Thank you for sharing!

Your article was successfully shared with the contacts you provided.

ATLANTA-Leasing activity in the local office market has fallen by as much as 60% over the past year, yet brokers are getting plenty of calls from companies seeking better and bigger space options, according to recent research reports. A combination of sublease and newly built space is attracting greater interest by prospective tenants, though some are opting to stay put or expand within their current buildings.

At least 6.3 million square feet of active office requirements are being tracked by Jones Lang LaSalle through the third quarter as more firms explore space availability in the tenant-favorable marketplace. At least 1.2 million square feet is being scouted in the Midtown submarket, while Downtown and Buckhead are also attracting attention.

Whether this means major moves are imminent remains to be seen. For example, healthcare company Kaiser Permanente shopped around for more than 18 months before deciding to renew and add to its offices at Piedmont Center, totaling 212, 000 square feet, according to Jones Lang LaSalle, which handled the September transaction.

“Tenants are beginning to feel more comfortable in making longer-term leasing decisions, possibly signaling the beginnings of an economic recovery,” says Lanie Rea, research manager with Jones Lang LaSalle’s Atlanta office. She notes, however, that the local market is still a long way from stabilization as vacancies have yet to peak.

Atlanta’s overall office vacancy rate through the third quarter reached 21.6%, while average asking rents stabilized at $21 per square foot annually, nearly $24 for class A space, Jones Lang LaSalle reports. Buckhead continues to command the highest rents at more than $25 per square foot.

The office market posted 1.4 million square feet of negative overall absorption through the first nine months of 2009, mostly in suburban submarkets, according to Cushman & Wakefield. That far exceeds the minus-830,000 square feet recorded by the brokerage in all of 2008.

Sublease vacancies have doubled from the start of this year to more than 3.1 million square feet, their highest level since 2004, says Chris Shaner, senior research associate with Cushman & Wakefield in Atlanta. The Central Perimeter, Northwest Atlanta, CBD and Midtown markets reported the highest levels of sublease vacancies in the third quarter, he says.

Only 1.4 million square feet of office properties have traded so far this year in Atlanta, Shaner says. The largest transaction involved the foreclosure sale of Downtown’s Equitable Building for only $29.5 million, or about $50 per square foot.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.