Tuesday, July 19, 2011

The Journey of a Thousand Miles . . .

. . . begins with a single step and the second quarter of 2011 is showing signs that the Atlanta industrial market may have made that first step toward recovery.

After 10 consecutive quarters of negative net absorption, the second quarter of 2011 broke free with 1,707,652 square feet of positive net absorption. In recent quarters, we have been observing some trends that were pointing toward a return to positive net absorption - most notably higher levels of activity.

Activity in the second quarter of 2011 was further evidence we are on the road to recovery. Activity remained steady at 731 deals totaling 11,927,253 square feet. Combine this with the first quarter’s level of 12,082,742 square feet and we are looking at just over 24 million square feet at mid-year. If we are able to continue at this pace, year-end activity would finish at 48 million – a level not seen since 2007.

There are two factors that are predominantly responsible for this uptick in activity. First, some larger companies are continuing to consolidate from two or three locations to one larger facility. Czarnowski Exhibit Service is a perfect example of this consolidation. They returned three locations totaling 434,000 square feet to the market, but took one space for 568,000 square feet off the market. This one consolidation resulted in positive net absorption of 134,000 square feet.

The second factor we are seeing is the smaller firms and “mom-and-pop” shops getting off the sidelines and into the game. Unlike some of their competitors, they have survived this latest economic downturn and are looking to pick up the customers those competitors controlled. To properly service these new customers, however, they need to expand their business operations. Publisher Services, Inc. is an example of this type of expansion. During the second quarter of 2011, this company added 40 percent to its foothold in the Norcross area.

No one can predict if these trends will continue and we have many miles to go before we pull ourselves out of the lows we have experienced over the last three years. But, unless we experience some unforeseen major world event, we believe the Atlanta industrial market has taken the first step in that journey.

Sim F. Doughtie, CCIM, SIOR, MCR

Submarket trends and summaries can be downloaded instantly here.

Tuesday, May 10, 2011

Two Great SBA Loan Programs

"If you are looking for a loan to purchase a warehouse and you plan to occupy it, you should take a look at the SBA program. They have very attractive rates and a low down payment. You have a choice of two different programs and Jennifer Hall provided me with an overview of the program. If you have any questions give Jennifer a call as she is a wonderful resource."
- Charlie King

See the details and then call...

Jennifer Hall
First Vice President, Commercial Banking
SunTrust Banks, Inc.
Tel: 678-526-6831 Mobile: 404-308-7658

Thursday, April 21, 2011

Action Accelerates Activity - 1st Quarter 2011

As we embark on a new year, King Industrial Realty introduces a new format for our Point of View. In 1988, when we began tracking the industrial market, our records held an inventory of 200 million square feet in the metro Atlanta area. As time progressed, not only did the square footage of that inventory grow, but the geographic area holding that inventory continued to stretch beyond the boundaries of our original 12 counties.

Beginning with this issue of the Point of View, our reporting has expanded to include 20 counties and over 600 million square feet. With this expansion, new regions have been created which are detailed on the map on page four. We feel confi dent that the addition of these outlying counties will provide you a broader and more accurate picture of the Atlanta industrial market.

This quarter, in particular, shows the effect the addition of these geographic areas has on the overall picture for the industrial market. The sublease offering of the 1.3 million square foot Solo Cupspace in Walton County accounts for the large majority of the negative net absorption recorded in this first quarter of 2011. While it would be nice to take this factor out of the equation, the broader picture is more complete when all aspects are brought into play.

With net absorption still in negative territory at -1,484,869 square feet, it’s hard to say we are climbing out of the trench dug over the past four years. However, there are a few positive indicators we want to keep our eyes on. The first quarter 2011 activity of 12,082,742 square feet represents a 46 percent increase over the previous quarter and is the highest level seen since the third quarter of 2008. We are interpreting this as a sign tenants are moving off the fence and making decisions that they may have been postponing in the past.

We have also noticed that lease terms are beginning to increase. In the first quarter of 2011, 25 percent of new leases executed in the King Industrial Realty offices were for a term of five years and longer. This percentage is up from 11 percent during the first quarter of 2009 and up from 12 percent in the first quarter of 2010. Additionally, we saw a 25 percent increase in the number of new leases executed in the first quarter of 2011 as compared to the same period last year.

Again, an indication that tenants are taking action and locking in on favorable market conditions. Although we did not expect to see positive net absorption in the first quarter of 2011, we are optimistic that within the next quarter or two we will begin to see a shift to positive net absorption.

Submarket trends and summaries can be downloaded instantly here.

Sim F. Doughtie, CCIM, SIOR, MCR

Monday, February 28, 2011

Owner Occupied Bank Rates

"If you are looking to purchase a warehouse for your use, you need to consider acting before the rates go up. Below is the most recent rate sheet for owner occupied properties from IronStone Bank." - Charlie King

Owner Occupied Commercial Real Estate

We distinguish ourselves in the market by being relationship driven, competitively priced, and firmly committed to exceptional service.

*** Rates as of February 15, 2011 (subject to change) ***

Take advantage of any of these great features for new construction:

· Single loan and single closing for both construction and permanent phases.
· Interest only during construction phase
· Option to lock rate at the front end for both the construction and permanent loan.
· SBA loans available

* Normal credit approval applies. Loan rates are effective as of 2-15-11 and are subject to change. Actual APR may be impacted by fees, rates, loan amounts, and terms.
* For loan requests less than $500,000 add 25 bps

For more information, please call:

Joe Bennett
Vice President
Business Banking
678.494.8652 Office
404.374.7374 Cell
678.494.8667 Fax

Tuesday, January 25, 2011

Atlanta Industrial Real Estate Market Trends - 4th Quarter 2010

Less Is More

Activity in the Metro Atlanta area tumbled in the fourth quarter of 2010. Down
30 percent (almost three million square feet) from the third quarter 2010 total,
activity of 7,000,261 square feet is the lowest seen in the 12 county metro area since
the second quarter of 2009. That being said, seven of the 12 sub-markets examined
for this report actually saw an increase in activity. The decrease in activity for the
remaining five sub-markets, however, was overwhelming.

Activity in both the I-85 North and the Airport/Clayton & Henry County sub-markets
dropped more than a million square feet each. Yet, amazingly, these two sub-markets
still recorded positive net absorption. Two other sub-markets, Gwinnett/North Fulton
County and City of Atlanta South of I-20, also recorded positive net absorption. Again,
Gwinnett/North Fulton County accomplished this feat despite a 50 percent reduction in

The flip side of this coin is the Fayette/Coweta County sub-market. This sub-market
saw a 130 percent increase in activity; nevertheless, it fell to negative net absorption.
Furthermore, the -50,341 square feet recorded was far deeper than that seen in the third
quarter number of -142 square feet.

While a decrease in activity is always disappointing, this quarter’s results prove that
success depends on more than just deals consummated. Net absorption for the fourth
quarter of 2010 came in at -294,602 square feet . . . the best Metro Atlanta has seen in
over two years.

Of course, the offset to activity in the net absorption equation is the amount of space
returned to the market and that was the distribution sector’s saving grace. Those same
sub-markets that dropped so significantly in activity were successful in keeping more of
their tenants in place. In the fourth quarter, Gwinnett/North Fulton County returned half
the amount of space given back to the market during the third quarter.

Although the Atlanta distribution sector has certainly seen fluctuations in activity over
the past three years, those deviations alone are not responsible for the lows in the net
absorption suffered. With any luck, the increase in tenant stability we experienced at
the close of 2010 will continue as we begin a new year and, hopefully, will usher in
a return to positive net absorption.

Submarket trends and summaries can be downloaded instantly here

Wilson S. Covington
Senior Vice President