Of the three urban submarkets, only the 12.3-million-sf Midtown area is staying out of the negative zone for the nine-month monitoring period to date. Midtown led the urban markets with 97,542 sf of positive absorption in the third quarter and 236,570 sf for the nine-month period. Downtown clocked in with 18,378 sf of positive absorption for the quarter but is in negative territory for the year to date with 127,035 sf.

Downtown also had the highest urban vacancy at 18.36%. Midtown vacancy is 14.09%. The suburbs easily outclassed the three urban markets in most categories and especially in the net absorption column. The 13 suburban markets chalked up a total 900,444 sf of positive absorption. Down, Midtown and Buckhead-Lenox aggregately contributed 2,634 sf.

"The suburban submarkets have soundly outperformed the urban markets for 2005 year-to-date with the spread between their occupancy levels narrowing," observes Richard Bowers, president, Richard Bowers & Co. But the urban corridor still remains at a higher occupancy level at 83.94% versus the suburbs at 82.79%, Bowers says. Average asking urban rents are $23.21 per sf compared to $19.15 per sf in the suburbs.

"For the next several years, the urban corridor will experience a much higher level of new office development than the suburbs, which has not been the case over the last 30 years," Bowers projects. "This situation will continue primarily due to the urban corridor's accessibility, convenience, public transportation, shorter commute times, numerous amenities and proximity to Hartsfield-Jackson International Airport."

Bowers adds, "Although the office market remains a buyer's market, our outlook remains positive with continued absorption and market conditions less concessionary than a year ago."

New construction in 2005 is expected to total only 316,400 sf. "This is the lowest amount of new space delivered since we began tracking the office market 18 years ago," Bowers says. However, new deliveries in 2006 and 2007 will bring an additional 1.7 million sf to the market, most of it along the urban corridor.