The Atlanta Commercial Board of REALTORS Releases Q3 2015 Office Market Statistics
Staff Report From Metro Atlanta CEO
Tuesday, October 6th, 2015
The Atlanta Commercial Board of REALTORS, the largest commercial REALTOR association in the country, released its Q3 2015 Office Brief on office market trend statistics for 30 Atlanta Office Sub Markets. Office Brief is compiled by data from Xceligent, a leading provider of verified commercial real estate information.
LABOR: According to the Bureau of Labor Statistics, the unemployment rate dropped 1.5 percentage points from 7.6% in July 2014 to 6.1% in July 2015. 85,000 jobs were created in the Atlanta-Sandy Springs-Roswell metropolitan statistical area over the past year. Office using jobs (industries include financial activities, information and professional and business services) increased by 28,400 jobs over the past year.
ABSORPTION: The Atlanta office market recorded 692,855 SF of positive absorption during the third quarter of 2015. Year-to-date absorption totaled 1,846,046 sf.
VACANCY: Due to an ongoing increase in demand for space, the total vacancy rate has dropped from 19.4% in Q3 2014 to 18.5% at the close of third quarter 2015. Direct vacancy rates dropped 1.3 percentage points from 19.0% to 17.7% during the same time period.
RENT: Rent growth is expected to accelerate during 2015, especially in high performing submarkets. Weighted average full-service asking rents for all classes rose 5.8% compared to Q3 2014 recording $21.63 per square foot (psf) at the close of third quarter 2015. Class A asking rents rose 6.8% over the last year recording $24.51 psf.
TOP LEASE TRANSACTIONS: Major occupiers of space included SAP America, FiServ, Rent Path and Mercedes Benz. Demand for space is expected to continue as corporations continue to find Atlanta a good match for their Southeast destination.
A Word from ACBR President Chip Roach: “Strong employment growth continues to fuel office leasing demand citywide with its 17th consecutive quarter of positive absorption, bringing the cumulative direct occupancy gains total to over 9.9 million sq. ft. since the end of the Great Recession. As a result of solid demand and restrained development activity, the office market has seen rental rates reach record levels as occupancy rates have improved to their highest level since 2007. The best performing sub-markets have experienced significant rental rate appreciation as the market continues to tighten and the scarcity of Class A product becomes increasingly evident.
In the year ahead, a flight to quality trend coupled a modest amount of new construction deliveries will further shift the negotiating power to the landlord’s favor, especially within well-located properties with greater infrastructure and amenities. As the Class A office market continues to tighten, large corporate users needing immediate space will increasingly consider Class B space options in the urban core submarkets or venture out to the northern suburbs as a more economically viable alternative. The current lack of adequate new development will lead to further space tightening, but there are several proposed construction projects on the drawing board that could break ground after pre leasing requirements are achieved to meet future demand beyond 2016.”