Driven by recent employment gains--particularly in office-using sectors--and moderate new construction, office occupancy rates and rents are on the rise. "Broad-based job creation is producing strong absorption and vacancies are steadily trending downward," says John Leonard, regional manager of Marcus & Millichap's Atlanta office. "Solid and steady revenue growth prospects and relatively higher cap rates compared to the national average are attracting strong investor interest, especially from out-of-state buyers."

In recent months, several office properties have traded hands. Among recent transactions are the sale of a 41-story, 669,711-sf office building at 1180 Peachtree to an affiliate of the General Electric Pension Trust and the acquisition of a 10-story, 116,000-sf office building at 1447 Peachtree St. to locally based Day Capital Partners LLC.

According to Marcus & Millichap, the positive market conditions are expected to continue. Total employment is projected to grow 2.1% in 2006, creating 50,500 jobs. Office-using employment is expected to increase by 14,800 jobs, reflecting a 2.3% gain. Vacancy has declined 90 basis points in the first half of the year to 16.8% and is down 270 basis points over the past 12 months. Asking rents are projected to increase a total of 2.1% to $20.29 per sf by year-end. Effective rents will climb 4% to $17 per sf.