As office and restaurant tenants still seek ‘new normal,’ job creation stokes demand for apartments, ‘necessity’ retail and quick serve restaurants.
By Monetha Cobb, Regional Managing Director, Atlanta
At Franklin Street, our team works across many industries, so we surveyed our brokers in Atlanta to see what will move commercial real estate market in 2022.
Overall, we’re predicting that almost every sector in commercial real estate will remain hot. By that, we mean active investors and developers in the multifamily space, a continued surge in interest in retail, with retail space of all shapes and sizes seeing reuse and reimagination, and the office environment finding new footing. Here are seven predictions the Franklin Street team has for 2022.
1. Smaller footprint restaurants with more drive-throughs
Restaurants are looking for smaller footprints, with spaces larger than 4,000 square feet harder to lease. Restaurants are looking for drive-through options to take advantage of new revenue streams like takeout and delivery. Our retail and restaurant tenant rep Greg Eisenman says examples of chains growing local are gusto!, First Watch and Freddy’s. Still, we continue to hear that staffing issues are causing new restaurants to push back grand opening dates.
2. Retail box stores getting smaller, opening up space for other retailers
Box stores also are shrinking in size. One example is Burlington: Its prototype decreased by half, from 50,000 to 25,000 square feet. Our retail landlord reps Sam Krueger and Kaitlyn Theriot say this trend will continue to create more space for other anchors and junior anchors, especially in the service-based retail, medical office, boutique gym and salon categories. Examples include One Medical, tend, Planet Fitness, [solidcore], Pepper Boxing and LionChaser Fitness, which all are expanding throughout Atlanta.
3. Property investors want more retail centers
Single tenant, strip, grocery-anchored and power centers still are extremely popular with investors. Our retail investment sales team John Tennant and Bryan Belk predict institutional and private sector money will be looking to buy all classes of retail centers this year.
Grocery-anchored centers continue to be the crown jewel, as retail sales of necessities continue to climb across the country. Strip centers and stand-alone buildings leased to drug stores, automotive tenants and strong credit, quick serve restaurants, like Chipotle, Chick-fil-A and Panera Bread, also are attractive to investors. The abundance of capital available to pursue retail deals is as high as it’s ever been, which will allow the retail sector to continue the aggressive pace of activity into 2022.