Deliveries Reached a Record 17.5 MSF According to Cushman & Wakefield
Cushman & Wakefield released fourth quarter 2016 statistics for the Atlanta industrial market that show continued momentum after an impressive first half of the year. Occupancy gains remained strong in the fourthquarter with 3.5 million square feet of positive net absorption. Leasing activity is up 8 percent from 2015 with 21.9 million square feet leased in 2016. Construction completions reached an all-time high with 17.5 million square feet delivered in 2016.
Fourth quarter 2016 statistics revealed that Atlanta shattered the previous delivery record set in 2000 when deliveries reached 14.9 million square feet. Speculative completions in 2016 were 15.3 million square feet,while build-to-suit completions posted 2.2 million square feet. This brings the overall construction completion total to a record amount of 17.5 million square feet. Even though 15.3 million square feet of speculative space delivered this year, more than half of that space is already leased. This proves that Atlanta is one of the most sought-after and attractive industrial markets in the nation.
Industrial net absorption in the fourth quarter of 2016 posted 3.5 million square feet, bringing the total to 13.7 million square feet absorbed for the year. The largest move-ins for 2016 wereGoogle’s move into 1.1 million square feet in South Atlanta, Williams-Sonoma 1 million-square-foot occupancy in the Northeast and Smucker’s lease for an additional 1 million square feet in South Atlanta. Fourthquarter 2016 marked the 14thconsecutive quarter with at least 1million square feet of positive net absorption.
Leasing activity for 2016 increased over 1 million square feet from 2015to 21.9 million square feet with 3.4 million square feet of leasing activity in the fourth quarter. Variety Wholesalers signed the year’s largestlease for 1.4 millionsquare feet at 60 Herring Road, followed by Williams-Sonoma’s lease of 1.1 million square feet at the Braselton Commerce Center.
Even with strong leasing activity and over 3 million square feet in net occupancy gains, the market saw an increase in the overall vacancy rate. Theoverall vacancy rate increased 110 basis points year-over-year from 7.9% in 2015 to 9.0% in 2016. This increase in vacancy is due to a record amount of deliveries.However,Atlanta still has 14.8 million square feet of industrial product under construction.
Overall triple-net asking ratesdecreased from a year ago from $4.29 per square foot at the end of 2015 to $4.20 per square foot in fourth quarter 2016. Looking forward, we expect vacancy levels to remain healthy despite the large influx of new deliveries. Strong market fundamentals coupled with increasing demand for big-box space make Atlanta one of the top markets in the nation for industrial real estate. Current indicators suggest that industrial activity will remain active and consistent throughout 2017.
2016 Industrial Highlights:
- Atlanta experienced a record level of deliveries with 17.5 million square feet of new construction completions in 2016.
- Leasing activity is up 8 percent from 2015 with 21.9 million square feet leased in 2016.
- Industrial net absorption in the fourth quarter of 2016 posted 3.5 million square feet, bringing the total to 13.7 million square feet absorbed for the year.This quarter marked the 14th consecutive quarter with at least 1 million square feet of positive net absorption.
- The overall vacancy rate increased 110 basis points year-over-year from 7.9% in 2015 to 9.0% in 2016 due to the large influx of deliveries.
- Overall triple-net asking rates decreased from a year ago from $4.29 per square foot at the end of 2015 to $4.20 per square foot in fourth quarter 2016.
- Investor sales activity remained strong during 2016 with 23.1 million square feet trading for the year.
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
