For that reason, Weghorst says, Atlanta is witnessing record occupancy levels and rents that have climbed over 30% in the last 36 months. As a result of the tightness in Atlanta's class A office market and record high rental rates, Atlanta's class B office market is seeing a lot of activity.

Midtown recorded solid leasing gains totaling 153,279 square feet of direct office space during the quarter, pushing the year-to-date total up to 302,873 square feet. Downtown posted 117,998 square feet of quarterly absorption gains, bringing the year-to-date tally to 305,786 square feet. The class A office sector accounts for two-thirds of the leasing gains year-to-date.

Northwest Atlanta posted 85,913 square feet of net absorption gains during the quarter, pushing year-to-date totals up to 126,168 square feet. Central Perimeter rebounded with 35,202 square feet of direct office space absorbed during the quarter. Northeast Atlanta posted 78,658 square feet of quarterly losses, with the largest vacancy due to LSI Corp. giving up 57K SF at The Offices @ Gwinnett Commons.

“Tenants who signed leases five years ago are dealing with sticker shock by choosing to relocate to less expensive class B properties,” Weghorst says. “We are now seeing strong rent growth at class B properties and record occupancy levels well above their historical averages.”

Buckhead recorded negative 66,598 SF of direct net absorption during the quarter, largely due to Towers Watson vacating 76K SF at One Alliance Center and GlobalT Investments giving up 24,000 square feet at Terminus 100.

“Atlanta's office market is chugging along on all cylinders,” Weghorst says. “Due to all these reasons, the office market should remain a strong landlord market for the foreseeable future. Landlords will retain their negotiating power and both occupancy and rental rates should continue to rise.”