Atlanta office activity contracted in first quarter

At the end of the first quarter, Atlanta’s office portfolio under construction was higher than the national figure, but lagged behind many comparable markets, according to a CommercialEdge study. Development activity appears to have stagnated in the metro, as no construction starts were recorded in the first quarter of 2024 and only one property was commissioned.

At the end of March, the metro area’s vacancy rate was lower than the national figure, with Atlanta posting higher office occupancy rates than comparable markets. A few large leases were recorded, but these were mainly renewals or downsizing.

Office Development Booths in Atlanta

As of March, some 3.5 million square feet of office space was under construction in Atlanta across 20 properties, representing 1.7% of the existing stock. Relative pipeline was slightly above the national rate of 1.5 percent and lagged comparably sized markets, such as Nashville (4.5 percent), Austin (3.9 percent) and Charlotte (2. 8 percent), but surpassed Denver (1.2 percent) and Phoenix (0.5 percent). ).

One of the largest properties underway at the end of the first quarter was Science Square Labs, a 368,258-square-foot life sciences building, part of the first phase of the larger Science Square mixed-use development. Meanwhile, developers Trammell Crow Co. and the Georgia Institute of Technology brought the 13-story tower online in late April.

During the first three months of 2024, just one 180,240 square foot property was commissioned in Atlanta. Shipment volume was lower than Denver (317,548 square feet), Charlotte (364,000 square feet), and Austin (635,250 square feet), but higher than Dallas (126,200 square feet) and Nashville (32,000 square feet).

The property coming online constitutes the second phase of SJC Ventures’ The Interlock, a larger 263,890 square foot mixed-use development. It includes 92,000 square feet of commercial space and a 682-bed student housing tower, as well as the aforementioned 180,240 square feet of office space. Last year, Armada Hoffler paid $215 million for the retail and office components of the first phase of The Interlock, totaling 311,000 square feet.

Atlanta Office Sales Volume Contracts

During the first three months of 2024, some 656,000 square feet changed hands, across six properties, for a total investment volume of $82 million. These figures represent a 24.7 percent drop from the same period last year, when $108.9 million was invested in the Atlanta office market, on nearly 1 million square feet. squares.

At the end of the first quarter, the average price per square foot in the metro area was $125, down 11.5% from March 2023. Atlanta office prices were significantly lower than from most of their peers, including Denver ($140.1) and Phoenix ($187.3). and Austin ($506.6), but surpassed Houston ($98.3) and Philadelphia ($92.5).

In terms of financing, one of the largest recent deals in the Atlanta office market was Vision Properties, which secured a $65 million refinancing for Wildwood Center. Franklin BSP Realty Trust provided the 5-year loan for the 692,707 square foot building.

Vacancy rate lower than the American rate

At the end of March, Atlanta’s vacancy rate stood at 17 percent, below the national figure of 18.2 percent. The metro fares better than markets like Dallas (21.7 percent), Austin (22.0 percent) and Denver (22.7 percent), but not as well as Nashville (15.5 percent ).

Recently, Lionstone Investments secured a lease for 164,221 square feet at 271 17th St. The tenant, Piedmont Healthcare Inc., plans to consolidate three of its offices into the 25-story building as it shrinks its footprint by more by 50 percent.

Architecture and construction management firm Pond also renewed its lease for 101,891 square feet at Peachtree Ridge in Norcross, Georgia. The building is currently owned by OA Development, which acquired it in 2017 for $18.2 million. The tenant has occupied the property since 2005 and currently occupies 64 percent of the 160,000 square foot building.

Coworking works well in Atlanta

At the end of March, Atlanta’s coworking sector accounted for some 4.4 million square feet of space, or 2.1% of the total office stock. The share of flexible space was higher than the national figure of 1.8 percent, also higher than comparable markets such as Charlotte (1.3 percent) and Austin (1.7 percent), but lower than Raleigh – Durham (2.6 percent) and Nashville (2.9 percent). ).

Atlanta’s largest flexible office operator was Regus, with a portfolio of 597,240 square feet across 27 locations. The other top coworking providers in the market were WeWork, with a sizable 355,117 square feet across 6 properties, as well as Industrious with 332,145 square feet across 10 locations.