The Atlanta Commercial Board of REALTORS Releases Q2 2017 Office Market Statistics
Friday, July 7th, 2017
The Atlanta Commercial Board of REALTORS, the largest commercial REALTOR association in the country, released its Q2 2017 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.
"The Atlanta office market continues to show strong activity," said F. Keene Miller, 2017 ACBR Board President, and President of Brokerage for Ackerman & Co. "Office absorption returned to positive territory in the second quarter of the year, although vacancy edged up slightly with some one million square feet of deliveries coming online. Regardless, the market remains in a relatively healthy balance."
LABOR: According to the Bureau of Labor Statistics, the unemployment rate decreased 0.3 percentage points from 4.8% in April 2016 to 4.5% in April 2017. The unemployment rate compares favorably to Georgia (5.0%) and higher than the US (4.1%). The Atlanta metropolitan statistical area nonfarm job creation totaled 87,200 in the Atlanta-Sandy Springs-Roswell metropolitan statistical area over the past year. Office using jobs (information, professional and business services and financial activities) added 37,000 jobs during the past year.
ABSORPTION: Absorption rebounded during the second quarter of 2017. Overall absorption totaled 441,161 sf during second quarter 2017 and 331,485 sf year-to-date. Major occupancies by Global Payments, State Street Corporation, Bennett Thrasher, Holder Construction, Equifax, Honeywell, Wellstar, Rheem Manufacturing and Fulton County Health Department brought absorption into positive territory through the first half of 2017. As the Class A vacancy rate continues to decrease, demand for space in Class B buildings is expected to increase. Currently, only nine existing Class A buildings can accommodate a user larger than 100,000 sf. Demand for space is expected to continue as corporations continue to find Atlanta a good match for their Southeast destination.
VACANCY: Due to speculative construction completions, the total vacancy rate has increased from 17.1% in 2Q 2016 to 17.5% at the close of second quarter 2017. Direct vacancy rates increased 0.3 percentage points from 16.2% to 16.5% during the same time period. Three Alliance, Riverwood 200 and 8000 Avalon completed construction totaling over 1.0 msf. The speculative completions added over 750,000 sf of vacant space. Vacancy will decrease once the tenants that have leased space occupy in the next six to twelve months. The three buildings added much needed available space to highly sought after submarkets.
RENT: Weighted average rent growth continued to improve during 2Q 2017 especially in Class A properties in Buckhead, Midtown and Central Perimeter. Weighted average asking rents in all classes rose 5.5% recording $23.67per square foot (psf) at the close of 2Q 2017 compared to 2Q 2016. Class A weighted average rents recorded $26.62 psf at the close of 2Q 2017. We expect rents to continue increasing during 2017 with higher escalations in Class A buildings in submarkets with low vacancy and construction activity. Class B weighted average rents are expected to follow suit as options in Class A buildings drop.