The fourth quarter solidified 2015 as the strongest year the Atlanta office market has seen during the current cycle in several key areas. Along with record investment sales activity, the market posted strong overall occupancy translating into a 1.6-percentage-point decrease in vacancy since 2014 year-end, ending 2015 at 16.2%, the lowest vacancy rate the market has seen since the third quarter of 2008. The market captured the strongest annual absorption since 2007, totaling in excess of 3 million square feet. The Atlanta market has seen 16 consecutive quarters of net-occupancy gains, continuing to drive Atlanta’s vacancy downward to pre-Recession levels.
Averaging $22.23 per square foot as of year-end, overall average asking rents continued their surge in the Atlanta area, increasing 4.0% from one year ago, marking the largest year-over-year growth since 2007. Notably, overall Class A asking rents increased at a more rapid pace, up 5.1% year-over-year to an average of $25.91 per square foot, as Atlanta’s Class A market continued to tighten. Up until recently, most of the significant rent growth has been in the Buckhead and Central Perimeter submarkets; however, we are now beginning to see strong rent growth carry over to additional submarkets, such as Midtown, NW/Cumberland/Galleria, and Georgia 400.
For much more on the 4Q findings from Cushman & Wakefield Research’s Atlanta Office Snapshot, including our outlook for 2016, click on the image below to view the full report.