Key Takeaways

  • Headquarter occupancies by Mercedes-Benz and HD Supply helped propel Atlanta’s office market to its fifth consecutive quarter of positive absorption.
  • The 341,000 square feet of office space absorbed this quarter brings the year-to-date total to 876,000 square feet. This puts Mid-Year 2018 at more than twice the amount absorbed this time last year.
  • Similar to last quarter, Atlanta’s overall office vacancy rate increased slightly in Q2 as a result of space deliveries outpacing absorption. Also as it relates to construction activity, a couple of new speculative projects recently broke ground: T3 West Midtown by Hines and North American Properties’ loft office component at Revel in the Northeast Atlanta submarket.
  • Following first quarter’s spike, Atlanta’s overall office rental rate average increased by its smallest amount in four years this quarter.
  • Though Atlanta’s office market is on track to meet this year’s outlook, anticipated move-outs by some of the city’s larger office tenants are beginning to affect overall occupancy gains.

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Atlanta Office Market

With its fifth consecutive quarter of positive activity, Atlanta’s office market remains steady at Mid-Year 2018. Second quarter’s absorption of 341,000 square feet brings the year-to-date total to just over 876,000 square feet which is more than twice the amount absorbed at this time last year. New headquarter occupancies were the biggest contributors to Q2’s absorption. The largest of these was Mercedes-Benz which moved into its 225,000 square foot facility in Central Perimeter. The German auto-maker officially opened the doors to its new office early in the quarter, relocating from its temporary location at Sterling Pointe II. The move represents an overall net occupancy gain of almost 121,000 square feet. HD Supply was the second headquarters move this quarter. The industrial distributor vacated its long-time location at Cumberland Center II for its new office building down the street at Encore Center. The 222,000 square foot building more than doubles the company’s overall office footprint.