Atlanta on Pace for Record Industrial Development
Metro on track for 40M SF in deliveries as rents hit $6/SF for first time.
Atlanta’s industrial market continued its record-breaking pace in the third quarter. The Atlanta metro is on track to vastly exceed the record for warehouse construction deliveries in 2021, according Cushman & Wakefield’s Q3 market report.
Construction has been completed on 21.5M SF of industrial space so far in 2022, with 71% of the spec space preleased, C&W reported. Another 18.2M SF of industrial delivers be completed before the end of the year.
Atlanta’s average warehouse asking rental rate is up 33% YOY to $6.02 PSF, surpassing the $6-mark for the first time in history in Q3, C&W said. Every submarket in the Atlanta metro now averages more than $5.20 PSF.
Though leasing activity did not reach the unprecedented heights of 2021, Q3 demand remained strong in Atlanta with 31.7M SF of new deals signed YTD, according to the report authored by C&W’s Christa DiLaio and Audrey Giguere.
Five submarkets exceeded 4M SF of industrial leasing activity: I-85 North (&M SF); I-75 South (5.8M SF, Airport/South (4.6M SF); I-20 West/Fulton Industrial (4.2M SF); and I-85 South (4.1M SF).
Metro Atlanta’s vacancy rate held steady at 2.9%, unchanged since last quarter, but down 100 bps from a year ago, with the most substantial decrease occurred in I-75 South/Henry County, where vacancy has plunged from a five-year average vacancy 12.6% to 1.8%, making it the tightest submarket in Atlanta, the report said.
Industrial demand in Metro Atlanta remained strong across tenant types. 3PL providers accounted for 39.6% of the top leases for Q3, most of which occurred in the I-75 S and I-85 S corridors; manufacturers notched 22.9% of the top leases; and retailer/wholesalers garnered 12.5%.
According to JLL’s Q3 industrial market report for Atlanta, the nearly 9M Sf of deliveries in the third quarter were the most in Atlanta’s history.
“The market is moving so quickly that many developers and owners will not quote rates until RFP’s are sent,” JLL reported.
“While Atlanta is still largely a landlord favorable market, landlords have become increasingly flexible with lower TI allowances and more willingness to prelease and do long-term deals, still trying to attract good tenants, JLL said.
According to JLL, sublease space is not staying on the market long in Atlanta, as over half of the space is in Class A product and is move-in ready. Roughly 1.4M SF of deals signed so far this year were in sublease space, up 62% since Q3 2021.