns around this. The local market has experienced a complete change from April to May as Mark Spain Real Estate managed to stay flat on the year for the month of April. Going into May, we saw a 30% increase in new listings. Anyone who was concerned is now coming off the sidelines, and we are beginning to see pending sales resume to typical summer volume. We are maintaining caution, continuing to require pre-approval letters and encouraging people to follow CDC guidelines to protect both our clients and our team. By mid-May, we experienced a 30% increase in Georgia compared with the same time last year. We remain optimistic about the remainder of 2020 into 2021.
We think the region will remain very strong. Atlanta, being the capital of the South, will always be a magnetic market. We are keeping a close eye on office leasing trends and how occupancy, rents, and additional development evolve as a result. Pre-COVID-19, the real estate industry was gauging whether some sub-sectors were becoming overbuilt, especially on the distribution center front. It seems that COVID-19 may foster the creation of a higher rate of absorption for some of that spec product. Our labor and workforce remain robust. Manufacturing and distribution need such talent. Having a skilled workforce will continue to be the driver for companies looking to relocate, for which Atlanta offers a strong value-added proposition.
In any sort of disruption, opportunity opens up to be a great partner to your clients. Our priority from the outset of the pandemic has been doubling down on our relationships, on listening, and being careful to not make definitive declarations until we truly determine the implications of what is happening around us. Our short-term priorities include providing intelligent and thoughtful feedback on what we are seeing in the market.
We anticipate an impact in terms of 2021 following an election year. During the city’s last downturn, we learned how dependent we were on residential development but we adapted. Our economy is now less dependent on single-family housing. Technology has found its way to Atlanta thanks to our tech-focused universities. Our market is highly driven by technology, jobs coming from the West Coast and the availability of a broad base of talent for businesses moving into Atlanta to hire. From where we sit, the future looks shining bright for the city and we are excited to be a part of it. Atlanta has a lot going for it, not least of which are a great lifestyle, cost of living within reason, a talented workforce and job drivers in Georgia Tech and Emory University, which are at the center of creating a massively dynamic workforce. Atlanta is set to grow beautifully in the next decade and we will be upbeat about it once we get past this pandemic nightmare.
RADCO is an opportunistic company. We thrive on the challenge of finding and meeting the needs of this great city, and other amazing cities in the southeast and central United States. Blessed with warm weather, pro-business governments, low taxes and a thriving workforce, there are plenty of opportunities for RADCO to explore and grow into in the coming years. This next decade will be an exciting one indeed!
We are extremely confident in Atlanta, the Southeast and the United States of America. Americans have proven over 250 years that we are among the most innovative, resilient people in the world. That confidence puts Ackerman & Co in a place where it is actively planning to place new investments and start new projects in the next eighteen months. We just started construction on another 1-million-square-foot industrial building – a $50 million investment. We are under contract for land in Braselton to begin another industrial project and looking into a new medical office building project. We are convinced metro Atlanta will continue to see new construction and a comeback of transactions for existing buildings as capital and debt becomes available. Equity is highly interested in new acquisitions but it is also on the lookout for good prices. Although debt is somewhat tougher to find, our prospects continue to look good as Atlanta is among the markets that showcases the most stability and security.
For more information on our interviewees, visit: