A snapshot of the downtown Atlanta skyline reveals a construction boom, flourishing with cranes and even more new high rises. This is only logical, as the ten year rebound in the real estate market has sharply increased the demand for top end real estate. According to Collier’s International, commercial vacancies in 2017 were the lowest they’ve been since the recession. It would seem that these buildings can’t go up fast enough.
The consequence to this seemingly unending demand for commercial space is the equally aggressive prices of rent. As commercial construction projects typically lag the economic recovery, this pent up demand creates ascendant price fluctuations until new office buildings can come online to alleviate demand. Indeed, Colliers reports that average rent prices increased by 7% alone last year. Class A luxury commercial real estate increased 17%.
While it is encouraging to see so much new commercial construction around the city, Colliers again accounts that the majority is in high end markets, signaling that rental prices will only continue to rise. In a booming market, this can be seen as healthy, but as with residential, every market has its limits.
Douglas Sams, Commercial Real Estate Editor for the Atlanta Business chronicle reported yesterday that while commercial rental activity remains high, consolidations are beginning to take hold which could slow the market. Mr. Sams breaks that AT&T, with offices in downtown and midtown, expect to vacate three buildings in Atlanta, moving operations into existing offices in an effort to save on outsized rental costs. Consolidation of such a large Atlanta business brings pause.
Ken Ashley, Executive Director and Cushman and Wakefield, cites shifts in the traditional commercial real estate paradigm as a way that companies are coping with outsized rents. “City Center” projects outside the perimeter are gaining steam, with projects like The Battery in Smyrna, or Avalon in Alpharetta. Ashley states this is a good way to maintain urban environments, while taking advantage of more plentiful and affordable land. Still he says upward price pressure will begin to take its toll, positing that subleases of space will accelerate as the needs of companies are no longer adequately met or are overburdened by the cost of the real estate.
While there are no indications on a hard stall with regards to the Commercial Real Estate market, as the ever increasing price tag for quality office space continues to rise, more and more individuals find them financially stressed and in some cases over leveraged. For companies facing this situation, it is important to understand their options.
As this unprecedented market boom nears its cyclical end, commercial foreclosures occurrences undoubtedly will find themselves back on the rise. After so many years of strong growth, some market stagnation is surely expected, and has already been seen on the residential side. Whether you are a commercial landlord or a commercial tenant, in order to protect your interests you should at the very least have a functioning knowledge of commercial foreclosure.
Commercial foreclosure operates similarly to residential foreclosure in Georgia. Georgia law allows non-judicial foreclosure is legal meaning that when the borrower defaults on the mortgage, either by falling behind on payments or failing to abide by the terms of the agreement, the lender can accelerate the loan and commence foreclosure without the intervention of the court. This can speed up the process of foreclosure and catch many affected off guard. The need for awareness applies not only to owners of commercial real estate, but tenants’ rights are also affected.
Before allowing your organization to find itself on the wrong end of these proceedings, you absolutely must speak with competent counsel who can educate you with regard to your options. Thrift McLemore’s attorneys have made a career in the commercial real estate arena and can help with your exact situation. Contact Thrift McLemore by email at firstname.lastname@example.org or by phone at 678-671-4031 to discuss how we can assist you with protecting your rights and keeping your commercial property or rental out of foreclosure today.