Second Quarter Update on Atlanta Industrial Market

By Jonathan Gerrard, research and marketing associate, Carter

ATLANTA (July 28, 2011) – Last week we gave you an update on Atlanta’s second quarter office market. Similar to the office market, industrial also seems slow to recover. According to CoStar, the overall market saw negative net absorption of 632,778 square-feet. This compares to positive net absorption of 2,115,848 square-feet in the previous quarter. The vacancy rate rose from 13.9 percent to 14 percent, but this number has been steady around 14 percent for the past year. Leasing activity was at 3,361,488 square-feet compared to 3,952,897 square-feet previous quarter. However, this is improvement from second quarter 2010 when leasing activity was at 2,845,400 square-feet.

Industrial Atlanta If we take a closer look at the industrial submarkets, the warehouse market saw negative absorption of 753,713 square-feet.  While this sector has experienced several quarters of occupancy gains over the past year, it will take a significant amount of time to recover from the over 15 million square-feet of vacant space added to the market between 2008 and 2010. The warehouse market’s vacancy rate is currently 14.2 percent, a 0.2 percent increase from first quarter’s 14 percent. This is a drop from third quarter of 2010 when vacancy reached a high of 14.5 percent.

The shallow-bay market is starting to look better while the flex market has not seen any significant improvements. Shallow-bay realized positive net absorption of 84,282 square-feet in the second quarter. This was the fourth consecutive quarter it has been positive along with a decrease in the vacancy rate, which is currently at 12.1%. The flex market experienced positive net absorption of 36,653 square-feet while the vacancy rate remains unchanged at 16.4 percent.

As we take a snapshot of Atlanta, the Northeast and South Atlanta markets are seeing the most leasing activity and largest absorption gains. Some notable leases this quarter include Czarnowksi’s 570,000 square-foot lease at Hartman V and Ceva Logistics ‘s 404,700 square-foot lease at Camp Creek Trade Center.

Hopefully this warm weather will also heat up Atlanta’s office and industrial markets.  We are hopeful third quarter numbers will show more signs of an improving commercial real estate climate.  

 

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