The Atlanta office market is in good shape, as rent growth and vacancy continue to outperform historical averages.
These conditions are due to strong job growth in office-using employment and a relative lack of new supply. Further, new office development this cycle has generally been build to suit, with State Farm, Cox Communications, and NCR leading the way. And even though Atlanta is experiencing the highest level of construction in the current cycle, the net amount of new supply still falls short of Atlanta's historical average.
With these favorable conditions in Atlanta, and so much capital in the marketplace, the metro has been a lucrative environment for deals this cycle. However, the average number of investment transactions has been slowing after strong showings in 2015-16. But this slowdown can be partially attributed to a lack of available inventory, as over 80% of institutional-grade assets have traded at least one time in the last seven years. Plus,average pricing continues to appreciate and average cap rates for 4 & 5 Star buildings are being reported sub 6.5%. Based on these factors, Atlanta’s office fundamentals are expected to remain favorable as the nation continues its economic expansion.