The Atlanta office market absorption is coming back; the City has absorbed some 2 million square feet of vacant space in 2012. While the news is good (2012 has proved the best year for Atlanta commercial real estate since 2006), the positive absorption is a relatively small number given that the Atlanta market comprises 220+ million square feet of office space.
- Atlanta Jobs Outlook: When analyzing national job numbers, specifically non-form jobs, we found the country has lost some 11.7 million jobs from 2007 through 2010 but has regained some 7.7 million in the last two years. Atlanta is tracking relatively well on the national scale, having lost 265,935 jobs in that same period and regained 61% of its jobs from 2010-2012. The good news: jobs are returning…and so is construction. There are about 1.7 million square feet of under construction inventory in Atlanta.
- Office Deals: While it’s still a tenant’s market, the tide appears to be shifting toward fewer concessions. Rates have bottomed out and have begun to rise slightly. Short-term leases, renewals without tenant improvements were more common in 2012. Also, the trend showed tenants choosing to go long term because the terms were not getting better.
- Market Conditions: Of the major Atlanta office submarkets, 2012 proved to be the comeback year for Central Perimeter. The submarket absorbed more than 1 million SF of office space, nearly half of all of Metro Atlanta office absorption combined. Other submarkets that showed less, but continued positive, progress were Buckhead and Midtown. An overall look at all office classes showed that the most expensive office lease was in Midtown at $24.50/SF, just barely beating Buckhead. North Fulton average quoted rates were reported at $17.51/SF and Central Perimeter at $20.07/SF.
2013 looks cautiously optimistic. If we can settle the ever-changing crises in Washington, our perceived optimsim for the coming year might prevail.