The Atlanta Commercial Board of REALTORS, the largest commercial REALTOR association in the country, released its Q3 2016 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 0.9 percentage points from 6.0% in July 2015 to 5.1% in July 2016.  The Atlanta metropolitan statistical area job creation totaled 74,800 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 14,800 jobs during the past year.  

ABSORPTION: The Atlanta office market recorded 476,084 square feet of positive absorption during 3Q 2016 and 869,192 sf year-to-date.  Major occupiers of space included Genuine Parts, Wellstar, N3, AFLAC and Power Engineers.  Several large tenants including Racetrac, Wellpoint, Kaiser Permanente and State Farm are expected to occupy over 75,000 sf each during 4Q 2016.  Demand for space is expected to continue as corporations continue to find Atlanta a good match for their Southeast destination.                

Due to an ongoing increase in demand for space, the total vacancy rate has dropped from 17.6% in 3Q 2015 to 17.0% at the close of 3Q 2016.  Direct vacancy rates dropped 0.8 percentage points from 17.0% to 16.2% during the same time period.  Markets with vacancy rates dropping more than 1.0 percentage points included Midtown, Northwest and South.

VACANCY: Weighted average rent growth continued to improve during 3Q 2016 especially in Class A product in Buckhead, Midtown and Central Perimeter.  Weighted average asking rents in all classes rose 5.2% recording $22.45 per square foot at the close of 3Q 2016 compared to 3Q 2015.  Class A weighted average rents rose 4.9% year-over-year, recording $25.70 psf at the close of 3Q 2016.  Class B rents rose 6.5% year-over-year, recording $19.11 psf at the close of 3Q 2016.  We expect rents to continue increasing during 2016 with higher escalations in Class A product in submarkets with low vacancy and construction activity.