OFFICE

• Overall vacancy rose to 16.6% due to negative absorption and the delivery of some unleased space in properties during the quarter. This is still reasonably low for Atlanta historically.
• Absorption paused in Q2 following healthy demand in Q1. This was largely due to several corporate users moving into new build-to-suit space and putting their leased space on market for sublease. In other words, office demand remains healthy in Atlanta, but this is not necessarily shown in a survey of space on market for lease. Year-to-date, Atlanta has absorbed more than 300,000 SF.
• Demand is clearly stronger in urban submarkets (especially Midtown and Buckhead) than in the suburbs, and is heavily weighted toward Class A space.
• In fact, urban areas are so popular that the relatively small Class B sectors in Buckhead and Midtown are the tightest markets in metro Atlanta (lower vacancy than any suburban Class A submarket), as many users choose premium locations while trying to watch their occupancy costs.
• Midtown is home to the bulk of spec construction, as well as two of the larger build-to-suit projects. It’s clear that this home to Georgia Tech and many young professionals continues to be the hub of technology and entrepreneurial activity in the city.
• Asking rents continue to rise essentially everywhere, in both Class A and B properties.

INDUSTRIAL

• Overall vacancy dipped to a 20-year-low of 6.2% due to strong demand and targeted development.
• Absorption in Q2 was almost exactly the same as was seen in Q1, reflecting consistency in demand that bodes well for the remainder of the year. The Atlanta industrial market absorbed just under 3.0 million SF in each of the past two quarters, for a year-to-date total of more than 5.85 million SF of net absorption as of mid-year. In 2017 the market absorbed 19 million SF.
• Demand is strongest in South Atlanta, but I-20 West and Northeast Atlanta have also seen healthy interest. All three of these submarkets are centered on major highway corridors, with South Atlanta having the additional advantage of proximity to the airport as well as being along the primary route to and from the Port of Savannah along the Atlantic coast.
• South Atlanta is home to more than half of all current industrial construction, with nearly 8.5 million SF under construction in that submarket alone. Across metro Atlanta 14.4 million SF are under construction, with most of that product due to deliver by the end of 2018.
• Asking rents rose 9% over the past year to their highest average since 2001. Rents are up in nearly every submarket due to strong demand and limited availability.