Four Predictions For Atlanta Commercial Real Estate In 2017

From capital's attitudes on Atlanta, financing for a big Midtown project to just why the Federal Reserve may be more hype than impact, here are four CRE trends for next year, from Bisnow's Atlanta 2016 Roundup & Outlook event this week.

1. Capital Loves Atlanta Again

Go back in time to 2013. Back then, Marcus & Millichap's Mike Fasano described institutional investors as giving “Atlanta the Heisman stiff arm.” Then came State Farm's massive campus project in Central Perimeter, and Mercedes-Benz's decision to move its US HQ to Atlanta.

“Sometime in 2014, they got religion," Mike said. "Since the summer of 2014, everybody we go to meet with is like, 'What about Atlanta?'”

It helps that Atlanta's economy has diversified this cycle, encompassing job growth in tech, medical and education, Mike said. Plus, unlike other major cities, real estate pricing in Atlanta is lower, with better yields.

2. Interest Rate Increases May Be Overblown

RADCO's outspoken captain, Norman Radow (on right, with Graham Group's Jeffrey Graham) has some healthy skepticism about fears that interest rates will do much increasing in the next year. He pointed out that, a year ago, the 10-year Treasury was around 2.3%. Today its hovering at 2.39%.

“And the Fed has not raised rates once,” he said. Yet a year ago, people were predicting that Treasurys would be over 300 basis points with cap rates at the rise. “None of that happened. The reverse happened."

3. Coda One Of Select Few Offices To Launch

Financing in hand, Portman Holdings' Travis Garland said the firm is finally ready to break ground on its new 1M SF Midtown Coda project, formerly called the High Performance Computing Center.

And while there is another 1M SF or so of office underway, most of it is pre-subscribed with tenants. That requirement by financing is keeping a lid on rampant new office development.

“I think the challenge is…office is very speculative,” Travis said. "If you're fishing for a lead tenant, you're fishing in a very small pond.

4. Driverless Vehicles' Impact On MARTA

MARTA's Keith Parker is not ignoring the potential impact that autonomous vehicles could have on mass transit. On the contrary, he says MARTA is embracing its future.

Keith told our audience of more than 300 CRE pros that autonomous vehicles could become that critical link to the last-mile transportation of riders, and within 10 years, he envisions a fleet of automated MARTA vehicles.

“As we think about late-night service, service in areas that are less dense...having those automated vehicles” will be a “critical component” to the MARTA system, he said.

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