Atlanta Office & Industrial Market: 1Q’2023

First Quarter 2023

Atlanta Office Market

Atlanta’s office market is in a holding pattern heading into Q2. Layoffs and paused expansion plans in the technology industry, which drove much of the robust leasing recovery in 2022, have tempered expectations for the coming year. While absorption continues a positive trajectory as tenants take occupancy on last year’s leases, new leasing declined considerably. And some market participants note a slowdown in inquiries from the new-to-market corporate relocations that drive the largest leases. Still, the market’s long-term appeal remains intact.

In Atlanta, long-term demand for office space benefits from regional affordability, population growth, and a diverse workforce. However, the market is not immune from macro recessionary trends and a drastically tighter financing environment.

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Atlanta Industrial Market

Despite four straight quarters of rising vacancies, the market here is still tighter than any time before 2021, and Atlanta remains among the top six markets for net absorption. The market has downshifted slightly, but the shift appears to be more normalization than downturn. Vacancy and absorption have both returned to more typical levels, while groundbreakings slowed even though much of leasing demand was for new inventory.

Well-located assets still command significant rent increases, though Atlanta remains one of the country’s least expensive major industrial markets. Connections to the nearby ports, combined with geographic location along the I-85 corridor, position Atlanta as a distribution hub. Additionally, vehicle manufacturing growth will continue to drive demand for industrial space.

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