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ATLANTA-Industrial real estate here is where many developers are betting the hottest demand for new space will be in the next two years, according to a new analysis by locally based Colliers Cauble.

The metro area’s 489,000-sf industrial sector chalked up its strongest third-quarter performance in three years with a total of more than 7.9 million sf absorbed since the first of the year. “It is possible the market could finish the year with a total $10 million sf in absorption,” notes Colliers Cauble research director Scott Amoson.

“With a lot of money looking to get invested in the real estate market, there has been a lot of activity by developers who are interested in constructing speculative buildings, anticipating continued market demand throughout the next couple of years,” says Amoson.

The numbers are there to support Amoson’s projection. For example, the vacancy rate of shallow-bay and distribution space has dropped by 1.5% since the first quarter of the year. A total 1.6 million sf of vacant space has been leased in that period. Third-quarter absorption in all industrial categories totaled 3.5 million sf. Overall vacancy is down to 13.3%.

“The third quarter’s absorption can once again be attributed to the increasing demand for shallow-bay and distribution space and also the sustained demand for bulk warehouse [space] in the market,” says Amoson. “With the economy turning around, companies need additional space to expand their inventories.” He says “confidence is up and these companies are willing to take the risks of expanding their spaces or opening up new distribution centers.”

Helping third-quarter absorption numbers were major leasing deals such as Clorox Co. moving into 607,000 sf of new construction at Camp Creek Trade Center; the US National Archives and Records Administration moving into 350,000 sf in the airport submarket; and John Wieland Homes purchasing and moving into the former Levitz Building off Sullivan Road, a 243,000-sf structure only a few miles from Hartsfield-Jackson International Airport.

The largest space absorption so far this year occurred in the first quarter with APL Logistics moving into their 980,202-sf build-to-suit in the Interstate 20 West/Fulton Industrial submarket. Catellus developed the warehouse facility.

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