The Atlanta metropolitan area continued the momentum of healthy job growth. The Atlanta metropolitan area (metro Atlanta) has added 82,400 non-farm jobs since the second quarter of 2016. The unemployment rate dropped 30 basis points to 4.8 percent from 5.1 percent a year ago.
Mid-year 2017 statistics revealed that Atlanta has experienced the most overall net absorption within the first half of any year ever recorded. The Atlanta industrial market experienced a record-breaking first quarter with 6.4 million square feet of overall net absorption, followed by 6.3 million square feet of occupancy gains in the second quarter of 2017. This brings the first half total for overall net absorption to an astonishing 12.7 million square feet. The I-20/Fulton Industrial submarket dominated absorption during the first half of the year with 3.4 million square feet of overall net absorption. The largest move-ins so far this year are Variety Wholesalers’ move into 1.4 million square feet at the Shenandoah Industrial Park and Duracell’s move into 873,800 square feet of space at Shugart Farms. Despite the record amount of occupancy gains so far this year, the vacancy rate has remained flat at 8.4 percent year-over-year. This is evidence that absorption is keeping pace with new completions.
Not only is the Atlanta industrial market experiencing record absorption, but construction completions are also at an all-time high for the first half of any year in Atlanta’s history. Speculative completions so far this year total 7.7 million square feet, while build-to-suit completions total 1.9 million square feet. This brings the overall construction completion total to 9.7 million square feet. With 18.3 million square feet still under construction, Atlanta is on pace to surpass last year’s delivery record of 17.5 million square feet.
Leasing activity remained strong in the second quarter of 2017 with 4.9 million square feet of leases signed. This brings the first half total for 2017 to 10.9 million square feet. The Northeast lead all submarkets with 3.3 million square feet of leases signed in the first six months of the year, followed by the I-20/Fulton Industrial submarket with 1.6 million square feet of leases signed.
Overall asking rents jumped from $4.22 per square foot (psf) during Q2 2016 to $4.35 psf in the second quarter of 2017. This marks the highest industrial overall asking rental rate since the fourth quarter of 2001 when asking rates reached $4.69 per square foot. Investment sales also made a strong showing in the first half of 2017 with over 10 million square feet of industrial product trading hands.
Atlanta is poised for another banner year in 2017. We expect vacancy levels to remain healthy despite the large amount 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 such as record absorption and strong leasing activity suggest that the Atlanta industrial market will remain active and consistent throughout 2017.
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