How Publix is Spending Its Cash
The famed Florida grocery store operator Publix is making some real estate inroads in Atlanta, snapping up two of its anchored centers here. (That's very big of them, considering Georgia stomps Florida every year at the "World's Largest Cocktail Party.")
JLL's Kris Cooper and Margaret Caldwell (along with Carson Good, not pictured) have just helped sell a portfolio of grocery retail centers to Publix for $37.5M from Columbia Regency Partners. Kris says Publix is sitting on a bunch of cash and has decided it may be better to own in some cases. (It's better than keeping it all in their mattresses... or at least better for their backs.) The two in Atlanta, King Plaza and Lost Mountain shopping centers, are already anchored by Publix. Also included in the deal: a Publix-anchored center in West Palm Beach and a Bi Lo-anchored center in Myrtle Beach.
Investor appetite in Atlanta retail has been rising in recent months due to the shrinking vacancies (falling 40 bp to 10.7% this year) and climbing rents (up 2% to $14.41/SF this year), according to Marcus & Millichap. Atlanta has taken awhile to come back, Kris says, but investor see the metro area as a good long-term bet. Add the threat of rising interest rates and you have a shopping spree in the making. (We've all seen Brewster's Millions.)
Marcus & Millichap's Tim Giambrone says the retail projects like Buckhead, Atlanta and Avalon are signs that retail investment in Atlanta is coming back. "The downturn took its toll on the city, but I think we're poised now to come back very well from that," Tim says. There's also a race with investors to finish buying and get balance sheets in shape before year's end." (Winter is the season of the accountant.)
One of Tim's latest sales was Camden Village, a 31k SF unanchored center in Johns Creek, for $6.2M at a sub-8% cap rate. He's also just listed Glenridge Alta Springs, the 20k SF retail portion of a mixed-use apartment complex off Johnson Ferry Road, and Moore Road Village on Peachtree Industrial Blvd in Suwanee are both already seeing offers come in. "I still think there's the basic law of supply and demand is at play: There'sÂ a lot of capital chasing not that much product," he says. "Clearly that's clearly driving the net leased market, and that market is white hot."