Atlanta Office & Industrial Market: 1Q’2023April 25, 2023
Second Quarter 2023
Atlanta entered 23’Q2 with more than 61 million SF of available space, an increase of 20% over the past three years. Much of that space is in a stubborn sublet market, a concern for the market that could serve as a headwind for the metro’s office recovery for years. Atlanta has roughly 9.1 million SF of available sublet space, representing about 2.7% of the metro’s total inventory. That’s up from 3.2 million SF in early 2020 and more than the market has ever seen. Even during the global financial crisis, sublet availabilities peaked at 5.6 million SF in 2009. Recent decisions from companies like Cox Automotive, IBM, and Anthem have added to that total.
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.
Atlanta’s vacancy rate drifted higher through the first half of 2023 after reaching record lows in 2022. However, at 4.6%, it remains far below the market’s 10-year average of 6.2%. A combination of slower leasing activity and a pickup in new deliveries drove the increase. The trailing 12-month leasing total for Atlanta fell to 34.6 million SF as of May 2023 from peaks above 50 million SF the year prior. Still, total leasing velocity remains above pre-pandemic trends. By comparison, annual leasing activity averaged 32.4 million SF between 2016 and 2019.
Connections to the growing ports of Savannah, Charleston, and Jacksonville, combined with a geographic location along the growing Interstate 85 corridor, position Atlanta as a distribution hub for both major Southern and lower Midwestern population centers. Recent major leases and move-ins from Sam’s West, Home Depot, UPS, and Dollar General solidify that position. Population growth in the broader Southeast region has bolstered aggregate spending in the market.