Atlanta’s industrial pipeline catches up with national trends

Atlanta presents itself as a dynamic hub of industrial development, its location and robust infrastructure making it an attractive destination for businesses looking to capitalize on its logistical advantages. Atlanta’s industrial pipeline in the first quarter of this year was more than four times larger year over year, according to information from CommercialEdge, reaching approximately 12.3 million square feet.

The metro is also home to several Fortune 500 companies, which are driving demand for extensive logistics support, including warehouses, distribution centers and transportation networks.

However, the metro also faces some challenges. In March, electric vehicle maker Rivian postponed the grand opening of its 16 million square foot factory in Stanton Springs, Georgia. Production on the $5 billion project was initially scheduled to begin in 2026 and be completed in 2030.

More industrial space underway in the metro

At the end of the first quarter, Atlanta’s industrial pipeline stood at approximately 12.3 million square feet across 26 projects, representing 2.2% of total inventory, more than four times larger than a year earlier. on the other. However, only five properties totaling less than 2 million square feet opened in the first three months of the year, representing 0.3% of the total inventory. This figure is comparable to that of the first quarter of 2023.

Among comparable markets, Atlanta’s industrial pipeline lagged behind Phoenix (10.3 percent of total inventory) and Dallas (2.5 percent), but outpaced Chicago (1.0 percent), l Inland Empire (1.2 percent) and Indianapolis (1.1 percent).

In November, Andersen Corp. broke ground on a 638,000 square foot manufacturing and distribution facility in Locust Grove, Georgia. The $420 million project is part of the Renewal by Andersen division and is expected to be commissioned later this year as operations begin. in 2025.

That same month, Dermody Properties announced plans to build LogistiCenter at Bright Star, a 181,000 square foot industrial campus in Douglasville, Georgia. Construction of both buildings began earlier this year and delivery is anticipated by the second quarter of 2025. Additionally, the facilities are built to meet LEED standards.

Completions decline in Atlanta

During the first three months of the year, Atlanta saw a decline in industrial deliveries, with only 1.8 million square feet of space coming online, compared to 2.4 million square feet during the same period from last year. Only seven installations were delivered, five fewer than in the first quarter of 2023.

Metro Atlanta had the fewest square feet to come online among comparable markets, with Inland Empire (12.2 million square feet), Dallas (9.1 million square feet) and Phoenix (5.3 million square feet ) on your mind. In October, a joint venture between AEW Capital Management and Stream Realty Partners completed the Union City Logistics Center, a 360,180-square-foot warehouse. Construction of the initial loading facility began in September 2022.

Sales prices below national figures

In terms of sales, Atlanta’s industrial sector saw $205 million in assets change hands in the first quarter. Nationally, sales volume during the same period reached $10 billion, with the Bay Area taking the lead with nearly $1.7 billion.

Facilities in metro Atlanta were trading for an average of $113 per square foot in March, according to information from CommercialEdge, which is considerably lower than the national average of $147. The Inland Empire ($212 per sq. ft.), New Jersey ($306 per sq. ft.), and Dallas ($145 per sq. ft.) are some of the markets that have fared better, while Chicago ($97 per sq. ft. ) was located at the opposite pole.

In February, Berkeley Partners sold a three-building, 141,481-square-foot industrial portfolio in Norcross, Georgia. Unilev Capital acquired the assets completed between 1973 and 1978 for $18.2 million, or $128.6 per square foot.

Last October, several institutional investors advised by JP Morgan Global Alternatives acquired BlueLinx Atlanta IOS, a 585,637 square foot distribution facility located in Lawrenceville, Georgia, for $40 million. Stockbridge Capital Group sold the asset for $68.3 per square foot after holding it for only two years.

A higher job vacancy rate, but still lower than the national average

Atlanta’s industrial vacancy rate in March stood at 4.6%, 60 basis points lower than the national average, but 170 basis points higher than a year ago. Indianapolis (3.2%) and Phoenix (3.7%) had the lowest vacancy rates, while the Inland Empire (6.0%) and New Jersey (6.1%) were among comparable markets that are faring the worst.

Atlanta remained one of the cheapest large industrial markets at the end of the first quarter, with an average rent of $5.67 per square foot, an increase of 7.8% year-over-year, but still $2.18 dollars less than the national figure. Orange County continues to lead the nation at $15.44 per square foot, while Indianapolis ($4.60 per square foot) is at the other end of the spectrum.

In June last year, NVH Korea signed a 234,000 square foot lease at Scannell Properties’ Gardner Logistics Park in Locust Grove, Georgia. The acoustic and thermal management company will occupy the entire facility.

A month earlier, Boston Scientific Corp. had also committed to acquire 206,686 square feet on the campus currently being completed from US Realty Advisors and Bain Capital in Johns Creek, Georgia. The life sciences manufacturing and supply chain facility is being built on the site of a former State Farm Campus.