Gwinnett#s Commercial Real Estate Landscape
While rising vacancies and falling rent rates have impacted the county, 2003 brought some welcome evidence that a recovery is beginning, with strong growth expected in 2004 and 2005.
Gwinnett#s office market has faced some challenges in the past few years as it matures into one of Atlanta#s stronger suburban submarkets. Gwinnett#s vacancy rate is slightly higher than the metro Atlanta average, but this is to be expected for a still-growing submarket that has yet to achieve a balance between supply and demand.
As demand for quality office space grew in the 1990s, developers quickened the pace of new construction to meet that need. When this happens, it is common for development to run ahead of demand until tenants grow and relocate to fill that space. In the last five years, Gwinnett#s office market doubled in size, with the delivery of new space exceeding short-term demand; before demand had a chance to catch up, the bottom fell out of the economy. As job growth increases the need for new space, Gwinnett possesses the supply to address those needs, and the market will stabilize # as long as development remains limited through the early stages of the recovery.
Gwinnett County boasts one of the Southeast#s largest supplies of industrial space, with everything from smaller research and development laboratories to huge warehouses and distribution facilities. During the last two years, the industrial sector has suffered from the business contractions and reduced demand for consumer products that directly impact the need for industrial space. Activity has picked up during 2003, and some of the area#s vacant inventory has been leased. After delivering more than 8 million square feet to the market in 2001 and 2002, developers responded to the slumping economy by putting the brakes on any significant new development in 2003. If developers can restrain their enthusiasm and avoid flooding the market with new space over the coming quarters, vacancy rates should continue to fall and rental rates will begin to increase.
Gwinnett has seen a boom in retail since the opening of Gwinnett Place Mall in 1984. In the 20 years since, retail growth has spread to essentially every corner of the county # from Buford, where the Mall of Georgia opened in 1999, to Discover Mills, which opened in late 2001; from Lawrenceville, where retail growth on the major arteries is now being balanced by a downtown revitalization effort, to Snellville, which has seen an explosion of big box retailers and specialty shops that not long ago would have been almost unimaginable so far outside the perimeter. While some may question whether Gwinnett is over-retailed, the next likely challenge for Gwinnett#s retail sector will involve how best to renovate and reuse older unused spaces, either for retail or other uses. As retail markets grow, older and smaller shopping centers (particularly those without grocery stores or other anchor tenants) may no longer provide the store size, parking, or traffic flow that retailers demand of contemporary developments.
As with other sectors of the landscape # residential development, schools, and infrastructure # there is no doubt that growth will continue in Gwinnett County#s commercial sector. As of this writing, there are more than 4 million square feet of office, industrial and retail space planned for development in Gwinnett. The challenge facing developers and community leaders in 2004 and beyond will be in pacing and managing that growth; if that can be accomplished, Gwinnett County can look forward to becoming a dominant player in metro Atlanta#s commercial real estate landscape.