I guess the moral of the story is that even though it’s a cool trend, the zoning is in place and you have a willing lender, sometimes you should not move forward with a development. This thought came to mind when I read about a rezoning being approved for a mixed use (retail and residential) development in the East Atlanta neighborhood.
The good news about this project is that the residential component will be “rental” rather that “for sale” units and it will be located in an established retail corridor adjacent to two very established single family neighborhoods. The bad news is that there are plenty of retail vacancies in the corridor and the multifamily market here is a bit soft. For this project, the chances are the good will outweigh the bad and it will be a success.
There are several other projects in the intown market that will not be so lucky. I somewhat understand the “irrational exuberance” of the condo developers that were caught up in the condo building frenzy and I understand the economics of having a retail component in your project. What I don’t understand is building a mixed use project in an area with few if any “rooftops” to support your retail. There are several projects that fit this description with 10,000 to 30,000 square feet of retail space available and almost none of it has been leased. The Intown Atlanta market, in my opinion, is still “under retailed”. It’s just that basic market fundamentals matter now more than ever and you need a population with a decent level of income to support retail establishments. Several developers seemed to have forgotten this lesson.