Headlines That Make You Go Hmm... 🤔
If you have been reading the news you may have seen some of the scary headlines over the last month or two. If you have only been getting your Atlanta market news from us this might come as a shock but here are a few of the most recent headlines. "Atlanta - Piedmont Center Faces Foreclosure!" "$657 Million Property Now Worth $200 Million!" "Office Market in Crisis!"
Sounds scary, right? But what if it isn't as scary as it sounds?
Remember back in 2008 when foreclosures meant the sky was falling? Well in 2008 it was home owners losing their houses and rentals. But what does that mean when an office builder is foreclosed on? If you stick with me for the next few minutes, I'll show you why these "doom and gloom" headlines might actually not be that bad of news for savvy investors have heard in years.
You see, there's something fascinating happening in Atlanta's real estate market right now. It's like watching two completely different movies playing at the same time. In one theater, you've got commercial buildings facing foreclosure. But in the other? Tech entrepreneurs are snatching up entire city blocks in South Downtown, and major homebuilders are gobbling up market share faster than a Georgian trying to find the right Peachtree Street.
So what's really going on here? Let me break it down...
The Tale of Two Markets
Let's start with what looks like bad news. According to the Atlanta Business Chronicle, Buckhead's Piedmont Center - all 2.2 million square feet of it - is facing foreclosure. Its value dropped from $657 million to potentially $200 million. Sounds terrible, right?
But here's where it gets interesting.
The building is still 63% leased. Not amazing but the main thing is the tenants haven't left. They're still working, still paying rent. The only thing that's really changed is the price tag on the building itself.
Think about it this way: If your local mall's property value dropped from $200 million to $50 million, would that change the prices at Nike or Apple inside? Would Starbucks suddenly sell cheaper lattes? Of course not. The stores inside keep operating, customers keep shopping, and business goes on as usual. The only people sweating are the mall's owners and their lenders.
The same thing's happening with these office buildings. Yes, Piedmont Center's value dropped from $657 million to around $200 million - but that's a problem for the owners and their bank, not the businesses inside. The tenants are still there, they still live in the area, they are still paying rent or mortgages, they are still doing business in the area. It's just the price tag on the building that's changed.
Meanwhile, Across Town...The Real Story in Atlanta
While everyone's distracted by these headlines, something incredible is happening. Tech entrepreneurs David Cummings and Jon Birdsong just scooped up 53 historic buildings in South Downtown. Their newest Atlanta Tech Village location is already 40% leased, bringing 200+ entrepreneurs to the area. That's not what a dying market looks like - that's what opportunity looks like.
But Here's What Should Actually Worry Us
Recent wildfires in Los Angeles caused a staggering $250 billion in damages.That's not a typo - that's billion with a B. Meanwhile, closer to home, hurricanes recently pushed through Augusta into North Carolina, leaving their own trail of insurance claims.
Here's the thing about insurance companies: they don't just absorb these losses. They spread them out
What This Means for Atlanta Investors
Even if your property isn't in a flood zone or near a forest, you could still feel the impact. Insurance companies are already getting nervous. The Senate Budget Committee found that in Florida alone, non-renewal rates for homeowners insurance jumped from 0.79% in 2018 to 2.99% in 2023.
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