Atlanta’s industrial market maintained its path of upward momentum in the first quarter, posting lower vacancy rates and modest rental increases, a new report from JLL reveals.
One result of the increased tenant demand – and specifically, occupiers’ desire for bigger, newer spaces – is an increase in construction activity, and developers are considering a number of avenues to secure land for industrial use in desirable areas.
The vacancy rate for industrial properties stood at 8.3 percent at the end of the first quarter, down from 8.7 percent at the end of 2014, and net absorption reached 3.1 million square feet during the first three months of the year. The Airport/South I-85 and Northeast submarkets were the objects of the vast majority of tenant demand, accounting for more than 80 percent of the net absorption.
“The spigot is open for new development, and the focus is on bigger box spaces,” said Mike Sivewright, JLL’s Market Director for the Atlanta region. “While build-to-suit projects still meet much of the need, speculative projects continue to become more pervasive.”
Among some of the higher profile transactions in the first quarter of 2015:
- Office Depot agreed to a new lease for 414,960 square feet at 1595 Heraeus Blvd. in Buford, Ga.
- IntegraCore signed a new lease for 304,000 square feet at 7280 Oakley Industrial Blvd. in Union City, Ga.
- Hub One Logistics signed a new lease for 247,000 square feet at 3605 Royal South Pkwy. in southwest Atlanta
- DCT Industrial purchased a 505,000-square-foot warehouse at 301 Eagles Landing Pkwy. in Stockbridge, Ga., from the Henry County Development Authority for $14.1 million ($28 per square foot)
- LNR Property bought a 440,800 square-foot space at 5070 Phillip Lee Drive in west Atlanta from First Industrial & UBS Realty for $8.8 million ($20 per square foot)
- DCT Industrial purchased 398,485 square feet of space at 435 Henry D Robinson Blvd in Pendergrass, Ga., for $15.5 million ($39 per square foot)
“The market does not appear to be worried about oversupply as tenant requirements remain considerable,” said Wit Truitt, Executive Vice President for Industrial Brokerage at JLL. “Whether these tenants renew in their current space or seek new locations, the demand is there, and absorption continues to surpass new deliveries.”