Q2 2012 | INDUSTRIAL
ATLANTA
MARKET REPORT
Industrial Market Recovery Continues in Atlanta
Updated May 2012
MARKET INDICATORS Projected
Q2 2012
Q3 2012
VACANCY
At mid-year 2012, the recovery of Atlanta’s industrial market remains solid. Second quarter absorption topped 2.5 million square feet which is the second highest amount of industrial space absorbed in the past four quarters. Year-to-date, the overall increase in occupancy is trending ahead of 2011’s total at this point in the year. The biggest winner of move-in activity this quarter was Northeast Atlanta which accounted for 61% of total absorption in the Atlanta market. Bed Bath & Beyond was the largest industrial occupier in the submarket moving into an 810,000 square feet warehouse facility it purchased at the end of the last year. Other industrial submarkets posting strong gains this quarter were I-20 West/Fulton Industrial and Snapfinger/I-20 East. Looking at development activity, there were no industrial deliveries to report in second quarter; however, construction activity increased by 50% during the past three months. The most significant project to break ground was IDI’s spec building of 653,484 square feet at its Riverside Business Center in I-20 West/Fulton Industrial. This distribution facility is the first spec industrial building to be built in the Atlanta market since 2008. With both strong absorption and no deliveries occurring, industrial vacancy dropped for the fourth consecutive quarter. Atlanta’s overall vacancy rate for industrial is below 13% for the first time since 2008. Compared to this time last year, the rate has dropped 1.5% which amounts to just over 9 million square feet of vacant space filled.
NET ABSORPTION CONSTRUCTION RENTAL RATE
—
— —
CAP RATES
Heading into the second half of the year, industrial market activity in Atlanta will continue to remain just as active, if not more, than the first half of the year. In the past couple of months, over 3.3 million square feet of big deal lease transactions have occurred. The largest completed was Home Depot’s 1.2 million square foot build-to-suit which was finalized with ProLogis. The new facility will be built in the Henry County area of South Atlanta and will service the company’s growing e-commerce business. Other large transactions which will factor into occupancy gains in the coming quarters include Nestle for 570,000 square feet in South Atlanta, International Paper for 356,000 square feet in Northeast Atlanta continued on page 2
UPDATE $4.00 $4.00
$3.75 $3.75
$3.50 $3.50
30,000,000
16%
25,000,000
14%
www.colliers.com/atlanta
6%
5,000,000
4% 2%
$2.50 $2.50
2012
2011
2010
2009
2008
2007
2006
(5,000,000)
2005
0 2004
Bulk Warehouse*
*Bulk warehouse defined as warehouse space in excess of 100,000 SF with dock loading and minimium ceiling heights of 24 ft.
8%
10,000,000
2003
2012 2012
2011 2011
2010 2010
2009 2009
$2.75 $2.75
10%
15,000,000
Square Feet
$3.00 $3.00
12%
20,000,000
$3.25 $3.25
Market AVG
ATLANTA INDUSTRIAL
NEW SUPPLY, ABSORPTION AND VACANCY RATES
Atlanta Rental Rates Overall Market & Bulk Warehouse* (per sq. ft.)
(10,000,000)
0% -2% -4%
Absorption
Deliveries
Vacancy %
At mid-year 2012, Atlanta’s industrial market has absorbed 3,282,622 square feet. The overall industrial vacancy rate decreased for the fourth consecutive quarter and is below 13% for the first time since 2008. There were no industrial deliveries in second quarter; however, construction activity increased to almost 2.5 million square feet.
MARKET REPORT | Q2 2012 | INDUSTRIAL | ATLANTA
Atlanta’s industrial vacancy rate is below 13% for the first time since the end of 2008. Taking out non-competitive space, the actual vacancy rate would be below 10%.
•
Northeast Atlanta and I-20 West/Fulton Industrial saw vacancy rates drop 1% from first quarter.
•
Warehouse properties have seen the largest drop in vacancy since this time last year. Just over 8.5 million square feet of warehouse space has been filled during this period of time. As a result, large availabilities (800K sq. ft. and up) of this product type are becoming scarce. Atlanta industrial is on track to finish the year with its largest drop in vacancy since 2004. Q2 2012 | Vacant Space By Type
Industrial space absorbed year-to-date totals 3,282,622 SF. This amount represents a 40% increase over mid-year 2011’s total.
•
Despite negative absorption in the second quarter, South Atlanta led the market in leasing activity. Over the past couple of months, 3 million square feet of transactions were completed in the submarket.
•
Small business growth contributed to industrial occupancy gains yet again this quarter. Signs this growth may be slowing could affect future absorption from these types of businesses.
•
Third quarter industrial absorption is expected to be close to the same amount as this quarter’s. Q2 2012 | Net Absorption by Submarket 1,800,000
Leasing Activity-The volume of square
1,600,000
footage that is committed to and signed for under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity for buildings under construction or planned.
1,200,000 1,000,000
SHALLOW-BAY 11,105,653 SF VCY RATE = 14.4% FLEX 9,853,614 SF VCY RATE = 17.2%
Build-To-Suit-A term describing property that was developed specifically for a certain tenant to occupy. Can be either leased or owned by tenant.
Square Feet
WAREHOUSE 57,158,277 SF VCY RATE = 12.1%
800,000 600,000 400,000 200,000
NORTHEAST ATLANTA
1,400,000
0 (200,000)
Warehouse
Shallow-Bay
Flex
(400,000)
UPDATE Recent Transactions in the Market SALES ACTIVITY PROPERTY
SUBMARKET
SALES DATE
SALE PRICE
SIZE SF
PRICE / SF
BUYER
Douglas Hill Bus. Ctr. - 4
I-20 West/Fulton Ind
4/12/2012
$40,000,000
913,000
$43.81
LaSalle Investment
Hartman V - 7545 Hartman
I-20 West/Fulton Ind
6/27/2012
$26,350,000
569,673
$46.23
Duke Realty
Shiloh 400 Business Ctr.
North Central Atlanta Ind
6/5/2012
$17,505,000
238,540
$73.38
Cabot Realty Partners
Hartman I - 675 Hartman
I-20 West/Fulton Ind
6/28/2012
$16,100,000
353,983
$45.48
Industrial Income Trust
LEASING ACTIVITY PROPERTY
SUBMARKET
TENANT
LANDLORD
SIZE SF
TYPE
McDonough, GA
South Atlanta Ind
Home Depot
ProLogis
1,200,000
Build-To-Suit
5005 Terminus Drive
South Atlanta Ind
Nestle
MD Hodges
569,918
Warehouse Lease
300 Horizon Drive
Northeast Atlanta Ind
International Paper
ProLogis
356,000
Warehouse Lease
9000 Riverside Pkwy.
I-20 West/Fulton Ind
Subaru
Stockbridge Real Estate
306,572
Distribution Lease
P. 2
| COLLIERS INTERNATIONAL
SOUTH ATLANTA
•
•
STONE MOUNTAIN
Flex-A type of building designed to be versatile, which may be used in combination with office, R&D, quasi-retail sales and industrial warehouse and distribution uses. Typically has at least 50% office and ceiling heights under 18’.
•
NORTH CENTRAL
Shallow-Bay Distribution-A type of building designed to be used for the distribution of materials or as a medium-sized manufacturing facility. Typically has 10%-30% of office, ceiling heights of 18’-24’ and bay depths of 120’-190’.
ABSORPTION & LEASING ACTIVITY
CENTRAL ATLANTA
Bulk Warehouse-A type of building designed to be used for bulk storage or materials, distribution or heavy manufacturing. Typically has a small amount of office space, ceiling heights of 24’ and bay depths of over 190’.
VACANCY & AVAILABILITY
CHATTAHOOCHEE
Vacancy Rate-A percentage of the total amount of physically vacant space divided by the total amount of existing inventory.
SNAPFINGER | I-20E
occupied space over a given period of time, calculated by summing all the positive changes in occupancy and subtracting all the negative changes in occupancy.
NORTHWEST ATLANTA
Absorption (Net)-The net change in
and Subaru for 306,000 square feet also in South Atlanta. In addition to what has already transpired, a number of industrial requirements over 100,000 square feet are actively touring the Atlanta market with the expectation that some of these get completed by the end of third quarter. Despite economic pressures, Atlanta’s industrial market perseveres. The synergy surrounding the positive activity taking place can be attributed to companies looking to optimize their supply chains; and recognizing the importance and benefits of being in a major regional market like Atlanta. For the foreseeable future, this type of activity is expected to continue.
I-20W | FULTON IND
DEFINITIONS
MARKET REPORT | Q2 2012 | INDUSTRIAL | ATLANTA
UPDATE
Market Comparisons
VACANCY
BLDGS
EXISTING PROPERTIES TOTAL SF
DIRECT VCY %
SUB VCY %
CENTRAL ATLANTA IND. Flex 95 Shallow-Bay 36 Warehouse 257 Total 388
2,792,319 1,233,858 12,256,888 16,283,065
9.1% 8.7% 8.1% 8.3%
-
CHATTAHOOCHEE IND. Flex 111 Shallow-Bay 27 Warehouse 361 Total 499
2,679,388 862,949 17,670,059 21,212,396
9.9% 16.6% 8.7% 9.2%
I-20 W / FULTON IND. Flex 96 Shallow-Bay 218 Warehouse 763 Total 1,077
3,046,218 12,804,729 75,104,547 90,955,494
DELIVERIES NEW SUPPLY YTD SF
RENT
UNDER CONSTR SF
AVG RENT (NNN)
VCY PRIOR %
NET ABSORP CURR SF
NET ABSORP YTD SF
254,421 107,090 987,978 1,349,489
9.1% 8.7% 8.1% 8.3%
7.7% 8.7% 8.1% 8.1%
(40,767) 10,070 (30,697)
16,682 (12,780) (65,090) (61,188)
-
-
-
$10.74 $2.95 $4.96 $5.33
0.0% 0.0%
264,771 142,870 1,544,221 1,951,862
9.9% 16.6% 8.7% 9.2%
10.5% 16.6% 8.7% 9.3%
16,302 (5,579) 10,723
4,450 (30,000) (105,546) (131,096)
-
-
-
$7.67 $3.80 $4.40 $4.87
17.0% 12.8% 13.3% 13.3%
0.1% 0.3% 0.3%
516,753 1,652,959 10,218,870 12,388,582
17.0% 12.9% 13.6% 13.6%
16.6% 13.7% 14.7% 14.6%
(12,132) 95,708 789,714 873,290
(48,717) 141,299 1,052,116 1,144,698
-
-
NORTH CENTRAL ATLANTA IND. Flex 252 8,490,079 Shallow-Bay 114 4,649,901 Warehouse 398 15,201,136 Total 764 28,341,116
22.7% 10.1% 10.6% 14.1%
0.2% 0.9% 0.2%
1,936,856 511,574 1,614,393 4,062,823
22.8% 11.0% 10.6% 14.3%
22.4% 9.9% 10.7% 14.1%
(38,331) (52,310) 14,659 (75,982)
(81,235) (125,537) (1,574) (208,346)
-
-
NORTHEAST ATLANTA IND. Flex 642 18,677,503 462 22,966,851 Shallow-Bay Warehouse 1,651 129,014,273 Total 2,755 170,658,627
20.4% 13.6% 11.6% 12.8%
0.5% 0.3% 0.2% 0.2%
3,911,862 3,186,750 15,139,296 22,237,908
20.9% 13.9% 11.7% 13.0%
20.9% 14.2% 12.9% 13.9%
(15,134) 74,469 1,474,311 1,533,646
(28,604) 35,185 1,839,134 1,845,715
-
27,500 27,500
NORTHWEST ATLANTA IND. Flex 302 9,808,040 217 9,348,435 Shallow-Bay Warehouse 802 41,799,837 Total 1,321 60,956,312
13.7% 15.2% 11.9% 12.7%
1.1% 0.1% 0.3% 0.4%
1,451,168 1,426,448 5,091,584 7,969,200
14.8% 15.3% 12.2% 13.1%
14.4% 15.4% 12.5% 13.3%
(42,772) 10,209 146,354 113,791
(73,337) (31,742) 514,661 409,582
-
-
-
$7.57 $3.74 $3.79 $4.13
SNAPFINGER / I-20 EAST IND. Flex 120 3,017,413 104 4,718,931 Shallow-Bay Warehouse 430 36,883,280 Total 654 44,619,624
6.9% 9.5% 10.4% 10.1%
209,155 447,933 3,839,744 4,496,832
6.9% 9.5% 10.4% 10.1%
7.4% 13.2% 11.0% 11.0%
14,022 173,347 233,998 421,367
30,510 195,357 142,885 368,752
-
-
-
$6.70 $2.76 $2.99 $3.07
SOUTH ATLANTA IND. Flex 227 Shallow-Bay 220 Warehouse 1,158 Total 1,605
5,190,087 13,688,389 126,877,728 145,756,204
8.9% 18.5% 11.9% 12.4%
0.3% 0.1% 1.5% 1.3%
476,730 2,542,543 16,980,538 19,999,811
9.2% 18.6% 13.4% 13.7%
8.5% 18.4% 13.3% 13.6%
(37,111) (27,393) (153,911) (218,415)
(42,524) 224,567 (145,592) 36,451
-
-
STONE MOUNTAIN IND. Flex 137 Shallow-Bay 165 Warehouse 311 Total 613
3,450,533 7,026,927 16,169,839 26,647,299
23.5% 15.5% 10.8% 13.7%
0.6% 0.0% 0.1%
831,898 1,087,486 1,741,653 3,661,037
24.1% 15.5% 10.8% 13.7%
23.4% 14.8% 10.5% 13.3%
(24,908) (46,791) (51,809) (123,508)
(61,442) (17,954) (42,550) (121,946)
-
-
ATLANTA MARKET GRAND TOTAL Flex 1,982 57,151,580 1,563 77,300,970 Shallow-Bay Warehouse 6,131 470,977,587 Total 9,676 605,430,137
16.8% 14.2% 11.6% 12.4%
0.5% 0.2% 0.5% 0.5%
9,853,614 11,105,653 57,158,277 78,117,544
17.2% 14.4% 12.1% 12.9%
16.9% 14.7% 12.7% 13.3%
(180,831) 227,239 2,457,807 2,504,215
(284,217) 378,395 3,188,444 3,282,622
-
27,500 27,500
2,489,881 2,489,881
$7.27 $3.42 $3.20 $3.45
0.5% 0.5% 0.5% 0.5% 0.4%
78,117,544 80,621,759 81,372,666 83,205,810 87,199,953
12.9% 13.3% 13.4% 13.7% 14.4%
13.3% 13.4% 13.7% 14.4% 14.3%
2,504,215 778,407 1,947,913 4,464,149 (443,776)
3,282,622 778,407 8,774,021 6,826,108 2,361,959
27,500 27,500 2,216,998 2,102,229 1,632,223
2,489,881 1,664,297 231,750 346,519 789,025
$3.45 $3.45 $3.52 $3.46 $3.43
-
NEW SUPPLY CURR SF
U/C
VCY CURR %
PROP TYPE
TOTAL VCY SF
ABSORPTION
653,484 653,484
-
935,757 935,757
900,640 900,640
-
$6.33 $2.57 $2.91 $2.94
$9.40 $6.28 $4.40 $6.42
$6.35 $3.85 $3.44 $3.73
$8.72 $3.13 $2.89 $2.95
$4.92 $3.31 $2.97 $3.24
QUARTERLY COMPARISONS AND TOTALS
QUARTERLY COMPARISON AND TOTALS Q2-12 9,676 605,430,137 Q1-12 9,676 605,430,137 Q4-11 9,675 605,402,637 Q3-11 9,673 605,287,868 Q2-11 9,671 604,817,862
12.4% 12.8% 13.0% 13.3% 14.0%
NOTE: STATISTICAL SET INCLUDES ALL INDUSTRIAL PROPERTIES 10,000 SF AND UP, EXCLUDING HEAVY MANUFACTURING PROPERTIES. WHILE COSTAR ATTEMPTS TO PROVIDE THE MOST ACCURATE DATA AT THE END OF EVERY QUARTER, REVISIONS ARE MADE THROUGHOUT THE YEAR ACCOUNTING FOR DISCREPANCIES IN PAST REPORTING.
27,500 114,769 470,006 -
SOURCE: COSTAR PROPERTY, COLLIERS RESEARCH
COLLIERS INTERNATIONAL |
P. 3
MARKET REPORT | Q2 2012 | INDUSTRIAL | ATLANTA
CONSTRUCTION
RENTAL RATES
For the second consecutive quarter, industrial construction activity increased in Atlanta. This quarter’s increase was due to IDI breaking ground on its 653,484 SF spec industrial building in I-20 West/Fulton Industrial.
•
As the GA-Pacific and FedEx projects deliver, build-to-suits for PPG and Kuehne & Nagel are expected to begin next quarter.
•
There was no significant movement of Atlanta’s average industrial rent in second quarter. The same is expected for next quarter.
•
Though only slight, I-20 West/Fulton Industrial is the only major industrial submarket seeing some upward movement in asking rents.
522 offices in 61 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118
SALES ACTIVITY
While industrial vacancy continues to drop, the question of when more spec construction projects begin becomes ever more inquiring.
•
•
Industrial investment sales were ample in the second quarter with over $190 million and 4.7 million square feet trading hands.
•
•
$1.8 billion in annual revenue
• Over 2.5 billion square feet under
management
CONSTRUCTION ACTIVITY (100,000 SF+) PROPERTY ADDRESS
SUBMARKET
SIZE (SF)
DELIVERY DATE
GA-Pacific BTS - 490 Westridge Pky
South Atlanta Ind
900,640
Third Quarter 2012
600 Riverside Pkwy.
I-20 West/Fulton Ind
653,484
Fourth Quarter 2012
Mitsubishi BTS - 1340 Satellite Blvd.
Northeast Atlanta Ind
559,407
Fourth Quarter 2012
FedEx BTS - 6271 Atlantic Blvd.
Northeast Atlanta Ind
204,250
Third Quarter 2012
Canton GAINESVILLE Cumming
CHEROKEE CO. F FULTON CO. F FORSYTH CO.
Allatona Lake
son
Lake Lanier
NORTH CENTRAL ATLANTA
Woodstock
FO RS FU
Mountain Park
CHEROKEE CO.
Acworth
H YT O LT
OW CO.
CO N . CO .
Alpharetta
Brase
NORTHEAST ATLANTA
e hooch e tac
Cha t
PAULDING CO. COBB CO.
NORTHWEST ATLANTA
INDUSTRIAL SUBMARKETS
Buford
HA GW INN LL CO . ETT CO .
Sugar Hill
Rive r
BARTOW CO. CHEROKEE CO.
ersville
Roswell
Duluth
316 CO BB FU LT CO O . N CO .
MARIETTA
Lawrenceville DORAVILLE Norcross
CHAMBLEE SMYRNA
DECATUR Avondale Estates
o
SNAPFINGER I-20 EAST
att
ho ac
ATLANTA
e
CO .
r
R iv
ch e
glasville
Ch
EAST POINT COLLEGE PARK HAPEVILLE
DEKALB HENRY
Hartsfield-Jackson International Airport
CLAYTON CO.
Union City Fairburn
FULTON CO. COWETA CO.
Palmetto
. ON CO FULT CO. TTE FAYE
675
CO. CO.
W AL TO N
CO .
Lithonia
Conyers Covington RO C NE KDA WT LE ON CO CO . .
I-20 WEST / FULTON INDUSTRIAL
Snellville
. STONE MOUNTAIN Stone Clarkston INDUSTRIAL Mountain
DE KALB RO CO CK . DA LE CO .
COBB CO. DOUGLAS CO.
GW IN DE NE KA TT LB C CO O.
CENTRAL ATLANTA
G W IN NE TT
CHATTAHOOCHEE INDUSTRIAL
Austell
e
PAULDING CO.
DEKALB CO. FULTON CO.
Powder Springs
FOREST PARK Riverdale
Stockbridge
SOUTH ATLANTA
The Atlanta industrial market consists of nine submarkets. They include Central Atlanta, Chattahoochee Industrial, I-20 West/Fulton Industrial, North Central Atlanta, Northeast Atlanta, Northwest Atlanta, Snapfinger/I-20 East, South Atlanta and Stone Mountain Industrial. The major interstates in the region include: I-75, I-85, I-285, I-575, I-985, I-675 and I-20. Georgia 400 and US 316 also play important roles to Atlanta’s transportation system.
• Over 12,000 professionals
UNITED STATES: Atlanta Caldwell Zimmerman Executive VP | Colliers Manager Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 888 9000 FAX +1 404 870 2845
RESEARCHER: Atlanta Scott Amoson Vice President | Director of Research Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 877 9286 FAX +1 404 870 2845
Jonesboro
McDonough
nan
BU TT S
CO .
HENRY CO. CLAYTON CO.
Fayetteville
This market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International-Atlanta, Inc., and certain of its subsidiaries, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 520 offices throughout 62 countries worldwide.
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