Atlanta's industrial sector fundamentals are becoming less landlord-friendly — but it remains a high-price market for tenants.
Asking rents dropped from $9.95 per square foot in the 12 months before to $9.78 — and yet rates are up by 85 percent since early 2020, according to a market report from Colliers.
"Atlanta remains relatively affordable compared to other major U.S. markets—ranking 13th in rental rates while holding the 4th largest industrial inventory among the top 25 metros," the CRE firm said.
But still, Colliers noted that the market is offering strong value to tenants. That's highlighted by net absorption increasing by 900,000 square feet year-over-year to 2.7 million square feet. That marks the highest amount seen in 12 months.
That said, tenant demand is skewed, as sublease availability is up by almost 50 percent, as strategies shift, according to Colliers. Plus, vacancy spiked by 150 basis points to 9.7 percent.
That comes as supply surged to 4.5 million square feet, from the 2.8 million square feet posted a year ago.
"Elevated vacancy rates persist due to lingering move-outs and speculative deliveries," Colliers said. "Over 50% of the 36.2 million square feet completed since the start of 2024 remains vacant."
And while construction was down year-over-year to 14.4 million square feet, it's up from the 11.4 million square feet in the previous three months.
"The construction pipeline expanded for the first time in three years, reversing a prolonged decline as concerns remain for elevated construction costs amidst tariff uncertainty," Colliers noted.
Meanwhile, investors will want to look out for two things in Atlanta industrial landlords. One, supply growth is starting to slow on a year-to-date basis, down 38 percent from the same period in 2024. And investment activity is starting to pick up as the Federal Reserve began to drop interest rates in the third quarter, with the expectation that they will go even lower throughout the rest of 2025.
"While transaction volume remains below historical averages, pricing remains consistent," Colliers explained.
"As fundamentals stabilize and borrowing costs ease, investor sentiment is expected to improve, positioning Atlanta for a potential resurgence in industrial capital flows in the coming quarters."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.