“Landlords in the desirable submarkets will remain in control when negotiating leases,” says Weghorst. “We will still see limited concessions and rising rentals rates as long as the options for larger tenants are limited.”

ATLANTA—The Atlanta metro's office market slightly improved but at a slower pace with 10,926 square feet of direct net absorption during the first quarter. That's largely the result of Coca-Cola and Farmers Insurance/Zurich vacating a combined 461,573 SF of class A direct space.

Those are among the highlights of PMRG's first quarter Atlanta Office Market Report. The good news: Atlanta's office market fundamentals still remain strong with 1.2 million square feet of direct net absorption in the trailing 12 months. (Find out how Atlanta ranks against top growth markets.)

“We are also seeing absorption in the class A market slowdown because the big blocks of space are simply not there in the desirable areas where millennials want to be,” Bill Weghorst, president of PRMG's Eastern division, tells GlobeSt.com. “Due to the lack of class A availability, record high class A rental rates and 90,000 new jobs added over the last 12 months we are starting to see a lot of activity in the class B office market. This is evidenced by the positive absorption of 351,454 SF Atlanta's Class B office market experienced in the first quarter.”

Class A direct office occupancy returned to levels witnessed in mid-2016 as rates declined by 20 basis points to 86.1% during the first quarter and have subsided by 40 basis points over the prior 12 months. Class B direct occupancy experienced a 40 basis point improvement during the quarter to settle at 82.5% and has witnessed a 90 basis point uptick since the first quarter of 2016. (Big trades are still being recorded in Atlanta's office market.)

“Landlords in the desirable submarkets will remain in control when negotiating leases,” says Weghorst. “We will still see limited concessions and rising rentals rates as long as the options for larger tenants are limited.”