The Atlanta Retail Foreclosures Are Now A Part Of The Troubled Economy (Part I)

John T. Adams, the developer Crabapple Mercantile Exchange in Milton and Ellard Village in Alpharetta, the twin suburban retail centers in Atlanta‚ paid deep attention to the minute facts like wooden overhangs, historic-looking brick facades and wrought-iron fences. Recently, however both the projects went into repossession by Flagstar of Troy, Mich, his bank.

However, the conditions of the economy including a major recession have affected the retailers like anyone‚ and so the aspect of retail foreclosures is now a part of the economy of Atlanta.

Retail experts infer that the banks are starting the process of foreclosure on such retail projects because they do not see much hope of their stability with their present owners. While residential properties were engulfed by foreclosure in 2008, most experts according to The Atlanta Journal-Constitution had seen the situation of repossession of retail projects by the banks.

Adams projects, for example were leased by 50% or above and in fact, at one time one of them was leased by 89% as well. However, with the cooling of the economy his problems also rose Adams situation is symbolic to the rest of the retail development industry: as lesser consumers paid from their wallets and the, retailers pushed the developers for rent concessions.

Rents are based, partly on development costs and partly on the market conditions. The developers during the economic boom saw the steady increase of the rents and numerous retailers expanded.

For instance, the, expected retail rents in metro Atlanta helmed at $16 per sq ft during the third quarter of 2008. While in 2009 third quarter, they had peaked to $15.17. This level had not been reached since 2006 end.

The developers can at the most reduce the rents so much when the payers cannot meet the payments of mortgage. If the tenants do not get enough concessions then they might just leave and then there will be very less income.

According to Alan Wexler of Databank Atlanta, which is a real estate research firm, “It’s a trickle right now because the lenders really don’t want to take these things back.” He explained that these projects “have no value” for most banks.

Many of the retail properties purchased and developed in the last three years have lost their value just like the houses of the underwater homeowners, which cannot be sold to cover the mortgage amount.

Wexler observed that, “Now I’m beginning to see a trickle of foreclosures because these are the ones that really have no hope. The lenders just throw up their hands and take them back. Next we’ll start seeing them getting sold for pennies on the dollar.”

Popularity: 1% [?]