MIAMI—Is it a landlord market or a tenant'smarket? Let's just say the scales are tipping toward landlords inAtlanta these days after years of recovering from the GreatRecession.

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Indeed, according to the latestCBRE OccupierView—a report that analyzes thenation's office market from the tenant's perspective—the balancebetween landlord- and tenant-favorable markets are tipping towardownership in several major US cities. Atlanta is one of them.

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CBRE points to tightening conditions challengingtenants from both cost and availability perspectives in mostdowntown areas. The report also shows little change in suburbanoffice markets.

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Drilling down into the numbers, Atlanta, overalloffice vacancy in Atlanta has dropped below 20%, nearing thepre-recession levels, according to CBRE's Southeast researchdirector Dan Wagner. The core submarkets ofBuckhead and Central Perimeter are most sought after for tenantrelocation and expansion, and consequently, prime markets forpotential new development.

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“Market fundamentals have improved incrementallyover the last several quarters in core urban and suburbansubmarkets,” Wagner says. “Conditions in areas such as Buckhead andCentral Perimeter have recovered to a point where rents areexperiencing some growth and concessions are tightening.Consequently, a lack of suitable large-block space options in thesemarkets has favored landlords and also spurred new speculativedevelopment activity.

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All told, the metro Atlanta area posted 808,179square feet of positive net absorption in the second quarter.Overall asking rental rates for Atlanta's officemarket increased slightly in the second quarter of 2014. Theaverage overall asking rate increased by 14-cents per square footto an average of $20.51 per square foot. Those figures furthersupport a landlord's market.

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Pulling back the lens, the US vacancy rategradually declined over the past three years and is at themid-point between its pre-recession low and recessionary peak of14.5% in the second quarter of 2014. Downtown markets in Denver,Houston, San Francisco, Manhattan, Atlanta, Boston, and Seattle arelandlord-favorable, while Dallas-Ft. Worth, Los Angeles,Philadelphia, Chicago and Washington, DC, are stilltenant-favorable, but approaching a tipping point.

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“By virtually all metrics, the second quarter of2014 was one of the most robust in years in the office market withmore than 15 million square feet of positive net absorption—thehighest quarterly figure since 2007,” says ColinYasukochi, director of research and analysis for CBRE.“Healthy job growth and historically low levels of new constructionmeans that companies need more space to put these employees, butwith limited new supply, we're now seeing a supply-demand imbalancein many key markets. This is very positive for landlords, butchallenging for tenants.”

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Leasing activity in almost every market is beingled by the high-tech sector. High-tech companies accounted for19.9% of all US major leasing activity in the first half of 2014.Financial services and business services were the second and thirdmost active sectors, at 12.4% and 10.6%, respectively.

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“Tightening labor markets and rising rents arecausing tenants to be more focused on location strategies,” saysWhitley Collins, who leads CBRE's OccupierServices Division in the Americas. “As we move towardowner-favorable markets in some downtown areas, tenants who haveleases coming due in the next three to five years need to lock inlong-term leases in downtown areas now, or consider relocation to asuburban office market where tenants continue to be in the driver'sseat.”

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