MARKETBEAT
Atlanta
Industrial Q4 2016
Economy
ATLANTA INDUSTRIAL
Economic Indicators
12-Month
Forecast
Q4 15
Q4 16
2.6 mil
2.7 mil
Atlanta Unemployment
5.2%
4.8%
U.S. Unemployment
5.0%
4.8%
Atlanta Employment
Market Indicators (Overall, All Classes)
Vacancy
Q4 15
Q4 16
7.9%
9.0%
Net Absorption (sf)
4.0M
3.5M
Under Construction (sf)
13.8M
14.8M
Average Asking Rent*
$4.29
$4.20
12-Month
Forecast
The Atlanta economy continued to post healthy job growth
throughout 2016. The Atlanta metropolitan area (metro Atlanta)
has added 67,200 non-farm jobs since the start of the year
according to the US Bureau of Labor Statistics. As a result of
overall employment gains, the unemployment rate for metro
Atlanta dropped to 4.8% in November, a 0.1 percentage point
decrease year-over-year. In terms of the office-using sectors,
employment grew 2.8% year-over-year, and continues to boost
demand for office space throughout metro Atlanta.
Market Overview
The Atlanta industrial market has experienced another banner
year in 2016. Occupancy gains remained strong in the fourth
quarter with 3.5 million square feet of positive net absorption.
Leasing activity is up 8 percent from 2015 with 21.9 million
square feet leased in 2016.
*Rental rates reflect net asking $psf/year
Overall Net Absorption/Overall Asking Rent
SF (millions)
4-QTR TRAILING AVERAGE
5
$4.50
4
$4.25
3
$4.00
2
$3.75
1
$3.50
0
$3.25
2011
2012
2013
2014
Net Absorption, SF
2015
2016
Asking Rent, $ PSF/Yr
Overall Vacancy
15.0%
12.0%
9.0%
6.0%
3.0%
2011
2012
2013
Industrial net absorption in the fourth quarter of 2016 posted 3.5
million square feet, bringing the total to 13.7 million square feet
absorbed for the year. The largest move-ins for 2016 were
Google’s move into 1.1 million square feet in South Atlanta,
Williams-Sonoma 1 million-square-foot occupancy in the
Northeast and Smucker’s lease for an additional 1 million square
feet in South Atlanta. Fourth quarter 2016 marked the 15th
consecutive quarter with at least 1 million square feet of positive
net absorption.
Leasing activity for 2016 increased over 1 million square feet
from 2015 to 21.9 million square feet with 3.4 million square feet
of leasing activity in the fourth quarter. Variety Wholesalers
signed the year’s largest lease for 1.4 million square feet at 60
Herring Road, followed by Williams-Sonoma’s lease of 1.1 million
square feet at the Braselton Commerce Center.
Historical Average = 9.3%
0.0%
2010
Fourth quarter 2016 statistics revealed that Atlanta shattered the
previous delivery record set in 2000 when deliveries reached
14.9 million square feet. Speculative completions in 2016 were
15.3 million square feet, while build-to-suit completions posted
2.2 million square feet. This brings the overall construction
completion total to a record amount of 17.5 million square feet.
Even though 15.3 million square feet of speculative space
delivered this year, more than half of that space is already
leased. This proves that Atlanta is one of the most sought-after
and attractive industrial markets in the nation.
2014
2015
2016
cushmanwakefield.com
MARKETBEAT
Atlanta
Industrial Q4 2016
ATLANTA INDUSTRIAL CONSTRUCTION
COMPLETIONS REACHED A RECORD 17.5
New Supply
2016 NEW SUPPLY REACHED AN ALL-TIME HIGH WITH 17.5 MSF DELIVERED
MSF
Even with strong leasing activity and over 3 million square feet
in net occupancy gains, the market saw an increase in the
overall vacancy rate. The overall vacancy rate increased 110
basis points year-over-year from 7.9% in 2015 to 9.0% in 2016.
This increase in vacancy is due to a record amount of
deliveries. However, Atlanta still has 14.8 million square feet of
industrial product under construction. Overall triple-net asking
rates decreased from a year ago from $4.29 per square foot at
the end of 2015 to $4.20 per square foot in fourth quarter 2016.
20
18
16
14
12
10
8
6
4
2
0
17.5
Historic Average = 7.3 MSF
8.9
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
MSF DURING 2016.
Occupied vs. Vacant Space Comparison
NORTHEAST HAS LARGEST INVENTORY OF VACANT SPACE
Outlook
180
Looking forward, we expect vacancy levels to remain healthy
despite the large influx of new deliveries. Strong market
fundamentals coupled with increasing demand for big-box
space make Atlanta one of the top markets in the nation for
industrial real estate. Current indicators suggest that industrial
activity will remain active and consistent throughout 2017.
150
MSF
120
90
60
30
0
Industrial Highlights
•
•
Atlanta experienced a record level of deliveries with 17.5
million square feet of new construction completions in 2016.
Industrial net absorption in the fourth quarter of 2016 posted
3.5 million square feet, bringing the total to 13.7 million
square feet absorbed for the year. This quarter marked the
14th consecutive quarter with at least 1 million square feet
of positive net absorption.
•
Leasing activity is up 8 percent from 2015 with 21.9 million
square feet leased in 2016.
•
The overall vacancy rate increased 110 basis points yearover-year from 7.9% in 2015 to 9.0% in 2016 due to the
large influx of deliveries.
•
Overall triple-net asking rates decreased from a year ago
from $4.29 per square foot at the end of 2015 to $4.20 per
square foot in fourth quarter 2016.
•
Investor sales activity remained strong during 2016 with
23.1 million square feet trading for the year.
Occupied
Vacant
Warehouse/Distribution Asking Rents by Submarket (NNN)
GEORGIA 400 HAS HIGHEST RENT IN THE MARKET
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
cushmanwakefield.com I 2
MARKETBEAT
Atlanta
Industrial Q4 2016
SUBMARKET
INVENTORY
(SF)
YTD
LEASING
ACTIVITY
(SF)
OVERALL
VACANCY
RATE
YTD USER
SALES
ACTIVITY (SF)
OVERALL
WEIGHTED
AVG.
NET RENT
(HT)
YTD
UNDER CNSTR
OVERALL NET
(SF)
ABSORPTION (SF)
OVERALL
WEIGHTED
AVG.
NET RENT
(MF)
OVERALL
WEIGHTED
AVG.
NET RENT
(OS)
OVERALL
WEIGHTED
AVG.
NET RENT
(WH)
Northwest Atlanta
44,281,764
1,691,984
170,480
8.55%
93,468
216,750
N/A
N/A
$10.42
$4.44
Georgia 400 Corridor
23,721,990
699,506
78,000
6.48%
511,536
197,378
$10.48
$5.50
$10.17
$6.95
153,521,905
6,226,097
717,289
8.50%
4,096,500
4,714,741
$13.90
$3.38
$8.63
$4.06
I-20 West/Fulton Industrial
84,652,930
2,344,664
1,522,681
9.59%
1,004,922
4,055,555
N/A
N/A
$7.32
$3.17
Chattahoochee/CBD
35,145,761
160,785
43,287
4.15%
-300,983
0
$2.75
$7.50
$13.68
$4.84
Stone Mountain/Tucker
25,827,735
595,275
147,830
6.07%
266,124
0
N/A
$3.25
$2.98
$3.53
Northeast Atlanta
Airport/South Atlanta
81,118,595
3,019,839
1,093,063
10.30%
3,197,527
2,279,975
N/A
$3.75
$9.63
$3.50
I-85 South
30,911,339
2,226,539
60,000
13.33%
2,112,883
100,000
N/A
N/A
N/A
$2.70
I-75 South
41,579,597
3,956,206
64,400
13.27%
2,052,998
2,233,235
N/A
$2.25
N/A
$3.00
SOUTH SUBTOTAL
I-20
East/Snapfinger/Rockdale
153,609,531
9,202,584
1,217,463
11.71%
7,363,408
4,613,210
N/A
$2.91
$9.63
$3.16
29,684,730
1,028,410
415,993
6.58%
623,856
1,000,000
N/A
N/A
$8.00
$2.98
ATLANTA TOTALS
550,446,346 21,949,305
4,313,023
9.0%
14,797,634
$7.17
$3.52
$8.75
$3.68
*Rental
rates reflect asking $psf/year
FLEX = Flex Space
HT = High Tech/Flex
13,658,831
MF = Manufacturing
OS = Office Service/Flex
W/D = Warehouse/Distribution
Key Lease Transactions Q4 2016
PROPERTY
TENANT
TRANSACTION TYPE
SUBMARKET
623,328
Hubbell Inc.
Lease
Northeast Atlanta
3707 N Commerce Drive
447,606
Armada Warehouse Solutions
Lease
Airport/South Atlanta
Fairburn 85 Distribution Center
192,780
DHL
Lease
Airport/South Atlanta
Horizon Pointe Business Center
180,693
AZZ Inc.
Lease
Northeast Atlanta
SELLER/BUYER
PRICE / $PSF
SUBMARKET
Jefferson Distribution Center
SF
Key Sales Transactions Q4 2016
PROPERTY
SF
Braselton Commerce Center
1,074,596
Hillwood/GLP US
$88,622,226/ $82.47
Northeast Atlanta
8095 McLarin Road
1,044,288
USAA Real Estate/Gramercy Property
$43,761,358/ $41.91
I-85 South
$43,500,000/ $60.88
I-75 South
$37,500,000/ $61.13
Northeast Atlanta
McDonough Commerce Center
714,560
Clarion Partners/American Realty
Advisors
650 Broadway Avenue
613,440
TPA Group/CBRE Global Investors
cushmanwakefield.com I 3
MARKETBEAT
Atlanta
Industrial Q4 2016
INDUSTRIAL SUBMARKETS
ATLANTA
Cushman & Wakefield
55 Ivan Allen Jr Blvd
Suite 700
Atlanta, GA 30308
For more information, contact:
Alex Walker
Senior Analyst - Research
Tel: +1 470 639 4906
[email protected]
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.
Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining
our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is
among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset
services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ
Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit
www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2016 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple
sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or
representations as to its accuracy.
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