Author: Matt Thomas

Steady demand, combined with limited new supply, is contributing to the upward trend in retail real estate.

Supply and Demand

New construction projects are being delayed due to higher interest rates and rising material costs, and many have been put on hold altogether.  The limited new supply has created steady demand for second- and third-generation retail space for lease in high-visibility, high-traffic locations. Reports indicate that the average time to lease has steadily decreased and that vacancy rates across the U.S. are at or near a 20-year low. As a result of the increased competition for existing spaces, there is upward pressure on asking rents.

Notable trends:

• Tenant demand has remained positive, as reflected in net absorption.
• Asking rents rose approximately 2.5% year-over-year.
• New construction volume remains well below historical averages, fueling competition for quality space.

Landlords with expiring leases should re-evaluate rates before marketing their spaces to ensure they have adjusted accordingly and are not missing out on potential income.

Store Closures: An Adjustment, Not a Downturn

Although the retail market remains fundamentally strong, we have seen several national and regional retailers close their doors in recent months. These closures are not always a sign of market weakness. In this case, they are frequently the result of shifting strategies. Today’s retailers are factoring in their e-commerce operations and seeking opportunities to reduce their physical footprint—and overhead costs.

With advance planning, landlords of these spaces can capitalize on an opportunity to reposition and improve the property. Average store sizes for new leases are down by over 15% compared to five years ago, and reconfiguring larger spaces into smaller units suited for multi-tenant use and repositioning the property can:

• Attract vibrant new tenants, including service-based and experiential retailers
• Adapt spaces for smaller, more flexible tenant footprints
• Strengthen the overall tenant mix to boost property performance

With the right approach, one vacancy can transform into multiple productive, income-generating spaces.

Actionable Steps for Investors and Owners

To thrive in today’s market, Atlas recommends that commercial property owners:

• Regularly assess portfolio performance through detailed commercial real estate analysis to identify repositioning opportunities and maximize returns.
• Prioritize tenant retention through proactive lease management
• Consider redeveloping or repurposing underperforming spaces
• Engage knowledgeable partners to provide commercial real estate services, from leasing and management to investment strategy and repositioning

Today’s retail market offers real opportunities for those ready to act strategically. Reach out to Atlas Real Estate Advisors to learn how we can help you meet your commercial real estate goals.

Ongoing trade disputes have dominated headlines in recent months, potentially reshaping key industries such as steel, lumber, and manufactured goods. While much of the discussion focuses on business costs and consumer pricing, the impact extends far beyond those sectors. 

Developers Should Anticipate Higher Costs and Delays 

Tariffs on essential building materials like steel, aluminum, and lumber are driving up development costs. As a result, new construction projects may face delays or become less financially viable. Developers should explore alternative material sources and negotiate supplier contracts now to offset price increases in the coming months. Anticipate delays and extend project timelines now to avoid missing deadlines and risking potential penalties.

Existing Property Owners Should Re-evaluate

For those who already own commercial properties, rising construction costs could work in their favor. With new developments becoming more expensive, existing buildings may see increased demand, helping stabilize or even boost occupancy rates—particularly in secondary markets. Current property owners should take a strategic approach to tenant negotiations:

• Evaluate Tenant Improvement Requests – Carefully assess the return on investment before committing to costly build-outs.
• Review Current Lease Rates – Rising replacement costs and higher demand may justify increasing lease rates in your market.
• Switch to NNN Leases-Implementing NNN (triple net) leases allows property owners to recover escalating expenses such as taxes, insurance, repairs, and maintenance.
• Optimize Space Utilization – Maximizing a property’s highest and best use will be crucial. In some cases, dividing larger spaces into smaller, more flexible units could attract a wider pool of tenants.

Opportunities for Investors

As development costs rise in major cities, investors should consider expanding their focus to secondary and tertiary markets, where assets may offer better returns and lower barriers to entry. Additionally, exploring asset types that are more resilient to economic fluctuations—such as industrial properties and essential retail—can balance out a portfolio in uncertain conditions.

Investors may want to prioritize properties with strong cash flow and implement long-term debt strategies to mitigate interest rate risk and maintain financial stability.

By carefully managing costs, optimizing existing assets, and focusing on resilient market segments, property owners and investors can stay ahead in this evolving environment. Atlas Real Estate Advisors is here to help—offering the insights and guidance needed to make informed decisions and position your portfolio or portfolio for long-term success.

For organizations with multiple locations or limited internal resources, outsourcing lease administration can be a game-changer.

Does your business operate in multiple locations, each with its own lease? Who is overseeing them—tracking critical dates, coordinating renewals and terminations, and ensuring compliance? Do you have a single, regularly updated source of information for all locations?

Without proper lease administration, many business owners find themselves facing lease expirations without enough time to analyze the market, consider expansion, downsizing, or relocation, and compare associated costs. Negotiating new lease terms can be stressful and may strain your relationship with your landlord.

At Atlas Management, we offer Lease Administration Services so business owners can focus on growth while our experienced commercial real estate team handles lease-related complexities. For organizations with multiple locations or limited internal resources, outsourcing lease administration can be a game-changer.

What is Lease Administration?

Lease administration for business owners is the process of managing and overseeing lease agreements to ensure all terms are being met, including tracking key dates, managing financial obligations, and maintaining accurate records.  It is a critical function in managing a business’s real estate portfolio, yet it often gets overlooked amid paperwork and competing priorities. Business owners with multiple locations must track various lease terms and crucial deadlines—including renewal application dates, common area maintenance (CAM) reconciliations, and payment due dates. Without a structured approach and a central source of data,  these important details can easily slip through the cracks.

The Benefits of Lease Administration

With ample notice of upcoming lease timelines, you gain more options beyond simply renewing in place or relocating. Have you considered negotiating a tenant improvement (“TI”) allowance or rent abatement to enhance your current space? Have you analyzed current lease rates and compared them to potential TI packages and incentives in a new location? Should your future renewal rates include arbitrary increases set by the landlord, or should they be tied to a more predictable metric like the Consumer Price Index (CPI)?

Atlas Management takes a proactive approach that helps business owners stay ahead of key decisions, reduce risks, and capitalize on cost-saving opportunities—so they can get back to focusing on growing their business. Call us today to learn more!

This year the Georgia Ports Authority (GPA) celebrates 80 years of fostering global trade and economic prosperity.

History

Georgia’s ports date back to 1733, when General James Oglethorpe founded Savannah. The colony quickly became a major exporter of cotton and rice, with Savannah emerging as a key cotton-shipping hub. To strengthen maritime infrastructure, Georgia established the GPA in 1945 to oversee its deepwater ports in Savannah and Brunswick.

Georgia currently has five ports:

• Port of Savannah (Deepwater)
• Port of Brunswick (Deepwater)
• Appalachian Regional Port (Inland)
• Bainbridge Terminal (Inland)
• Blue Ridge Connector (Inland)

Economic Significance

Georgia’s ports are key drivers of the state’s economy. Deepwater terminals in Savannah and Brunswick ensure the continuous flow of goods to and from global destinations. These vital gateways move retail shipments, refrigerated cargo, cars and machinery, bulk, and breakbulk cargo. The Port of Savannah is the third-busiest (and fastest growing) container gateway in the US.  In the past 5 years, the ports have experienced 18% growth in both imports and exports.

How does this relate to commercial real estate?

This growth translates to a strong demand for industrial and logistics properties in Georgia. Warehouses and distribution facilities, especially near major transportation hubs, ports, and interstate highways, offer significant upside potential given the recent growth of the ports. Acquiring and/or developing these facilities, or acquiring industrially zoned land in these areas, is worth consideration for any commercial real estate developer seeking to diversify their portfolio. 

Contact us today to explore the opportunities that Georgia’s thriving industrial real estate market has to offer.

Cons of Sale-Leaseback Transactions

1. Loss of Ownership for Seller

While the Seller maintains possession of the property, they lose out on future appreciation of the asset when they give up ownership. At the end of the lease term, the Seller will either need to negotiate a new lease, repurchase the property, or move operations elsewhere.

2. Long-Term Lease Obligations for Seller

Once a sale-leaseback is executed, the Seller is locked into a lease agreement for an extended period of time. If market conditions change or their business falls on hard times, the tenant could be stuck paying higher rent than they can afford. 

3. Potential Tax Burdens for Seller

Tax implications can be positive or negative, depending on each unique scenario. Depending on how long the Seller has owned the asset, they may face significant capital gains taxes upon selling.

4. Risk of Tenant Default 

The primary risk for any Buyer is tenant default. If the Seller becomes the tenant but fails to meet lease obligations, the Buyer may need to renegotiate the lease or find a new tenant, which could be time-consuming and costly.

If you’re interested in learning more about a sale-leaseback for your business or investment needs, Atlas Real Estate Advisors can provide you with a thorough analysis and provide expert guidance. Contact us today to learn more about this strategic option.

The commercial real estate (CRE) market is undergoing significant changes in 2024, driven by various economic, technological, and societal factors. Here are some of the key trends shaping the landscape and how Atlas can help.

High Interest Rates

Interest rates have remained elevated, creating a challenging environment for CRE financing. This “higher-for-longer” rate scenario is pushing investors and developers to rethink their strategies. Refinancing existing debt has become more expensive, leading to a cautious approach to new investments and development. Rather than shy away from a difficult market, we believe that is the best time to get creative and consider alternative ways to create value.

Vacancy Rates in Office Spaces

Vacancy rates for office spaces remain high in most markets, and Georgia is no exception. With hybrid and remote work models becoming the new normal, the demand for traditional office space has been significantly reduced. By crafting flexible lease terms and identifying amenities that attract tenants, we have been able to bring new tenants into traditional spaces for many of our clients this year.

Strength in Industrial 

Despite challenges in office real estate, the industrial sector across the country remains robust, benefiting from the ongoing e-commerce boom. Here in Georgia, major metropolitan areas are benefiting from increased investment in warehousing and distribution centers, which are essential to meet the growing consumer demand for quick and efficient delivery services. It is evident that companies are looking to optimize supply chain logistics, making Georgia a prime location due to its strategic position and transportation infrastructure.

Focus on Sustainability 

Sustainability has become a central focus in CRE, with both investors and developers making it a priority. Both have started prioritizing green and sustainable practices to meet the increasing demand for environmentally friendly properties. This includes the incorporation of energy-efficient systems, sustainable materials, and designs that reduce the overall carbon footprint of buildings. As a LEED AP Kyle Nelson of Atlas has extensive knowledge of green building concepts and can help incorporate sustainable practices into your current investment properties. 

Adaptive Reuse and Mixed-Use Developments

Following the sustainability trend, the concept of adaptive reuse—converting old buildings into new, functional spaces, and mixed-use developments–those that combine residential, commercial, and recreational spaces—continue to gain traction. Increasingly popular in Georgia these approaches are seen as ways to revitalize urban areas, making them more vibrant and economically resilient by creating live-work-play environments.

Increased Investment in Secondary Markets

While major cities like Atlanta remain key hubs, there is growing interest in secondary markets across Georgia. Areas such as Athens, Augusta, Macon, and Columbus are attracting attention from investors due to their lower costs and potential for high returns. These markets offer opportunities for diversification and are seen as promising areas for future growth.

Retail Resilience and Adaptation

The retail sector is showing resilience, with grocery stores and essential services remaining strong performers. Kroger has made significant investments in the region, with a $1.7 million renovation of its store off Alps Road and a $36 million project to replace the store on Barnett Shoals Road. These investments not only provide local employment opportunities, they create investment opportunities as well.

The Corporate Transparency Act (CTA) was passed in 2021 but goes into effect in 2024. It signifies a pivotal shift in the regulatory landscape, bringing about heightened transparency in corporate structures and operations within the United States. For commercial real estate investors, understanding the purpose and significance of the CTA is paramount, as it may directly impact business operations.

Purpose of the CTA:

Combating Illegal Activities

The CTA aims to identify those who are behind the veil of US businesses and real estate ownership in an effort to tackle money laundering, potential terrorist activity, and other illicit activities.

Strengthening Accountability & Integrity

The government hasn’t historically had a good way to track the individuals behind large corporations and company names. CTA bolsters corporate governance by promoting accountability and integrity within business structures by requiring that all businesses disclose all “beneficial owners.”. There are exceptions for some large companies, SE-registered advisors, pooled funds, etc., but most corporations, LLCs and other similar entities that are established solely for the ownership of real estate will be required to meet these new requirements.

Enhanced Compliance

Compliance with CTA requirements is essential for businesses, including entities that exist for the sole purpose of owing real estate, to avoid penalties. Understanding reporting deadlines and accurately submitting beneficial ownership information to FinCen.gov is crucial.

The reporting deadlines of reporting companies vary depending on the business’s formation date, so it is important to familiarize yourself with the nuances set forth to avoid the potential penalties established by the U.S. Treasury.  LLC’s that are not in compliance with the CTA may face a fine of $500 per day per LLC or a 2-year prison sentence.

Most people are aware of the tax benefits of a successful exchange. It allows you to sell a business or investment property and purchase a new one and defer the capital gains tax as long as the properties are considered ‘like-kind’.

But what about a failed exchange? Well, even a failed exchange has its benefits. When a sale is made late in the year and the funds are held by the intermediary until after December 31 and no purchase is made, the tax liability of the sale may be deferred to the year the funds were disbursed.

What if the perfect investment property is available now but won’t be once you’re ready to exchange?

You could make that purchase utilizing a Reverse 1031. In a Reverse 1031 exchange, the process is reversed but the benefits are the same. The investor buys a new property and then has 180 days to sell the old property (which should be of equal or lesser value than the new property).

Most people aren’t aware of the benefits of 1031 Exchange in terms of estate planning. Since tax liabilities end with death, so if the property that was purchased through a 1031 Exchange is not sold, heirs get the stepped-up value of the property and aren’t typically expected to pay tax on the gains.

Is your real estate working for you? If not, let’s talk.

*** Always speak to a certified tax professional before initiating any transaction that may have tax-related implications. 

Perhaps the most noticeable difference in commercial real estate compared to residential, is that many transactions are never really ‘on the market’- or placed in the MLS or similar online site.  

Many of the deals we put together are a result of staying in touch with our contacts and colleagues, paying attention to market conditions, and knowing how to put the pieces together when the time comes. The recent sale of The Falls of Oconee is a great example.

Our buyer client had recently sold a major investment property and was looking for something to replace it.  The ideal property was a well-established and fully-leased retail center that Atlas was involved with developing and leasing for another owner several years before.  Because of our contacts and experience in the market, we knew that the owners would sell when the time was right, so we made some calls and set up meetings with both parties to gauge the viability of the idea.  Both Buyer and Seller were interested, and the rest as they say, is history. 

The Falls of Oconee sold for $5,800,000 in April 2022 without ever spending a day ‘on the market’.  

If you are interested in learning about off-market opportunities in commercial real estate, call or email us today.