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Atlanta Commercial Real Estate Demand Drivers

From the sweet peach trees to the world’s busiest airport and even the creation of Coca-Cola, Atlanta has so much to offer residents. But it’s not just residents who are interested in the Atlanta metro area—real estate investors have also been attracted to the capital of Georgia. This article will describe the current demand for Atlanta real estate, consider what’s driving that demand, and explain how individual investors can access commercial real estate through our private REIT, Jamestown Invest 1, LLC (the “Fund”).


Atlanta’s Growing Population

The Atlanta area is thriving. According to a March 2020 article published by the Atlanta Business Chronicle, between 2010 and 2019, the massive population growth that Atlanta experienced when the population grew from 5.3 million to 6 million made it the fourth-fastest growing metro area in the United States.1 The local news outlet also estimates that the metro area will grow to 8.6 million people by the year 2050.

According to CoStar analytics, Eastside Atlanta is currently one of the busiest submarkets. In recent years, rental rates have continued to climb. CoStar also estimates that 1,200 more renter households will be added in the submarket by 2024.

Atlanta Commercial Real Estate



The Appeal of the Old Fourth Ward

One of the most desirable places in the Eastside Atlanta area is the Old Fourth Ward, often abbreviated as O4W. The population here is just over 12,000 across 0.69 square miles. It continues to attract an influx of new residents due to the cost of living being lower than the Atlanta metro area average and the area offering incredible dining and entertainment options. With its strong livability score, it’s one of the most desired neighborhoods in the entire state of Georgia.2

The Atlanta BeltLine, a multi-use trail, is another major reason why the Old Fourth Ward is such a hotspot. Not only does this green space benefit the community by giving it a great way to get fresh air and exercise, but it’s also had a significant positive impact on the economy. The Atlanta BeltLine reported, from 2005 to 2019, it generated over $6 billion in private development.3 This was a considerable gain given that only $600 million was invested in the project itself over the same period. The BeltLine also passes alongside Ponce City Market, the area’s largest adaptive reuse project, reinvented as a vibrant community hub housing the Central Food Hall, various shops, flats and offices. Jamestown owns Ponce City Market, a former Sears, Roebuck & Co. distribution facility building, in a separate investment vehicle.

Ponce City Market is located in the Old Fourth Ward neighborhood along the Atlanta BeltLine, across from Historic Fourth Ward Park.

Thanks to a 2019 donation from the James M. Cox Foundation, there are plans to join the Silver Comet Trail and the Atlanta BeltLine.4 When all 300 miles are completed, it will be the longest unbroken paved trail surface in the entire country.

Although the whole project is expected to be completed in the next couple of years, the Eastside Trail is already finished. This BeltLine encompasses trails and parks and goes through Old Fourth Ward, adding to the appeal of this neighborhood.

Last year, BeltLine President, Clyde Higgs reported by 2020, the visionary project had already created 11,000 permanent jobs along with 30,000 temporary construction jobs and counting.5 Since the pipeline of new real estate development is robust in the area, it will only continue to create jobs and benefit the community.

The Atlanta Economy Overall

You can’t look at population trends in a particular location without considering their connection to the local economy. In the last decade, the Atlanta metro area’s contribution to gross domestic product (GDP) has consistently increased since the Great Recession, going from $272.4 billion in 2009 to $371.83 billion in 2019 according to data provided by the U.S. Federal Reserve.6 While the GDP fell steeply in 2020 due to the pandemic, the area is beginning to recover in 2021. Predictions by the City of Atlanta Department of Finance expect the local GDP in 2022 and 2023 to rise quickly.7

Atlanta is known for having robust job opportunities and its unemployment rate has remained below the national average despite the pandemic headwinds.8 The high percentage of jobs in the Atlanta area in professional services, technology, and leisure and hospitality have also helped mitigate the pandemic’s impact on the local economy.

Year after year, the Atlanta metro area attracts and retains some of the biggest companies in the country and the world. Major corporations like Coca-Cola, Home Depot, and AT&T are headquartered here. Mark Butler, Georgia’s labor commissioner, reported in January 2021, 10 of the state’s 14 metro areas showed employment growth and highlighted many reasons to believe that job opportunities and the population in Atlanta will only continue to increase in the near future.

Major Job Opportunities Coming to the Atlanta Metro

The growing job opportunities begin with one of America’s most lucrative companies: Microsoft. The software giant acquired 90 acres from the Quarry Yards development on the Westside of Atlanta.9 Although over 20 acres have been set aside for affordable housing, the rest will most likely be transformed into office spaces.

For other growing job opportunities in the area, look no further than Google. In mid-March of this year, Google announced that it would be investing $7 billion into office buildings across the country and creating 10,000 jobs in 19 states in the process.10 One of the locations Google has set its sights on is the Atlanta metro area. While Google has had a significant presence in the area for nearly two decades, this expansion will include filling 19 floors in an office building currently under construction in Midtown Atlanta.

The last major player to monitor in the Atlanta area is Facebook. Since 2018, the company has had a data center located 22 miles east of downtown Atlanta. But late last year, Facebook announced they would be expanding this facility by 1.5 million square feet.11 The project is set for completion sometime in 2023 at which time it will have created over 200 jobs. This isn’t even including the construction jobs that will be added to make the facility run on 100% renewable energy.

Corporate expansions in Atlanta, GA

Between these new additions alone and the strength of the metro area’s economy in general, the future seems clear: Atlanta is a prominent presence in the American economy with a major contribution to gross domestic product.

Potential Benefits of Investing in Atlanta Real Estate

The Atlanta area is ripe with investment opportunities in commercial real estate. We believe businesses and people alike want to be in Atlanta.

US Market Demand by Investors
Source: PWC: Emerging Trends in Real Estate®2021 - US & Canada. Note: Ratings reflect the perspective of local market participants.

In fact, according to a PWC report titled Emerging Trend in Real Estate 2021, Atlanta was listed as one of the top cities for real estate prospects.12 Some of the many reasons Atlanta is so attractive are its temperate weather, affordability for residents driving strong migrational influx to the area, and pro-business local government.

Source: PWC: Emerging Trends in Real Estate®2021 - US & Canada. Note: In-migration markets are those where it costs more to bring in a U-haul than to take one out.

People come from all over the world to live, work, and start businesses in Atlanta. The high percentage of college-educated workers and the concentration of universities and colleges are also advantages. The university presence benefits investors because it means there is a large number of people moving into the city as opposed to there just being natural population growth internally.

Finding the Right Investment Opportunity

So which real estate opportunities are investors considering? According to a survey completed by CBRE in March 2021, 36% of investors are most interested in the industrial market, 29% in the multifamily sector, and 14% in the office sector across the country.13

While office vacancies are higher than historical averages for the first half of 2021, interest from office tenants is beginning to pick back up again in the second half. In one survey, 98% of respondents claimed they expected to return to the office by the end of quarter three of 2021.

Although it’s still too early to estimate what the long-term impacts of the pandemic will be on office spaces, it seems that the new wave of office users will be looking for different qualities in real estate, including superior indoor air quality, touchless technology, and more shared meeting spaces. Because of this, investors will be wise to look for these kinds of features to be included in office building investments.

southern_dairies_office
Southern Dairies is located 1/4 mile to Piedmont Park via the BeltLine Trail, located 1/2 a block from the building. Also located adjacent to the property is Old Fourth Ward Park.

In March 2020, the Fund acquired a controlling 51% interest in Southern Dairies @ Ponce City Market, a historic adaptive re-use office campus in Atlanta for $7.3m of equity. With today’s focus on individual and community health, tenants can enjoy as much or as little interaction as they please. Southern Dairies’ location across the street from Ponce City Market and its incorporation as an extension of the PCM campus offers the amenities of a full mixed-use environment without the traffic or congestion of being physically located in a bustling mixed-use building. Other noteworthy attributes include:

  • 66% of leasable space is accessible via private tenant entrances (not through common areas)
  • 89% of leasable space is accessible without using an elevator
  • All suites have individually controlled HVAC units and high ceilings, and most have sawtooth roofs for better air circulation
  • The campus has an abundance of outdoor green space, including a redesigned courtyard
  • Several spaces have private tenant patios in excess of 500 SF on the ground floor
  • The entire property is surface parked (no parking decks which tend to have poor air circulation and elevators)

Conclusion

The Atlanta area and the real estate in it are thriving. Although our investment mandate for the Fund is broad in scope related to asset type and location, Atlanta is one of our current focuses due to its growing population, strong economy, and exciting real estate opportunities.

Jamestown has made real estate more accessible and straightforward with our Fund. If you’ve been considering becoming a real estate investor, consider joining Jamestown Invest today. Hundreds of our investors are seeking to build wealth by diversifying their traditional portfolio through real estate. Partner alongside a well-capitalized, stable, and reliable manager with a 35+ year track record starting at $2,500. Get started today.


Sources:

  1. Atlanta population soars by 730,000, now fourth fastest-growing metro
  2. Old 4th Ward Atlanta, GA Livability
  3. Beltline Project Funding
  4. Cox gives $6 million to connect Silver Comet to Atlanta
  5. Measuring the Atlanta BeltLine’s economic impact
  6. Total Real Gross Domestic Product for Atlanta
  7. City of Atlanta 2021 Fiscal Condition of the City
  8. Atlanta Area Economic Summary
  9. Microsoft plans to expand in Atlanta, turn city into major hub
  10. Google to Occupy 19 Floors of Midtown Atlanta Office Tower
  11. Facebook to Invest $1B Into Georgia Data Center Expansion
  12. PWC Emerging Trends in Real Estate 2021
  13. CBRE Americas Investor Intentions Survey 2021


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Because of the illiquid nature of our shares, you should purchase our shares only as a long-term investment and be prepared to hold them for an indefinite period of time.

Investing in Jamestown Invest 1, LLC’s common shares is speculative and involves substantial risks. The “Risk Factors” section of the offering circular contains a detailed discussion of risks that should be considered before you invest. These risks include, but are not limited to, illiquidity, complete loss of invested capital, limited operating history, conflicts of interest, blind pool risk, and any public health emergency. In addition to the foregoing risks, the adverse economic effects of the COVID-19 pandemic are unknown and could materially impact this investment. Further, there is no assurance that Jamestown Invest 1, LLC will be able to achieve its investment objectives or to access targeted investments like those identified. Jamestown Invest 1, LLC is offered through North Capital Private Securities, member FINRA/SIPC.

Information on and photography featuring Jamestown’s current and previous portfolio of projects and properties are not representative of Jamestown Invest 1, LLC’s investment strategy and are not representative of the scale of investments that Jamestown Invest 1, LLC intends to make. Further, there is no assurance that Jamestown Invest, 1 LLC will be able to achieve its investment objectives or to access investments like those identified. Prior performance is not indicative of future results.

Jamestown makes no representations, express or implied, regarding the accuracy or completeness of this information, and the reader accepts all risks in relying on the above information for any purpose whatsoever. Any actual transactions described herein are for illustrative purposes only and, unless otherwise stated in the presentation, are presented as of underwriting and may not be indicative of actual performance. Transactions presented may have been selected based on a number of factors such as asset type, geography, or transaction date, among others. Certain information presented or relied upon in this presentation may have been obtained from third-party sources believed to be reliable, however, we do not guarantee the accuracy, completeness or fairness of the information presented.


The NPI is a quarterly, composite total return for private commercial real estate properties located in the United States. The NPI includes operating office, retail, industrial, apartment, or hotel properties accounted for on a market value basis and includes the impact of leverage employed on the properties in the index. The NPI Levered Index is illustrative of historical average annualized commercial real estate returns on a gross property level leveraged basis, and these historical returns may not be indicative of future results. Leverage adds additional risks because leverage providers generally get paid first and may have a full or partial recourse claim against a portfolio. Such real estate return data should not be used to estimate returns of Jamestown Invest investments. While Jamestown Invest 1, LLC may acquire properties that meet some of the NPI criteria, it may acquire properties that do not meet such criteria. Further, Jamestown Invest property returns may have a better or worse average annualized return performance compared to the index as each real estate investment is unique in nature, which is inherently problematic for benchmarking to the composite returns of a highly diversified index.