ATLANTA—Some 11 million square feet of industrial is currently going up in the three major submarkets of A-Town, and Steve Harriss, director of analytics for GlobeSt.com Thought Leader Xceligent, says the outlook is good for the foreseeable future. In fact, major names such as The Home Depot, Walmart and Procter & Gamble have all taken up industrial residence here in the past year, taking up more than 500,000 square feet and causing a comfortable uptick in rents and down-tick in vacancy.

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“In the South submarket, by Atlanta's Hartsfield-Jackson International Airport, rates have gone up 6.5%,” Harriss tells GlobeSt.com. “In the West submarket, they've risen 4.9%, and in the Northeast 7.2%, all in the past year.” These numbers reflect all product types, be they “warehouse/distribution, flex, light industrial or bulk warehouse.” The overall vacancy rate has fallen from 10.2% in Q4 '14 to a current 9.6%.

Of course, like any other living thing, real estate doesn't grow in a vacuum, and Harriss paints a rosily supportive macro-economic environment supporting industrial's surge. “The Atlanta economy continues to improve,” he says, “and according to the Bureau of Labor Statistics, the unemployment rate is down from 7.1% in February of last year to 6.2% in February of 2015.

“Industrial-using industries such as manufacturing and trade, transportation and utilities increased by 27,900 jobs over the past year,” he continues, “and employment is expected to get another boost with both Mercedes Benz and Comcast in new construction adjacent to the new Atlanta Braves stadium in Atlanta's Cobb County.” And of course, they're going to need “industrial users to service them.” 

Harriss makes an interesting observation by noting that “Population growth is more important for industrial users than job growth. The Atlanta MSA population grew 1.6% during 2014, increasing by 88,891—the largest increase since 2008. At the end of 2014, the Atlanta MSA population was 5.6 million. 

The conversation kept returning to those construction stats, and Harriss points out that much of that new building is in spec, a fact brought up frequently by Xceligent's regional broker advisory board. “There's a lot of build-to-suit going up but quite a few spec buildings as well,” says Harriss, “and when developers feel confident enough to build on spec, that's when you know the market is back.

“Walmart just completed a 1.3-million-square-foot build-to-suit in Majestic Airport Center IV,” he reports. “Major national developers such as Majestic, Prologis, IDI, DCT, Seefried Properties, Trammell Crow Co., Exeter Property Group and Weeks-Robinson either have projects under construction or proposed. In addition, product coming out of the Port of Savannah increases the need for new warehouse/distribution product to be stored in the Metroplex.”

It should be noted that the current high times in Atlanta industrial are a far cry from the depths of the recession, when, as Harriss puts it, the MSA was hit “pretty hard.” His outlook is clearly positive these days, and will apparently remain so for the mid-haul at the earliest. “We're early on in this recovery. We have at least another two years. This year is a lot stronger than last, and next year will be even stronger.”

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Leases over 500,000 sf since April 1, 2014