Construction “On Pause” Until Election Dust Settles
U.S. and Atlanta Land & Development Q3 Market Update
Q3 marked a trend for new construction – namely, there’s less of it. “Developers are likely to pick up the shovel and commence new projects closer to the end of the year or the beginning of 2017 once the dust settles after the US Presidential elections on November 8,” according to the REIS’ Q3 2016 Construction First Glance report.
Even multifamily, the Energizer Bunny of new construction during this recovery, has finally shown signs of slowdown. However, REIS points out to “consider lagged variables,” as there is a time factor in confirming the status of newly complete apartment projects and often data shifts upward with time for this sector.
For office, 7.2 million SF were completed in Q3. This is a decrease from the last three consecutive quarters of over 9 million SF in completions. However, the office sector is in line with the jobs reports, which indicate that both nonfarm employment and office employment job creation has decreased when compared to 2015. The top 5 office metros by completions in Q3 were: Houston, Chicago, Phoenix, Boston and Dallas. Combined they account for 58.5% of all office completions in Q3.
There are no surprises for the retail sector, which has undergone a multitude of changes in the past couple of years that point to a pattern of less inventory growth overall. The exception is what retail has become all about: mixed-use and experiential over traditional retail centers. Nationally, a “scant” 2.5 million SF of new shopping center space was completed in Q3. However, Atlanta was the Number 1 metro for retail completions at 299,000 SF.
“During the first 9 months of this year, construction spending amounted to $863.2 billion, 4.4% above the $826.8 billion for the same period in 2015,” according to the U.S. Department of Commerce. Nationwide, 156,000 new jobs were added in September and 255,000 jobs and the unemployment rate was little changed at 5.0%, according to the Bureau of Labor Statistics.
In Atlanta, there’s a plethora of activity around stadiums alone. Turner Field is being redeveloped by Georgia State. SunTrust Park will open for the 2017 Braves season and with it, multifamily, office and retail space is being developed and filled at a rapid pace. The latest retailer will be Athens-based Terrapin Beer Co. The Mercedes Benz stadium will also be complete for the 2017 Falcons season. And the Atlanta Hawks have reached an agreement with the city for a $193 million renovation of Phillips Arena, reported The Atlanta Business Chronicle.
In addition, South Carolina developer, WRS Inc., is making attempts to acquire and remake Underground Atlanta. They just bought nine more south downtown properties for $10 million, reported The Atlanta Business Chronicle. The first Whole Foods 365 concept store is opening in Decatur and the AJC recently reported a 365 will also be coming to Buckhead. Atlanta Beltline Inc. is also seeking proposals from developers to buy and build upon roughly 1.5 acres where the Eastside Trail meets Piedmont Park , the Atlanta Business Chronicle reports.
All of the activity isn’t exclusively ITP…the suburbs are having fun too. A high-end theater CMX is opting to be the anchor tenant for Forsyth County Development Halcyon, reported Curbed. And in Sandy Springs, new impact fees were approved that could raise over $300 million by 2040 for parks, transportation and public safety,” according to The Sandy Springs Reporter.
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