Atlanta’s speculative supply pipeline, coupled with uncertainty caused by the coronavirus pandemic, could lead to a softening in market conditions in the coming quarters. Atlanta is home to one of the largest speculative supply pipelines in the nation, and submarkets in the southern part of the metro will bear the brunt of the current supply wave. However, after a slowdown in leasing activity immediately following the onset of the coronavirus pandemic in mid-March, leasing volume has surged over the past few weeks, driven by a few major leases by Amazon. Even if absorption does slow over the next few quarters, vacancies should remain below Atlanta’s long-term historical average.
Sustained low vacancies have kept pricing power in the favor of landlords in recent years, and rent growth continues to outperform the national benchmark. The metro benefits from its role as a regional and national distribution hub, the growing Port of Savannah, and strong local demographic growth. While the Port of Savannah is a major driver for Atlanta industrial and a long-term net positive, any disruption in trade caused by the economic impact of the coronavirus pandemic, specifically sustained weakness in East Coast port traffic, could affect Atlanta industrial.