ATLANTA—Atlanta's office market is on a winning streak, with positive momentum spilling over to the third quarter. Vacancies continued declining in the period, settling at 17.9%, according to the latest research from Cushman & Wakefield. That's an improvement over second quarter stats.

In fact, it's the first time since 2009 that vacancy dipped below 18%. Those occupancy gains translated into a 130 basis point vacancy decrease from 2013 year-end and a 150 basis point decrease year-over-year. Overall office space absorption totaled 463,357 square feet.

All told, Atlanta's office market has posted 11 consecutive quarters of net occupancy gains, which continue to drive its vacancy downward towards pre-recession levels. Year-to-date absorption for 2014 now totals 1.7 million square feet, a 54% increase compared to the year-ago period.

“Atlanta is seeing consistent momentum in terms of tenant activity and absorption,” says Logan Menne, CushWake's research manager. “As vacancy continues to tighten, the supply of existing available options is becoming more and more limited. Additionally, due to the increased demand from tenants in the Atlanta market, many landlords are beginning to increase asking rents, particularly in high-demand submarkets like Buckhead and Central Perimeter.”

The market's largest new office space lease deals during the third quarter included Vonage, which signed an 80,000-square-foot sublease at The Towers at Wildwood Plaza in the Northwest-Cumberland-Galleria submarket. Dixon Hughes Goodman's 51,000-square-foot lease at 191 Peachtree in the Downtown submarket was also among the most sizeable.

Overall average asking rents climbed 1.9% from 2013 year-end, averaging $21.21 per square foot as of the end of the third quarter. Noteworthy is the fact that overall class A office space asking rents have also increased 1.9% over the same time period to an average of $24.28 per square foot as Atlanta's class A market continued to tighten, particularly in submarkets like Buckhead and Central Perimeter.

Atlanta's construction pipeline for new office space is still conservative, but there are a number of office projects under way. Buckhead Atlanta and Avalon in Alpharetta are among them.

What's more, Three Alliance, Tishman Speyer's 500,000-square-foot class A office tower in the heart of Buckhead, started construction in August as Atlanta's first speculative office tower to break ground since 2008. For its part, the Ponce City Market project delivered over 550,000 square feet of office space during the third quarter as Athena Health began taking occupancy of its space.

On the investment front, sales activity in the Atlanta market picked up during the third quarter after slow activity during the first half of the year. Activity for the quarter totaled 4.1 million square feet, which is the strongest quarterly investment sales activity in 2014. So far this year, investment sales activity  totals 8.9 million square feet and is still behind the 2013 pace by 13%.

Key sale transactions during the third quarter included the sale of 171 17th Street in Midtown, which sold to KBS REIT III for $132.5 million in August. Atlanta's investment sales pipeline is strengthening and CushWake expects a significant pick-up in transaction activity during the second half of the year.