The Difference in Atlanta Office This Cycle

ATLANTA—While over 1.3 million square feet of office leases were signed in the second quarter, more than 3.1 million square feet of office product is underway. That's according to Cushman & Wakefield's latest Atlanta office market report.

The largest office project under construction is Coda Tech Square at 760,000 square feet. In the second quarter alone, more than 1.3 million square feet of office space was delivered, the largest amount since the first quarter of 2010. The most significant completion was the delivery of Three Alliance in Buckhead, a 506,000-square-foot class A building.

The Atlanta office market will continue to relieve the tightening of office space with the delivery of 2.5 million square feet of speculative product over the next two years. That, says CushWake, will give companies seeking office space in Atlanta more options, but pre-leasing activity is expected to increase as the developments progress.

“On the micro level, Atlanta is still underpinned by its traditional and unmatched strengths in the Southeast,” Lawrence Gellerstedt, director of Cushman & Wakefield Atlanta's Office Tenant Representation Group, tells GlobeSt.com. He pointed to infrastructure around the Port of Savannah, the extensive highway and interstate system, rail connectivity and of course the busiest and most efficient airport in the country.

CushWake reports office absorption rebounded this quarter with 405,038 sf of positive net absorption, however, vacancy increased to 16.7% due to over 1.3 million sf of deliveries. Overall rental rates continue to break records at an all-time high of $24.10. (There's unprecedented rent growth in this sector.)

Buckhead leads all submarkets with the highest class A rate of $34.63, eclipsing the $34 mark for the first time in history. Atlanta experienced the most construction deliveries since 2010 with 1.3 million sf of new space added. (Is this Atlanta's biggest office market challenge right now?)

“Atlanta's infrastructure has historically allowed it to operate as a much more diversified economy than other cities in the region and in most parts of the country,” Gellerstedt says. “The difference in this cycle has been local developers willingness to match the restraint from the larger finance community in not overbuilding. That patience has been rewarded as the macro trends have pushed jobs to Atlanta allowing the city to finally experience significant rent growth.”

ATLANTA—While over 1.3 million square feet of office leases were signed in the second quarter, more than 3.1 million square feet of office product is underway. That's according to Cushman & Wakefield's latest Atlanta office market report.

The largest office project under construction is Coda Tech Square at 760,000 square feet. In the second quarter alone, more than 1.3 million square feet of office space was delivered, the largest amount since the first quarter of 2010. The most significant completion was the delivery of Three Alliance in Buckhead, a 506,000-square-foot class A building.

The Atlanta office market will continue to relieve the tightening of office space with the delivery of 2.5 million square feet of speculative product over the next two years. That, says CushWake, will give companies seeking office space in Atlanta more options, but pre-leasing activity is expected to increase as the developments progress.

“On the micro level, Atlanta is still underpinned by its traditional and unmatched strengths in the Southeast,” Lawrence Gellerstedt, director of Cushman & Wakefield Atlanta's Office Tenant Representation Group, tells GlobeSt.com. He pointed to infrastructure around the Port of Savannah, the extensive highway and interstate system, rail connectivity and of course the busiest and most efficient airport in the country.

CushWake reports office absorption rebounded this quarter with 405,038 sf of positive net absorption, however, vacancy increased to 16.7% due to over 1.3 million sf of deliveries. Overall rental rates continue to break records at an all-time high of $24.10. (There's unprecedented rent growth in this sector.)

Buckhead leads all submarkets with the highest class A rate of $34.63, eclipsing the $34 mark for the first time in history. Atlanta experienced the most construction deliveries since 2010 with 1.3 million sf of new space added. (Is this Atlanta's biggest office market challenge right now?)

“Atlanta's infrastructure has historically allowed it to operate as a much more diversified economy than other cities in the region and in most parts of the country,” Gellerstedt says. “The difference in this cycle has been local developers willingness to match the restraint from the larger finance community in not overbuilding. That patience has been rewarded as the macro trends have pushed jobs to Atlanta allowing the city to finally experience significant rent growth.”