IRR-Atlanta Mid-Year Viewpoint 2015 Local Market Report - Office
Atlanta’s economy continues to improve with employment surpassing 2008 levels. State Farm Insurance and Mercedes-Benz are constructing corporate campuses in the Central Perimeter submarket. A major mixed-use development is underway at the former General Motors plant in Doraville. The technology industry is growing as several companies have recently leased office space in Midtown. Tourism continues to be a major impact on Atlanta and the state of Georgia. The movie industry is burgeoning and Atlanta is becoming the “Hollywood of the South”.
Housing construction levels are improving though well below the precession levels. In the office market, vacancy is declining and rents are increasing. Class A properties are outperforming lower tier properties, particularly in Buckhead and Midtown. NCR is relocating from suburban Gwinnett to Midtown. Many firms desire in town locations to lure millennial employees and campuses near MARTA transit.
However, the Atlanta CBD continues to have the highest vacancy level of all submarkets for Class B space. Tenants are continuing to “trade up” from lower tier properties to higher quality office space. The speculative Three Alliance Center which began construction in 2014 has asking rents of $40.00+ per square foot. Other offices buildings in Buckhead and the Central Perimeter have increased their asking rents above $30.00 per square foot. Kaiser Permanente plans a technology campus with 150,000 square feet in Midtown. In Alpharetta, 1.7 million in office space is planned for the 104-acre Riverwalk Village. Real Capital Analytics indicates the average office sale price per square foot recently jumped to $243 versus $153 for 2014. According to Costar, the “King and Queen” towers and surrounding buildings totaling 2.2 million square feet at Concourse Corporate Center sold for $489,000,000. This is a substantial increase from the $311,000,000 sale in 2011. Central Perimeter, Buckhead, and Midtown should continue experiencing strong demand over the next few years.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.