The Atlanta industrial market continues to surge, benefiting from its role as a national distribution hub and from the rapid growth in the metro itself. Logistics space dominates the market, accounting for nearly 80% of all supply. And that share is only expected to increase as major tenants continue to ink deals for modern warehouses near interstates in the suburbs, while smaller industrial buildings inside of the perimeter are converted to better and higher uses. By removing that low-functioning supply in the core, and adding build-to-suit facilities in the industrial nodes, overall vacancy has steadily fallen throughout the cycle, reaching a cyclical trough in the beginning of 2018. These conditions have created an environment where industrial landlords can easily push rents, and cumulative rent gains in Atlanta have been in the top third of the nation since the beginning of 2015 (among major metros). Fundamentals are also attractive for investors, who have traded more than $2 billion in industrial assets each of the last four years. Pricing continues to appreciate, with the average over $50/SF in 2018, while cap rates have been in the mid-7% range for over a year.
