Second Quarter Update on Atlanta Office Market

By Jonathan Gerrard, research and marketing associate, Carter

ATLANTA (July 22, 2011) – It is hard to believe we are already in the third quarter of 2011. As we look back at second quarter, it is disappointing to see Metro Atlanta experiencing the lowest rental rates in five years and the highest vacancy rates in over 15 years according to CoStar. The second quarter brought negative net absorption of 181,904 square-feet and a decrease in average quoted rental rates from $19.38 per square-foot the previous quarter to $19.22 per square-foot. Vacancy rates increased during this same time from 19.8 percent to 19.9 percent.  These numbers confirm that Atlanta is in the midst of a slow recovery and still treading along the bottom.

Atlanta_Skyline_from_Buckhead The recovery we are seeing, while modest, still appears to be concentrated in the Class A market.  The class A market experienced positive net absorption of 91,689 square-feet and a decrease in vacancy from 20.7 percent to 20.6 percent.  This is the fifth consecutive quarter with both positive net absorption and decreasing vacancy for the Class A market. Unfortunately, quoted rental rates still dropped from $21.69 square feet in the first quarter to $21.58.

The Class B market is still struggling with negative net absorption of 263,387 square-feet and a climb in vacancy rates from 19.2 percent to 19.5 percent.  Quoted rental rates are also down slightly from $16.48 per square-foot to $16.46. This is the 11th consecutive quarter with both negative net absorption and an increasing vacancy rate for the Class B market.

In terms of Atlanta’s recovery, Midtown and Buckhead have experienced the most leasing activity during 2011. Notable leases include North Highland’s 69,922 square-foot lease at Terminus 200 and Arnold Golden Gregory’s renewal at 171 17th Street.

Check back next week for our second quarter update on the industrial market.

 

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