From a slew of new spec developments and how the deepening of the Panama Canal will move the needle in Atlanta to foreign capital's love for Atlanta industrial real estate, here are five things we learned at yesterday's 2016 Atlanta Industrial Update.
1. ALMOST EVERY DEVELOPER ON THE PANEL HAS A SPEC PROJECT
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Combined, DCT Industrial, First Industrial, Robinson Weeks Partners, Core5 Real Estate Partners and Seefried Properties have more than 3M SF of spec industrial underway in metro Atlanta. Execs from the developers revealed their plans during the first panel. Projects include:
• DCT's 550k SF development in Northeast Atlanta off Satellite Boulevard.
• First Industrial is moving ahead with 400k SF near Hartsfield-Jackson Atlanta International Airport, part of the company's 1.8M SF nationwide development pipeline, half of which is already leased, says First Industrial's Corey Richardson (here).
• Robinson Weeks Partners has 850k SF delivering this summer, a spec building next to its Kroger Co warehouse at Fort Gillem.
• Core5 has 4M SF and $180M in the development pipeline, including Core5 Logistics Center at Shugart Farms, an 873k SF facility near the airport, and a 70-acre tract called Core5 Logistics Center at Interstate West off I-20 that will encompass more than 780k SF of industrial space.
2. PANAMA CANAL DEEPENING IS 'NEEDLE MOVER' FOR ATLANTA
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Core5's Lisa Ward says the dredging project allowing Panamax ships through the Panama Canal will be impactful for East Coast ports, and especially Savannah. She predicts that 10% of the containers bound for California from Asia will now be diverted through the canal.
3. INTERNATIONAL ANGST FUELING INVESTMENT DEMAND
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Seefried's Ferdinand Seefried (on right with Core5's Lisa) says that, even with industrial cap rates going sub-6% in some cases, foreign investors still are lured to the US as a safe harbor for wealth preservation. That's especially true time when Russia is rattling sabers with The West, the Mideast is in perpetual turmoil and many European central banks have been flirting with zero- or even negative-interest rate policies. So a 5% cap “looks pretty good,” Ferdinand says. And as DCT's Jay puts it, investor “demand outstrips supply” overall.
4. WHAT TO LOOK FOR IF CYCLE IS ENDING
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Panattoni Development's Dayne Pryor told our audience of some 500 attendees that when capital demand is driving construction versus tenant demand, that “always puts us over the edge” and into oversupply and crash. “That was sort of the last cycle. We had buildings we were selling that would be pouring the slabs so we could sell it to a partner at a pro forma rent and cap rate” without a tenant actually in tow.
And despite the Q1 slowdown that gave Trammell Crow Co's Mark Dishaw “a little lump in my throat,” activity has picked up nicely again. In fact, Prologis' Jason Bennett says tenant demand is twice the square footage that is underway in Atlanta. “That gives us confidence,” he says.
5. JLL ELEVATES KRIS COOPER
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We met up with JLL's Kris Cooper during our event, a surprise to us since Kris has made a career of selling retail property. We learned Kris was promoted by JLL to head up triple-net investments—encompassing retail, industrial and office—and industrial investment sales for the Southeast at the end of last year.
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