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This Type of Office Renting for a Premium

ATLANTA—“There has been a conscious flight to quality, both quality buildings and quality space within each building.”

By Jennifer LeClaire | jenniferleclaire | | Updated on August 12, 2016
Class A per square foot asking rent for office space in Atlanta's urban core has hit $30.62. But that's not all. Class A per square foot asking rent for office space in Atlanta’s urban core has hit $30.62. But that’s not all.
ATLANTA—Class A per square foot asking rent for office space in Atlanta’s urban core has hit $30.62. That’s the market’s first time on record above $30 per square feet, according to Savills Studley ‘s Q2 Atlanta Market Report. The office market report highlights several noteworthy factors weighing on the city’s development and tenants. “The vacancy rate has been falling and construction costs are increasing,” Chris White , a market leader at Savills Studley, tells GlobeSt.com. “New buildings are asking between $40 and $45 per square foot, which is elevating the asking price for nicer class A buildings in the market. Rents have moved from high $20s per square foot to low-high $30s per square foot.” Meanwhile, tenants are more than willing to pay a premium for penthouse office space . The report reveals the pricing differential for lower floor commodity space and office space on upper floors is widening. Specifically, “view space” commands a premium over $40 per square foot in some buildings. “There has been a conscious flight to quality, both quality buildings and quality space within each building,” White says. “Because of this, upper floor opportunities are limited and the trophy buildings are commanding a 15 to 20% premium for upper floors versus lower floors.” That said, there are still big blocks of office space available in Downtown Atlanta. There are 55 class A and B blocks over 50,000 square feet in existing buildings currently available in the urban core. “This is likely down from 12 to 14 months prior,” White says. “Most of these blocks of space 50,0000 square feet are lower in the building, as many of the upper blocks have already been spoken for.”

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