ATLANTA—Atlanta's delivery of new industrial space in 2017 reached its highest level on record in 2017 with more than 17.6 million square feet completed. That's according to fourth quarter statistics released by Cushman & Wakefield.
“As companies follow rooftops and population growth, Atlanta remains the best logistics hub in the Southeast for companies to locate and expand their reach to those customers,” Lisa Pittman, director and Lead of Cushman & Wakefield's Industrial Tenant Representation Practice, tells GlobeSt.com. “With the Port of Savannah just four hours from the city of Atlanta and the world's busiest airport, Atlanta offers access to millions of customers. As e-commerce continues growing, so do expectations on fast delivery times. Atlanta's a key market for companies to locate to reach customers quickly.”
Atlanta's industrial market added 14.2 million square feet of speculative construction completions in 2017, and speculative warehouse and distribution construction completions exceeded 1 million square feet for the 11th consecutive quarter with 2.1 million square feet in the fourth quarter of 2017. Build-to-suit completions totaled 3.5 million square feet, or 19.6% of 2017 construction completions, up from 12.4 percent of completions in 2016.
“The development spigot was turned off for so long that it resulted in a large amount of pent-up demand,” says Pittman. “The number of large users scouting the market continues to support the record construction levels we have seen and there are further reaching parts of the metro being tested from a logistical standpoint.”
Industrial leasing activity and absorption are keeping pace with the record amount of new completions. Despite record construction deliveries in 2017, vacancy fell for the fifth consecutive quarter to 7.7%, a 130 basis point decline year-over-year.
In the fourth quarter of 2017, overall industrial absorption exceeded 4 million square feet, with seven out of 10 submarkets showing positive absorption. The Interstate 85 North Corridor dominated the quarter, with 2.8 million square feet, or 68% of the quarter's positive net absorption. Overall asking rents were unchanged on a percentage basis from the third quarter of 2017, and ended 2017 at $4.47 per square foot, up 6.4 percent year-over-year.
“The Atlanta Metro continues to attract net new industrial users who require a southeastern distribution point within their logistics network,” says Pittman. “This trend will continue as long as Atlanta remains a good place to live and work as companies continue to improve their delivery times to customer's homes.”
Georgia's GDP growth rate year-over-year has exceeded 2.3% for four consecutive years, and the state is forecast to grow by an additional 3.2%in 2018. Additionally, the state is expected to add more than 100,000 residents to its population via in-migration, while unemployment is predicted to fall and wages are expected to continue their rise. These economic forecasts point to continued expansion of Georgia's construction, manufacturing, and transportation/logistics industries, which are the backbone of Atlanta's industrial real estate market.
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