Colliers International just released a new report that consisted of mostly good news about the Atlanta office market.
Right now, the Atlanta office market is showing continued signs of stability in the second quarter. There was significant expansion by leading technology companies, and the report argued that Atlanta is a preferable location for large companies to relocate post-pandemic. But, that there has been a decline in overall leasing activity that will affect occupancy levels later in the year.
The Colliers International report is significant because the coronavirus has had a substantial impact on the office market nationwide. Many jobs were lost and there has been a mainstream movement for employees to work from home so they can avoid becoming infected by the coronavirus.
Though, for the most part, the coronavirus pandemic has not drastically impacted the Atlanta office market. The report cited increasing rents, flat vacancy, healthy construction activity, and positive absorption.
For instance, one of the shining stars in Atlanta is the Class A office market, which experienced the most positive activity in the second quarter. And, for the second consecutive time, Central Perimeter led the market with the highest amount of office space absorbed.
The report recognized Siemens as the largest occupancy for the second quarter. The German automation company relocated to nearly 75,500 square feet at The Catalyst at Peachtree Corners. Though, the company consolidated out of two buildings within the submarket, giving back over 112,000 square feet, according to the report.
Colliers stated in the report that in the second quarter, there were 100,000 square feet in absorption primarily due to expansion by technology companies, such as Merchant e-Solutions, Square, and Prime Revenue. To that end, the largest transaction in 2020 has been by the technology company, Mircosoft, which has a 524,000 square foot lease at Atlantic Yards.
However, there is some bad news to the Atlanta office market brought by the coronavirus pandemic. There has been a negative effect on both Class B and Class C properties as they experienced occupancy losses for the second quarter, according to the report.
While the reopening of the economy may decrease the loss of nearly 300,000 jobs in Atlanta, right now, many offices remain empty as more employees are choosing the mainstream trend of working from home. The report stated the new trend is creating a buzz in the commercial real estate industry "given its direct impact to office buildings across the nation."
Also, lagging was investment activity in the Atlanta office market. There was a significant drop in the second quarter as total sales volume decreased by 65% from the first quarter. But, the report provided ways to mitigate the downturn. Buildings with the "most desirable fundamentals," such as strict property management protocols, "will likely capture investor interest."
Moving forward, the metro area is likely to attract companies from outside the Atlanta market. The report forecasted that as companies in highly-urbanized cities assess their future, relocations to the metro area will intensify. In addition, as the metro area is home to many affluent office nodes in the suburbs that "will also be a major attractor to post-pandemic requirements."
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Michael A. Mora
Michael was born and raised in South Florida. He went to undergrad at Florida Atlantic University and earned his master's degree from the Columbia University Graduate School of Journalism. He is the crypto litigation reporter for Law.com, as well as an editor for ALM Global. You can email him at [email protected].
