CUMBERLAND — The new Atlanta Braves stadium will be a boon to commercial real estate in Cobb County over the long term, experts say. But when it comes to its precise effects on specific office buildings and retail centers, the guessing games are in full swing.
“The stadium is going to be a very positive thing for the Cobb County market,” said Kirk Diamond, senior managing director and principal at Cassidy Turley, a commercial real estate services firm. “But until some of these questions are answered — mostly related to access, ingress and egress traffic — it is going to be tough to predict exactly which projects will benefit, or how quickly.”
In particular, the tenants of office buildings and retail centers, are scratching their heads as they contemplate how more congestion might affect employees and customers in and throughout the Cumberland and the south Cobb areas. Rumors about the possible relocation of Genuine Parts Co.’s 300-employee corporate headquarters are but one illustration of this, Diamond said. The company’s office at 2999 Circle 75 Parkway is adjacent to the stadium site, and concerns about stadium-related congestion are reportedly part of the reason Genuine Parts Co.’s management team is mulling a relocation to the Towers at Wildwood Plaza or another site. Last year, Coca-Cola announced it would move hundreds of workers out of Wildwood to a new IT complex on Peachtree Center Avenue.
That means Genuine Parts would have access to plenty of empty cubicles at the office complex at 3200 Windy Hill Rd., should it make the move. “With Coca-Cola moving out of (Wildwood), there are some pretty significant vacancies over there,” Diamond said.
Still, real estate professionals say the new stadium is arguably less important to commercial real estate in Cobb than broader national and regional trends that have been in play for years now. In the wake of the 2008 fiscal crisis, for example, new construction largely ground to a halt throughout much of the metro area. As projects closer to Atlanta have gradually filled up again, prospective tenants are more likely to hunt for leasable space in Cobb County, Diamond said. He cites the ripple effects from State Farm’s plans to bring thousands of jobs to Atlanta as part of its national operations center near Perimeter Mall.
“With State Farm leasing 1.4 million square feet in the central perimeter, this is now having spillover effects in Cobb,” he said. “Historically, there were always lots of vacancies in both Buckhead and the central perimeter, but that has changed. Cobb is benefitting as these other markets fill up.”
Amid this demand, Diamond says, major commercial landlord Hines will likely add another office building to its 34-acre, 1.5 million-square-feet Overton mixed-use project at the southeast corner of I-75 and I-285. The project already includes One Overton Park, a 387,000-sqare-feet office building completed in 2002. While developer John Williams is moving his company out of Overton, the arrival of hundreds of Randstad employees as part of Randstad’s headquarters relocation bodes well for the project, Diamond said.
“Randstad is going to expand. So I think the space will be very quickly absorbed in the Overton building,” he said. “All of that is precipitating the potential development of a second (office) building at Overton.”
Demand for space is growing among well-located retail projects in the county as well, said John Bemis, executive vice president of retail at JLL, the global real estate firm.
“The lack of ground-up development has allowed the market to readjust itself — especially over the past 24 months,” he said. “Cobb in particular has done very well, with big-box retail being reinvigorated and some of the vacancies diminished.”
Smart landlords have also taken advantage of the construction lull by making strategic improvements to their existing properties in strong submarkets such as those in East Cobb or around Town Center Mall in Kennesaw, Bemis added.
He cites the $3 million renovation of JLL-managed Town Center Plaza, an open-air shopping center on Barrett Parkway across from Town Center Mall. Launched in 2012 following the loss of anchor tenant Michaels craft store, the redevelopment project was a key part of JLL’s effort to woo a new anchor tenant. Homegoods, the TJX Co. brand, was a natural fit given that the TJX concepts TJMaxx and Marshall’s already posted solid numbers at Town Center Plaza, Bemis said.
The project involved modernizing changes such as adding new canopies to store entrance doors, building a new pylon sign and adopting color schemes that matched tenants’ corporate colors. After Homegoods signed its lease at the 227,000-square-foot center, retailers such as Off Broadway, Motherhood, Dress Barn, School Box and Gigi’s Cupcakes followed suit, Bemis said. “The in-line, small-shop tenancy at Town Center Plaza has been significantly upgraded, and this will continue over the next eight months,” he said. “We’re seeing this type of redevelopment occur again and again.”
But Cobb’s retail landlords continue to face some troubling trends as well — including big-box and junior-box vacancies caused largely by the national popularity of Internet shopping, said David David Lobaugh, founder and president of Marietta-based August Partners, a market research and strategic planning firm. One example is the “store closing” sign outside the Office Depot in the Providence Square shopping center on Roswell Road in East Cobb. Office Depot is closing about 400 stores nationwide amid ongoing consolidation in the office-supplies niche, David Lobaugh said.
“Staples has already announced they’re closing 225 stores and downsizing other locations to 7,000 or even 5,000 square feet,” he said. “Staples now does 42 percent of its sales online. Talk about a huge hit on real estate.”
In David Lobaugh’s survey of 1,600 U.S. shoppers last year, 23 percent of respondents reported shopping online within the past 90 days. Only 16 percent, by contrast, reported going to the mall.
“One of the consistent things we see is how much online sales are impacting brick-and-mortar retail,” he said.
But Cobb’s retail landlords are finding success by signing leases that capitalize on Internet-proof countertrends — particularly the craving for foodie-friendly stores and restaurants. At the East Lake Shopping Center at 2145 Roswell Road, for example, tenants such as Heywoods Meat Haus and newly opened The Craft Beer Factory cater to the growing appeal of all things artisan. Likewise, the trend toward fast-casual restaurants such as Uncle Maddio’s Pizza Joint, which opened at Providence Square in November, continues to help Cobb landlords fill retail vacancies, Bemis said. “We have seen an explosion of these kinds of concepts over the past two years,” he said. “And chef-driven, farm-to-table restaurants are on fire right now as well.”
Moreover, leaders in brick-and-mortar retail are working overtime to figure out how to leverage the power of the Internet rather than fight it, Lobough said. Simon Property Group, owner of Town Center Mall, is now experimenting with same-day delivery at some of its properties.
Using nothing but a smartphone, users can pay a small fee to have “crowd-sourced” drivers deliver goods from mall stores right to their homes or offices. Meanwhile, the likes of startup Sydewalk.com — an online social network focused on helping people find and share information about local shopping and dining—also hint at the prospect of technology to help Cobb real estate, not hurt it, David Lobaugh said.
“I’m not a downer,” he said. “If you don’t understand the extent of the challenge, you can’t understand the extent of the opportunity.”