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State of the Atlanta Retail Market Update

Mike Neal • 11/11/2022

The Atlanta retail market remains strong as indicated by the tight supply, substantial net absorption, low vacancy, and rising rental rates. Below are main takeaways about the state of retail in the city: 

  • From 2000 to 2009, an average of 9.9 million square feet of retail space was added yearly. Since 2010, the annual average is only 2.1 million square feet. Atlanta’s steep and steady population growth along with very limited new supply has resulted in a declining retail inventory per capita.  

  • Despite limited new retail supply being built in Atlanta, vacancy has reached a historic low of 4% in the third quarter of 2022. 

  • Atlanta currently has 3.6 million square feet of retail space under construction, ranking fifth in the nation by square footage.  

  • Market rents across retail property types in the city are sitting at $20.51 per square foot with malls posting the highest asking rents at $28.74 per square foot.  
  • The forecast for the next five years in Atlanta for retail will likely consist of measured construction deliveries, a modest decline in net absorption, and vacancy rates in the 4.5% range. The probability of a recession impacting Atlanta metro area’s retail marketplace is mild.  

When looking outside of Atlanta at the retail sector more broadly, retail sales remain exceptionally strong, but the sector may see some choppiness due to inflation and more service-oriented spending.  

The silver lining, however, is that inflation may provide an opportunity to gain market share with lower-income shoppers who are most impacted by tighter budgets. These shoppers will shift their spending to more budget friendly brands and retailers. Other retail commercial real estate markets are also tightening with a limited development pipeline, so competition for space should continue to heat up and rental rate growth will continue to rise.  

Retailers will place their focus on leveraging technology and the productivity of their existing staff. A few areas of retail are also predicted to be resilient to economic headwinds and a recessionary environment including experiential retail (which is on the rise this year) and the luxury, Medtail, and value retail categories.  

Note: This presentation was recently given to 150 appraisers at the Appraisal Institute Atlanta Chapter’s annual conference. 

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