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Fourth Quarter 2023
The challenges facing Atlanta’s office market deepened in 2023. The long-planned consolidation of office footprints from major employers such as AT&T and Invesco in 23Q2 led to the steepest negative absorption since early 2021. Still, the market’s long-term appeal remains intact, and a handful of high-profile leases signed in the second half of 2023 raised optimism among market participants. Bright spots of positive absorption exist around pockets such as The Battery and the Eastside Beltline.
Long-term demand for office space has benefited from regional affordability, population growth, and a diverse workforce that help corporations meet environmental, social, and governance (ESG) or diversity, equity, and inclusion (DEI) mandates
Even with six straight quarters of rising vacancy and the worst negative absorption since 2011 in 23Q4, Atlanta’s industrial market is still tighter than at any time before 2017, with a 6% vacancy. But compared to the record run of tightening vacancies and escalating leasing activity mid-pandemic, Atlanta’s industrial market cooled significantly over the past several months.
Longer term, the same challenging financing environment that has slowed sales volume could help strengthen market fundamentals in the years to come. Construction starts have declined precipitously in Atlanta, even more so than in other major U.S. markets. That will result in fewer deliveries in coming years, which will likely position Atlanta to return to tighter vacancies and reaccelerated rent growth in 2025.