Tenants Looking for Large Blocks of Office Space, Be Warned

ATLANTA—NKF is taking a then-and-now look at large blocks of office space in Atlanta's three major submarkets. The report looks at Downtown, Midtown, and Buckhead.

According to the research, office tenants looking for 50,000 to 99,000 square feet in the three core office leasing markets have very limited options. That, the firm says, will likely result in office tenants coming out to the market earlier.

More specifically, there's an increase in the overall number of large blocks of office space available downtown. In Midtown, the number of buildings with availability over 25,000 square feet has stayed the same, but the composition has changed. Meanwhile, in Buckhead, there's a decrease in supply of 50,000 to 99,999-square-foot options and a decrease in sublet spaces available.

“The leasing environment in Atlanta has changed significantly since the last time most tenants did their deals,” Marianne Skorupski, research director for the Southeast region of NKF, tells GlobeSt.com. “Over the past couple of years, the significant shift to a landlord's market has resulted in the jump in pricing that has become sticker shock for many companies.”

Quoted rental rates, overall, are rising, which NKF points to as further evidence the core is a landlord's market. And limited sublet options are directing tenants to direct office space, further improving market's fundamentals.

As population projections continue to rise, NKF says it will be worth keeping an eye on availabilities at office buildings within walking distance of MARTA. The increased traffic congestion could nudge people to public transportation, and as new residents relocate from cities with well-established and highly used public transit systems they could be more inclined to ride MARTA than a long-time Atlanta resident. Meanwhile, Atlanta suburban office markets are heating up.