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Ackerman & Co. Gets Second Helping Of Stone Mountain Industrial

An Atlanta real estate firm is beefing up on its shallow-bay presence, giving it a dominating position in Stone Mountain.

Lavista Business Park in Stone Mountain,
recently acquired by Ackerman & Co.

Ackerman & Co. bought Lavista Business Park, a four-building, 217K SF industrial portfolio in the Stone Mountain area. Ackerman purchased the portfolio from Minnesota-based Onward Investors for $12.7M, or more than $58/SF.

The main tenants at Lavista Business Park include the U.S. headquarters of German energy management firm SonnenBatterie, the U.S. Department of Veterans Affairs and Pure Red Marketing. CBRE Executive Vice President Tom Shafer and transaction manager John Hinson brokered the transaction.

This is Ackerman's second acquisition of shallow-bay warehousing in the Stone Mountain submarket. Shallow-bay warehouses are buildings that typically have lower ceiling heights and shallower delivery bays than their big-box distribution center brethren and are often used by misize companies and manufacturers.

Ackerman purchased Stone Mountain Industrial Park, a 69-building, 4.1M SF campus from Pattillo Industrial Real Estate, whose CEO, Larry Callahan, is a panelist at Bisnow's Atlanta Industrial event Sept. 19, for $135M in 2015.

2017 occupancy rates by Atlanta industrial submarket, according to Colliers International

While nowhere near the size of its 2015 purchase, Lavista Business Park does give Ackerman a larger presence in the submarket, which in turn gives it stronger control of rents in the area. While there is 27M SF of industrial in Stone Mountain, only 6.6M SF is considered shallow-bay product. That means Ackerman controls two-thirds of the area's shallow-bay market.

The shallow-bay market is absorbing faster compared to other warehouses in Stone Mountain, according to Colliers International data. Nearly 200K SF has been absorbed so far this year, leading to a vacancy rate of 5.6% as of the second quarter. That is a whole percentage point decline from the previous quarter, according to Colliers, and average rents are surpassing $4/SF.

The purchase also comes at a time when Atlanta's industrial market as a whole is going gangbusters, outperforming other major industrial markets in the U.S.

“With Atlanta’s ongoing population growth and increasing traffic congestion, we’ve learned the value of close-in locations that offer quick access to Atlanta’s major submarkets and the opportunity for last-mile distribution to consumers,” Ackerman President Kris Miller said.

Lavista Business Park is on 12 acres off Weems Road, a quarter mile from Interstate 285. It is a location that is hard to replace, Miller said, and very little of it is being built. Of the 14M SF of industrial projects underway in Atlanta, most of it is big-box warehouses geared toward e-commerce tenants.

Ackerman & Co. President Kris Miller

Miller said the firm is on the hunt for more shallow-bay space, as well as other industrial projects within the I-285 ring around Metro Atlanta.

“We are bullish on shallow-bay, close-in industrial,” he said. "We are actively seeking more."

That said, Ackerman should have some competition. There is plenty of capital chasing industrial deals in Atlanta, especially around Hartsfield-Jackson Atlanta International Airport. But investors chasing better yields are eyeing industrial parks in Norcross and Stone Mountain submarkets, “where average first-year returns in the low to high 8% span can be found,” Marcus & Millichap officials stated in a recent report.