Key Takeaways

  • Atlanta’s office market experienced its second consecutive quarter of negative absorption in Q3 following a number of large vacancies taking place; and also Q2 revisions reversing positive results.
  • Most of the positive gains this quarter occurred in the Downtown submarket which saw over 230,000 square feet of office absorbed. North Fulton had its worst quarter since statistics have been consistently tracked, losing almost 360,000 square feet of tenants.
  • Despite Q3’s negative outcome, Atlanta’s overall office vacancy rate showed no significant change from last quarter, up only 10 basis points (0.1%). Average rents increased yet again as well.
  • Construction activity picked up this quarter with eight buildings breaking ground. The largest of these was the 330,000 sq. ft. office building at The Battery which will be anchored by Thyssenkrupp’s North American headquarters.
  • As mentioned in the previous quarter, large anticipated vacancies are having their affect on Atlanta’s overall office performance. Because of this, 2018 absorption is not expected to change much from its current year-to-date level.

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Atlanta Office Market

The Atlanta office market finished the third quarter with its second consecutive period of negative absorption following large vacancies in Q3 and stats adjustments from last quarter. For third quarter, large move-outs, most of which were anticipated, led to Atlanta seeing just over 117,000 square feet of negative absorption. The largest contributor to the negative activity over the past six months is AT&T which has so far vacated over a half a million square feet in the Atlanta market as part of the company’s consolidation of office space announced earlier this year. Elsewhere, North Fulton took a big hit this quarter posting its worst three months of negative absorption ever. Contributing to the 360,000 square feet of move-outs were Comcast, State Farm, and General Motors. Comcast vacated its 109,000 square foot office at 4700 North Point as it focuses on a new customer service model that favors more full-time positions than part-time.