(Read more on the industrial market.)
ATLANTA-Industrial leasing is expected to remain on pace with the past two quarters, according to the first quarter market report from Colliers International. About four million sf of industrial space was absorbed in the first quarter, which is similar to absorption levels for the previous two quarters, says Scott Amoson, director of research for Colliers Spectrum Cauble Inc., a member firm of Colliers International Property Consultants.
There was approximately 13 million sf absorbed last year and Amoson predicts a similar amount to be absorbed this year. In the report for the fourth quarter, Amoson predicted that absorption rates would be only be about one million sf to two million sf for the first quarter. One of the most surprising findings while putting together the report for the first quarter was that absorption rates appear that they will remain relatively the same as the previous two years, Amoson tells GlobeSt.com.
"At the beginning of the year, it was kind of quiet," he says. However, in the first quarter, PetSmart moved into a new 877,000-sf distribution facility in South Atlanta, Worley Logistics moved into a 500,000-sf warehouse space in the I-20W/Fulton Industrial and Jonesboro Commerce moved into 307,114-sf of warehouse space in South Atlanta, he says. Warehouse space and shallow-bay distribution space each saw absorption of more than two million sf in the first quarter, according to the report.
The vacancy rate posted a decrease for the first quarter, which was the first time in a year. Amoson says the vacancy rate had increased because there was 20 million sf of industrial space delivered with six million sf delivered in the fourth quarter. Approximately 1.9 million sf of industrial space was delivered in the first quarter. For next quarter, the vacancy rate "might not move at all," he says. There is expected to be about four million sf or five million sf of industrial space delivered and between 2.5 million sf to four million sf absorbed. Construction levels are down 60% from last year. "We still have six million sf under construction [but] that is a lot lower than the 15 million sf a couple of years ago," Amoson says.
There was a 2% increase in the overall average market rate to $3.70 per sf, triple net. The increase is due partly to the decrease in vacancy but lease rates are going up nationally for industrial as well as office rates, Amoson says. "Cap rates remain level," he says.
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