Atlanta’s office and industrial sectors are experiencing robust construction activity. Industrial completions in 2018 reached an all-time high, with over 18 million square feet (msf) of new space delivered. This marks the first time the Atlanta industrial market has posted three consecutive years with annual deliveries over 17 msf. With record-breaking occupancy gains and construction completions, the vacancy rate was unchanged year-over-year at 7.7%. Despite record warehouse/distribution deliveries in 2018, warehouse/distribution vacancy fell to 8.0%, a slight 10 bps decline year-over-year. The fourth quarter of 2018 was Atlanta’s 20th consecutive quarter of vacancy at or below 9.0%, while 68.2 msf of new construction delivered through the same 20-quarter period.
Office-using employment continues to rise in the Atlanta market. Coupled with relatively low construction deliveries in the most attractive submarkets, office occupancy has remained in a narrow range since 2016, dropping to 16.2% in the fourth quarter of 2018. Strong economic growth and in-migration to Atlanta, and the accompanying war for talent, will continue to push the Atlanta office market to more record heights throughout 2019. Demand for office space in the city’s CBD has contributed to 2.7 msf of office space under construction in Midtown and Buckhead alone, accounting for 64% of office space currently in development. There is a total of 3.5 msf of speculative office space under construction, and 631,000 sf of build-to-suit space for occupiers.
For more on construction trends, check out our infographic below.