Atlanta office market
The supply and demand forces in Atlanta’s office market reached a
“healthy equilibrium” this past second quarter, according to a market
analysis by real estate research company JLL. The market continued to
strengthen in the third quarter of 2018, with some 2.2 million square
feet of speculative office space under construction and another 592,000
square feet of built-to-suit space in the pipeline. The total office vacancy
rate as of this past third quarter stood at 18. 7 percent — down from
nearly 21 percent in 2013.
As a sign of the overall health of Atlanta’s office market, asking rents had
increased for 19 of the past 20 quarters as of the end of third-quarter
2018. The overall average asking rent stood at $27.40 per square foot
heading into the final quarter of 2018, a historic high, according to JLL.
Solid market fundamentals are expected to continue to attract investor
and developer interest in Atlanta’s office market in the future, JLL reports.
What the locals say
“Atlanta’s office market is healthier now than it has probably
been since the end of the Great Recession. Right now, we’re
at historic highs for rental rates on the office side. When you
look at Atlanta, we are one of the four Sun Belt cities that
is adding lot of population still. We’ve been adding about
100,000 people a year … so about a million people a decade.
That’s what’s driving growth, because that’s driving job
creation. And we’re still producing a ton of jobs, and those
jobs are demanding additional supply and office space.
So, the demand is there.”
By Bill Conroy
The Peach State’s economy packs a powerful punch.
Georgia, nicknamed the Peach State, is the largest U. S. state east of the Mississippi River in terms of area and also is one of the original 13 colonies, founded
in 1732. The state has a rich history that includes the dubious distinctions of
having been the slave state with the largest number of plantations in the
South and for being the site of Gen. William Tecumseh Sherman’s infamous
march to the sea during the Civil War — in which Sherman and the Union
army cut a path of fire and destruction from Atlanta to Savannah.
Georgia is the birthplace of U.S. civil rights icon Martin Luther King Jr.;
former President Jimmy Carter; and baseball legend Jackie Robinson, the first
African-American player in Major League Baseball. The Peach State also is
home to 21 Fortune 500 companies, 16 of which are headquartered in Atlanta.
The state’s major employers include The Home Depot, United Parcel Service,
The Coca Cola Co., Delta Air Lines, Aflac Inc. and Sun Trust Banks Inc.
Georgia’s economy is quite diverse. Technology, manufacturing (including
automotive and aerospace), agriculture and tourism account for some 40 percent of the state’s economic output as measured by gross domestic product
(GDP). Other major economic nodes include financial technology, cybersecurity and the creative industries.
Georgia is home to some 100 fintech companies, including six of the largest
payment-processing companies in the nation. The state also boasts at least 115
cybersecurity companies that generate some $4.7 billion in annual revenue,
according to the Georgia Department of Economic Development. Georgia is
home to media giant CNN and is the third most popular filming location in the
nation, behind California and New York — thanks in large part to the generous
tax incentives Georgia offers to movie- and television-production companies.
The Peach State’s robust economy is underpinned by its logistics infrastructure. It boasts the fourth-largest container seaport in the nation, the Port of
Savannah, as well as the busiest airport in the world in terms of passenger
traffic— Hartsfield-Jackson Atlanta International Airport, which serves in
excess of 100 million travelers annually.
All of this economic firepower contributed to Georgia’s respectable GDP
growth in 2017 of 2.7 percent, exceeding the national GDP growth mark that
year of 2.1 percent. Over a longer term, however, the state’s economy has
slightly underperformed the U.S. economy.
Georgia recorded a compound annual growth rate of 1 percent over the
10 years through 2017, compared with the national GDP growth rate over the
same period of 1.2 percent. During first-quarter 2018, that pattern continued,
with Georgia’s GDP growing by 1.6 percent, compared with the national
mark of 2.2 percent for the quarter. A quarter later, the state’s GDP growth hit
3. 9 percent, compared with the national mark of 4.2 percent. n Craig Van Pelt
Director of research for the Atlanta region, JLL
Atlanta Office Market
Source: JLL *As of Q3
Average asking rent
per square foot
Total vacancy rate