C&W: Five Consecutive Quarters of Positive Absorption for Atlanta Office Market
Overall absorption in the Atlanta office market in 2012 totaled 469,541 square feet, resulting in year-to-date positive absorption of 2.9 million square feet, well ahead of 2011 absorption and the strongest annual absorption since 2007.
This according to the Cushman & Wakefield fourth quarter 2012 statistics for the Atlanta office market, which now show five consecutive quarters of positive absorption.
Overall absorption – a measure which indicates the net change in occupied space – pushed the overall vacancy rate (direct and sublease) down to 20.4 percent compared to 21.9 percent at year-end 2011. Vacant sublease space continued to decrease significantly, declining 38 percent in 2012 to 990,000 square feet.
Overall leasing activity slowed in the fourth quarter to 1.6 million square feet, bringing the 2012 total to 8.5 million square feet, 3.2 percent behind total activity in 2011.
The Buckhead submarket captured the market’s largest new lease deals during the fourth quarter including Carter’s 222,730 square foot lease at Phipps Tower and CoStar’s 26,657 square-foot lease also at Phipps Tower.
“Vacancy rates continue to fall and rents are stable and even rising in a few cases.” said John O’Neill, Cushman & Wakefield’s Atlanta office Market Leader. “What’s considered the bellwether submarket, Central Perimeter, is seeing considerable activity – five of the biggest leases of the year were in the Central Perimeter.”
Overall average asking rents have begun to show consistent improvement, albeit marginally, averaging $20.86 per square foot, up 0.4 percent from $20.77 at year-end 2011. Overall class A asking rents have increased 0.9 percent year-to-date to an average of $23.75 per square foot.
Development activity remained scarce. Progress continued on Primerica’s 344,476 square-foot Legacy Business Park building in Duluth while the re-development of Midtown’s Ponce City Market which is expected to include 450,000 square feet of office space is well underway.
Following a slowdown in the first half of 2012, investment sales activity picked up significantly during the second half of the year and totaled 7.9 million square feet by year-end as the Atlanta office investment market continued to build momentum.