ATLANTA—Leasing activity started off strong this first quarter of this year for the Atlanta industrial market. Absorption was positive 1.9 million in the quarter, with additional leases totally about 2.2 million in the second quarter. So says Xceligent’s  1st Quarter 2014 Industrial Market Trends report.

According to Xceligent, tenants occupying space in the second quarter are: Topcu leasing 153,000 square feet in the East submarket, The Dixie Group leasing 292,000 in the Northwest submarket, Embraco North American leasing 126,144 square feet in the Northeast. Total Sweeteners leasing 235,719 in the West submarket, and Amazon will be occupying their 301,000 square foot space this quarter in the South submarket.

“The current vacancy in the Atlanta industrial market has dropped 1.6 percent since the beginning of 2013 with the bulk warehouse buildings posting the largest decrease of 1.2%,” the report reveals. “This is partially from new companies moving to Atlanta and occupying the new build-to-suit properties. The challenge will be to fill the older buildings.”

Xceligent reports that build-to-suit buildings are breaking ground sooner than speculative buildings. There is currently 3.5 million square feet under construction with companies such as HH Gregg, Amazon and Proctor and Gamble occupying buildings this year and Kroger is on the horizon and should be signing a deal in approximately 30 days. Ollie’s and Kubota Tractor Company moved into their facilities this quarter posting over half of the absorption this quarter.

“The majority of the leasing activity is being leased by large companies mainly in warehouse/distribution and bulk warehouse buildings,” Xceligent says. “There is an extreme amount of space available in the 25,000 to 50,000 square foot range and the vacancy has been dropping gradually since the start of 2013.”

Looking at industrial rental rates, Xceligent reports increase over the past five quarters. The firm attributes this to the leasing activity in warehouse and distribution buildings. As the leasing activity continues to increase in this product, Xceligent concludes, overall lease rates may continue to climb.

To download the full first quarter 2014 Industrial Market Trends report for Atlanta, click here.