COVID-19 Fuels Growth in Atlanta's Industrial Market

The coronavirus disease pandemic has brought new business to Atlanta’s industrial real estate market, according to a new report from Colliers International.

The reason is that major online retailers are shopping for new warehouse space as their customers self-isolate at home because of COVID-19 concerns and order more goods to be delivered to their doorstep.

“The pandemic has put a premium on e-commerce activity,” Scott Amoson, director of research for Colliers International in Atlanta, said in a new Atlanta industrial market real estate report. “Amazon is securing locations in the major submarkets to allow it to service its customers in the fastest way possible, expanding its last-mile logistics infrastructure at breakneck speed.” During the second quarter, both Amazon and Walmart took on an additional million square feet each of warehouse space in the Atlanta market, Amoson said. Those two companies’ occupancies were the largest of the quarter, accounting for almost half of net absorption, he said. He added the Atlanta industrial market is approaching an average leasing price of $5 per square foot.

Amazon dominated Atlanta’s industrial warehouse and distribution space leasing activity over the three month period of the second quarter, Amoson said. “The e-commerce giant transacted 3.7 million square feet” of that space during this time.

“The Atlanta industrial market returned to stronger absorption levels in the second quarter of 2020 with occupancy gains totaling just over 4.4 million square feet,” Amoson said. “The balancing act between space absorbed and new inventory delivered led to Atlanta’s overall vacancy rate remaining flat, though warehouse vacancy declined 20 basis points (0.2%) this quarter.”

Certainly, COVID-19 “still remains an unknown to the market,” Amoson acknowledged. But he highlighted a bright moment in a dark time.

“For now, it does not appear to be greatly impacting Atlanta, with the exception of a slight increase in sublease space availability and also a pause in overall investment activity,” Amoson said. “For Atlanta, it appears the industrial market should come out on top overall. The market’s fundamentals and location have been the key drivers to its continued growth, even during the pandemic.”

That’s not to discount COVID-19 concerns, Amoson added. “The focus now shifts to managing the pandemic’s overall influence on economic activity.”