ATLANTA—Occupancy gains boosted the Atlanta office market with 712,898 square feet of direct net absorption recorded during the fourth quarter. That pushed year-end absorption gains to just over 1.7 million square feet. That's according
“This is no surprise given that Atlanta continues to witness robust job growth with 57,000 jobs created over the trailing 12-month period and over half a million jobs since the Great Recession ended in 2010,” Bill Weghorst, president of PMRG's Eastern Division, tells GlobeSt.com. “Atlanta remains an economic powerhouse as companies flock to our region thanks to our proximity to an excellent talent pool of highly skilled workers, our great university system and our lower cost of living compared to the more traditional gateway markets.”
(What really drove a decline in transaction volume? Check out one opinion.)
Class A direct occupancy rates slid by 10 basis points to 85.5% during the fourth quarter and has fallen by 80 basis points over the prior 12 months as construction deliveries added nearly 2.2 million SF throughout the year. That means there's a temporary surplus of available space.
Overall asking rental rates continued to ascend to their highest level on record but the class A sector experienced its first pullback since 2013. Pre-leasing in new construction projects is expected to remain strong in 2018 as this new product will provide tenants with much needed relief with more space options to expand and/or relocate.
With tenants demanding more amenities and controlled environments for recruitment and retention purposes, property owners will focus upon significant capital improvement programs to enhance their assets to remain competitive in retaining and attracting tenants.
“In 2018, I think we will continue to see significant pre-leasing in new projects before these new buildings break ground,” Weghorst says. “We will also see landlords continue to renovate and re-purpose older buildings in-order to keep attracting tenants who look at older, class B properties as more economical options than newer built buildings.”
(Bridge Office sold Parkway Center in suburban Atlanta. Get all the details.)
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