The Atlanta Commercial Board of REALTORS (ACBR), the largest commercial REALTOR association in the country, released its Q2 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 0.8 percentage points from 6.4% in April 2014 to 5.6% in April 2015.  83,200 jobs were created in the Atlanta-Sandy Springs-Roswell metropolitan statistical area over the past year.

ABSORPTION: The Atlanta office market recorded 245,950 SF of positive absorption during the second quarter of 2015.  Year-to-date absorption totaled 568,545 sf.  Class A space continues to dominate the market, accounting for the majority of the absorption total during the second quarter of 2015.

VACANCY: Due to an ongoing increase in demand for space, the total vacancy rate has dropped from 19.8% in Q2 2014 to 18.9% at the close of second quarter 2015.  Direct vacancy rates dropped 1.1 percentage points from 19.3% to 18.2% 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 3.9% compared to Q2 2014 recording $20.71 per square foot (psf) at the close of second quarter 2015. Class A asking rents rose 4.6% over the last year recording $23.81 psf.

TOP LEASE TRANSACTIONS: Major occupiers of space included SAP America, Veritiv, Norfolk Southern and Kimberly Clark.  With over 800,000 square feet (sf) of space to be occupied during the second half of 2015, absorption totals will continue to strengthen.

A Word from ACBR President Chip Roach: “Atlanta’s economic expansion has strengthened within the past year, driven by corporate relocations and expansions. As a result, Atlanta’s office market fundamentals have remarkably improved with nearly 3 million sq. ft. of direct net absorption in the trailing 12 months and over 9.3 million sq. ft. absorbed since the end of the Great Recession. Strong job growth and limited development have caused direct occupancy levels to match their highest level since 2007. Due to the supply/demand imbalance, landlords of existing product have pushed rents near their prior peak established in 2008 and it certain buildings in Buckhead and Central Perimeter the rates have surpassed those levels. The best performing submarkets have experienced significant rental rate appreciation as market conditions continue to tighten and the scarcity of Class A product becomes increasingly evident. As a result, several developers have announced office development projects in recent quarters that are currently vying for a few large requirements in the market to help kick-off construction.         

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 strong amenities. As a result of the tightening Class A office market, larger users needing immediate space will be forced to consider Class B space options. With no deliveries on the immediate horizon, occupancy and rental rates are projected to continue to increase over the next 12 to 18 months.”

For more information or details on the reports, please contact ACBR at 404-250-0051.