ATLANTA-Overall leasing activity in metro Atlanta has still not shifted out of low gear and the volume of office rental transactions recorded so far this year has been clocking in at a laggardly pace. So says Jones Lang LaSalle’s latest Office Highlights report for the second quarter.

JLL reports that leasing volume was down just slightly from first quarter with 2.9 million square feet of activity signed for in the second quarter. And while tour activity is up from where it was in 2010 and early 2011, JLL’s research shows the tenant pipeline for activity that would bring net new growth to Atlanta remains lackluster.

“Because of Atlanta’s highly diversified tenant base, the city cannot rely on any one job sector to spawn employment growth as in some markets like Texas, where leasing has been bolstered by big energy or Silicon Valley with its unending high-tech boom,” the report says. “While today’s deals are not being done with the record concessionary fire sale pricing seen just a few years ago, most of the metro’s best addresses can still be had at a discount.”

Gary Lee, managing director and principal at Cassidy Turley, tells GlobeSt.com Atlanta still has a large overhang of class B office assets that are overleveraged—and through mid-second quarter there was a general sense that REO office properties are not being sold at market pricing, which would reset their basis.

“With that said, the pace of the sale of REO properties does appear to be improving, and I believe it will continue to improve throughout the remainder of this year,” Lee says. “Leasing fundamentals in the class A office market are definitely improving, and they are headed that way in class B properties as well, albeit more slowly. Confidence is returning to the overall market, driven particularly by the return of job growth in Atlanta.”