Today, Cushman & Wakefield released a new report, Space Matters, which examines the four top trends for occupiers of office space and provides market-by-market comparisons for the country’s top 40 largest and fastest growing cities, including Atlanta. The trends featured in the report include:
- Office density: Occupiers have been allocating less square footage per employee, but that trend is starting to slow down as businesses grapple with the right balance of personal, private, communal, and break space.
- Amenities: Common amenities—such as fitness centers and cost-effective food options—still remain very important. However, there is significant opportunity for growth in how technology amenities are leveraged by occupiers and landlords.
- Parking: In many urban sub-markets parking supply is a challenge. Prices have been increasing, and occupiers are looking at creative options to meet the challenge. Also looming in the future is what impact autonomous vehicles may have on parking demand.
- Concessions: Free rent and tenant improvement allowances increased over the past year, but gains were driven by gateway markets in 2017. This trend will spread, and some secondary markets will soften as absorption slows down and/or new supply comes online.
In Atlanta, vacancy rates have been below Atlanta’s historical average for the past three years. While cooling off from the 2014 and 2015 peak, net absorption remains strong. Still, concessions are on an upward trajectory, having increased in 2017 by 6.2%. This was driven primarily by a 7.9% increase in TI allowances. In 2017, TI allowances for the overall market were $31 per square foot.
Square footage allocations in Atlanta shrunk over the past eight years more dramatically than most other cities as job growth greatly outpaced the increase in occupied inventory. The average square footage per office employee is 147 square feet. Additionally, parking costs in Atlanta are near the top among Southern cities, totaling $125/month in 2017, and have increased faster than almost every other U.S. market. Parking is up from $100/month in 2016.
“With unemployment below 4 percent, companies are focusing on making smart decisions about their space – decisions that keep their employees happy and engaged,” said Revathi Greenwood, Americas Head of Research at Cushman & Wakefield. “Landlords are playing a critical role as well – ensuring their buildings stay competitive with a good mix of amenities, and affordable parking, and of course concessions where necessary to attract top tenants.”
Click here to download a copy of the report.