In Atlanta, Developers Destroy Hopes of Recovery
The Wall Street journal recently reported the Atlanta Real Estate market is suffering from that oft-repeated term that has come to define our current ecnonomy: "irrational excuberance".
They site a 1 mile section of Buckhead Real Estate as a prime example of an emerging trend in the United States commercial real estate sector. A trend that stands as an obstacle to economic recovery.
According to the article, several prominent Atlanta developers are in the process of constructing 4 new office buildings in Buckhead. Now, that alone is not a speculative act, but add to this scenario that there is currently little demand for office space and you've got a recipe for disaster. It's this same reckless builder activity perpetuated by the likes of Novaire and other condo developers in our city that helped push our inventory to a near 40 year supply at the current sales pace and has littered our market with fire sale prices.
"If you build it, they will come."
It's was this silly mantra - a backwards interpretation of simple supply-demand mechanisms - that got us into this mess in the first place. And for nearly a decade lenders, developers and investors have fueled an irrational, greedy and thoughtless push for profit.
Don't they know the party is over?