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ATLANTA-The metro industrial market has been quiet of late but market experts expect it to weather the storm. “The market is still in good shape,” says Wit Truitt, senior vice president with CB Richard Ellis. And insiders expect the market to remain a tenants’ market. “In 2008, it will probably still be a tenant’s market but probably not as strong,” says Dave Watson, senior vice president with Grubb & Ellis.

Leasing activity and absorption declined for the third quarter although there were a few large deals such as Dick’s Sporting Goods signing a 657,200-sf lease in the Camp Creek Business Center and LG Electronics signing a 612,000-sf lease at Greenwood Industrial Park, as previously reported by GlobeSt.com. Companies and firms held off on leases and buying, and are expected to do so this quarter as well, as an indirect effect of the capital markets problems, Watson says.

Absorption was lackluster “due to the overall market and economic conditions in the area,” Truitt says. Absorption is still up for the year and could pick up in the fourth quarter, Truitt says. “We still have 11 million sf or 12 million sf [of absorption] for the year,” he says. “That is a decent number for Atlanta.” Watson expects the fourth quarter to be quiet in regards to leasing activity. It is possible there will still be some big leases this quarter but it is already the beginning of December and “it is going to start getting pretty dead,” he says. Activity is expected to pick up after the first of the year although Truitt expects it to take a little longer than Watson. “It will probably be slower towards the first half; hopefully, picking up in the third or fourth quarter,” Truitt says.

Lease rates have been pretty stable and are expected to remain stable with possible a small up tick in 2008, Watson says. The amount of concessions is decreasing for some property types, such as small freestanding buildings, while becoming a little bit better in others, such as flex space. “Concessions are kind of going up and down depending on the product type,” Watson says.

“Sales activity has been very strong,” Truitt says. “There are still local and national investors that are looking for good buys.” In the third quarter, Equity Management acquired a $63.5-million flex portfolio in Technology Park, Metzler Realty acquired a $52-million portfolio with 951,000 sf at Riverside Industrial Park and SVN acquired a $60.6-million portfolio with more than one million sf at Gwinnett Park.

The amount of new construction is decreasing, which is a good sign, according to both Truitt and Watson. Construction activating peaked at the beginning of 2006 with fewer new projects are being constructed because of rising construction costs and the amount of space available. There are still 4.6 million sf of new space currently in the pipeline though, according to a third quarter market report by CB Richard Ellis. “Developers are still building in Atlanta,” Watson says. “There is a lot of activity.” The 1.4-million-sf Jackson 85 Distribution Center, being developed by Raco, in addition to the 632,000-sf Park 85 at Braselton and the 212,940-sf facility at 4800 Commerce Dr., both being developed by Duke Realty, are expected to come online in the first quarter of next year.

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