Average rental rates ratcheted up to $21.01 psf, and the occupancy rate climbed to 91.7%. Absorption outpaced delivery in the first half, accounting for the higher occupancy rate. Occupied office space breached the 100 million sf level and continues to rise.
The Urban Corridor, comprised of downtown, Midtown and Buckhead/Lenox, is robust. Just five years ago, companies were leaving the downtown area for livelier surroundings and more modern space in Midtown and Buckhead. Others were exiting the urban scene completely, heading north to the exploding North Fulton market where new buildings were, and still are rising in droves.
Space in Buckhead was scarce. In 1995, the Urban Corridor occupancy rate was 86.9% and the average rental rate was $18.93 psf. Today, occupancy at mid-year was at an all-time high of 94.6%. Suburban markets are at 90.3%. Led by Buckhead/Lenox's rental rates of $25.28 psf, average rates for the Urban Corridor are at $23.29 psf, up from $22.64 psf at year-end 1999.
Fueling the urban comeback is development around Centennial Olympic Park. Several office and residential projects are either under way or planned, including Turner Properties' five-year expansion plan to add a 25-story, 600,000-sf office tower and a 24-story hotel. Loft conversions and demand for space by high-tech companies, professional firms, financial institutions and government are also driving this submarket's engine.
Midtown remains strong, with a record high occupancy rate of 96.9% and rental rates at $23.12, second only to Buckhead/Lenox. More than 1.5 million sf of space is under construction or redevelopment in the submarket. It has attracted a core of high-tech companies, drawn by the fiber optics cable infrastructure laid to accommodate Olympic activity.
Buckhead has long led the Atlanta office market in rental rates. Class A space is at $27.01 psf and the mid-year occupancy rate is 96.2%. Little space is available presently, but future office projects under way or planned total more than one million sf.
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