Q3 2012 | INDUSTRIAL
ATLANTA
MARKET REPORT
Atlanta Industrial Set to Finish the Year Strong
Updated May 2012
MARKET INDICATORS Projected
Q3 2012
Q4 2012
VACANCY
For the second straight quarter, Atlanta’s industrial market saw absorption top 2 million square feet. Yet again, the majority of this quarter’s move-in activity occurred in the Northeast Atlanta submarket. The largest space occupier was Carter’s which moved into the remaining amount of its space at Park 85 at Braselton; this amounted to 505,269 square feet. Elsewhere in the submarket U.S. Lumber occupied 215,690 square feet at Gwinnett Regional Distribution Center and FedEx Ground moved into its new build-to-suit facility of 215,000 square feet in Norcross. For the market as a whole, expansions by existing tenants and positive activity from smaller space users ranging between 30,000 to 80,000 square feet made up the bulk of this quarter’s absorption. Atlanta’s industrial occupancy has increased to almost 6 million square feet year-to-date. For the fifth consecutive period, Atlanta’s overall industrial vacancy showed a drop thanks to continued momentum. This quarter’s rate fell to 12.7%; down 20 basis points from last quarter and down 110 basis points from this time last year. This decline comes even as the market saw over 1 million square feet of new space delivered. The two third quarter deliveries were both located in South Atlanta and included a 160,000 square foot distribution center for HK Logistics and also GeorgiaPacific’s 900,640 square foot build-to-suit facility. The latter was delivered in the final week of the quarter; because of this, Georgia-Pacific’s occupancy will not be reported until fourth quarter.
NET ABSORPTION CONSTRUCTION RENTAL RATE
—
CAP RATES
—
The outlook for Atlanta’s industrial market remains upbeat through the end of the year. Though absorption is not expected to be as high as the previous two quarters, the market should still see over 1 million square feet filled in the last three months of the year. Taking this into account, Atlanta should end 2012 with industrial absorption totaling somewhere between 7 to 7.5 million square feet. This will fall short of last year’s amount; however, it shows the Atlanta industrial market to be in fine form heading into 2013. Nevertheless, there is hesitancy weighing on the sentiments of businesses due to uncertainty surrounding the global and national economies. The drop in Atlanta’s industrial leasing continued on page 2
UPDATE
ATLANTA INDUSTRIAL
NEW SUPPLY, ABSORPTION AND VACANCY RATES
Atlanta Rental Rates Overall Market & Bulk Warehouse* (per sq. ft.) $4.25 $4.25 $4.00 $4.00
30,000,000
16%
25,000,000
14%
$3.75 $3.75
$3.25 $3.25 $3.00 $3.00
www.colliers.com/atlanta
8%
10,000,000
6%
5,000,000
4% 2%
$2.50 $2.50
2012
2011
2010
2009
2008
2007
2006
(5,000,000)
2005
0 2004
2012 2012
Bulk Warehouse*
*Bulk warehouse defined as warehouse space in excess of 100,000 SF with dock loading and minimum ceiling heights of 24 ft.
10%
15,000,000
2003
Market AVG
2011 2011
2010 2010
2009 2009
$2.75 $2.75
12%
20,000,000 Square Feet
$3.50 $3.50
(10,000,000)
0% -2% -4%
Absorption
Deliveries
Vacancy %
Atlanta’s industrial market absorbed 2,512,550 square feet in the third quarter. The overall industrial vacancy rate decreased yet again and is now at 12.7%. There were two industrial deliveries in third quarter: HK Logistics distribution center of 160,000 SF and Georgia-Pacific’s buildto-suit of 900,640 SF. Construction activity increased to almost 3.8 million square feet.
MARKET REPORT | Q3 2012 | INDUSTRIAL | ATLANTA
DEFINITIONS Absorption (Net)-The net change in 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.
Vacancy Rate-A percentage of the total amount of physically vacant space divided by the total amount of existing inventory. 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’.
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’.
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’.
activity demonstrates this best; third quarter leasing was down approximately 34% from the previous quarter. Though this is troublesome and will likely impact industrial absorption in the first half of 2013, overall demand for space remains intact. Much like the cases of Caterpillar, Toyota and Baxter Pharmaceuticals this year, the state’s economic development agencies will continue to win industrial requirements in 2013, many of which will benefit the metro Atlanta region. In addition, new build-tosuits should continue to be signed in the coming year as a number of companies are in need of expanding and also require more modernized space. Confidence in Atlanta’s industrial market recovery remains unbroken. As the economic uncertainty subsides, the metro region will continue seeing positive results as it has over the past couple of years.
VACANCY & AVAILABILITY •
ABSORPTION & LEASING ACTIVITY
The industrial vacancy rate for Atlanta decreased for the fifth consecutive quarter. Over this period of time, 10 million square feet of vacant space has been filled.
•
The Northeast Atlanta and I-20 West/Fulton Industrial submarkets have seen the largest drop in vacancy since this time last year.
•
Vacant space left over by companies moving into build-to-suits has yet to become a problem; however, as requirements for modernized space become more abundant, functionally obsolete space could present a challenge to the market. Q3 2012 | Vacant Space By Type
•
Atlanta industrial absorption topped 2.5 million square feet in third quarter with the majority of it occurring yet again in Northeast Atlanta.
•
Outside of Northeast Atlanta, the Northwest and South Atlanta industrial submarkets saw moderate occupancy gains, combining for 46% of total absorption in the market this quarter.
•
Though Atlanta experienced another strong quarter of industrial absorption, overall leasing activity was down from previous quarters. The major factor driving this is uncertainty in the market. Future absorption is likely to be affected. Q3 2012 | Net Absorption by Submarket
I-20W | FULTON IND
SNAPFINGER | I-20E
CENTRAL ATLANTA
200,000
CHATTAHOOCHEE
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.
600,000 400,000
STONE MOUNTAIN
FLEX 9,815,941 SF VCY RATE = 17.2%
800,000
SOUTH ATLANTA
1,000,000
SHALLOW-BAY 10,678,735 SF VCY RATE = 13.8%
NORTHEAST ATLANTA
1,200,000
WAREHOUSE 56,620,590 SF VCY RATE = 12%
NORTH CENTRAL
1,400,000
Square Feet
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.
NORTHWEST ATLANTA
1,600,000
Leasing Activity-The volume of square
0
Warehouse
Shallow-Bay
Flex
(200,000)
UPDATE Recent Transactions in the Market SALES ACTIVITY PROPERTY
SUBMARKET
SALES DATE
SALE PRICE
SIZE SF
PRICE / SF
BUYER
3100 & 4644 SouthPark
South Atlanta Ind
9/21/2012
$45,800,000
852,800
$53.71
LaSalle Investment
Jackson 85 DC - Bldg. E
Northeast Atlanta Ind
8/16/2012
$30,825,000
1,004,400
$30.69
Hillwood Investment Prop.
Jackson 85 DC - Bldg. F
Northeast Atlanta Ind
8/10/2012
$29,750,000
772,000
$38.54
Exeter Property Group
490 Westridge Pky.
South Atlanta Ind
8/28/2012
$28,985,000
900,640
$32.18
Koch Industries
LEASING ACTIVITY PROPERTY
SUBMARKET
TENANT
LANDLORD
SIZE SF
TYPE
5300 Kennedy Rd.
South Atlanta Ind
HWC Logistics
Colony Realty Partners
425,300
Warehouse Renewal & Exp
Airport Distr. Ctr. III
South Atlanta Ind
UPS Supply Chain Solution
KTR Capital Partners
406,989
Warehouse Renewal
4644 SouthPark Blvd.
South Atlanta Ind
FedEx SmartPost
McDonald Development
401,600
Warehouse Renewal & Exp
6600 Governors Lake Pky.
Northeast Atlanta Ind
Unisource
Uniwest Atlanta LP
388,481
Warehouse Renewal
P. 2
| COLLIERS INTERNATIONAL
MARKET REPORT | Q3 2012 | INDUSTRIAL | ATLANTA
UPDATE
Market Comparisons
VACANCY
BLDGS
EXISTING PROPERTIES TOTAL SF
DIRECT VCY %
SUB VCY %
CENTRAL ATLANTA IND. Flex 93 Shallow-Bay 36 Warehouse 253 Total 382
2,733,505 1,235,858 11,620,233 15,589,596
8.8% 8.7% 11.0% 10.4%
-
CHATTAHOOCHEE IND. Flex 111 Shallow-Bay 27 Warehouse 361 Total 499
2,683,887 862,949 17,737,489 21,284,325
11.2% 4.4% 8.5% 8.7%
I-20 W / FULTON IND. Flex 97 Shallow-Bay 218 Warehouse 768 Total 1,083
3,057,634 12,773,329 75,007,906 90,838,869
DELIVERIES
UNDER CONSTR SF
AVG RENT (NNN)
NET ABSORP CURR SF
NET ABSORP YTD SF
239,217 107,090 1,282,463 1,628,770
8.8% 8.7% 11.0% 10.4%
9.3% 8.7% 10.6% 10.2%
15,204 (48,885) (33,681)
31,886 (12,780) (115,075) (95,969)
-
-
-
$10.74 $2.48 $5.04 $5.39
0.0% 0.0%
301,020 38,000 1,514,014 1,853,034
11.2% 4.4% 8.5% 8.7%
9.9% 7.3% 8.6% 8.7%
(36,249) 24,870 17,207 5,828
(31,799) 74,870 (76,339) (33,268)
-
-
-
$7.88 $3.80 $4.29 $4.73
15.4% 14.2% 13.2% 13.4%
0.1% 0.4% 0.3%
469,529 1,822,612 10,176,997 12,469,138
15.4% 14.3% 13.6% 13.7%
16.9% 12.2% 13.7% 13.6%
47,224 (263,520) 104,478 (111,818)
(1,493) (87,234) 1,102,638 1,013,911
-
-
NORTH CENTRAL ATLANTA IND. Flex 251 8,477,082 Shallow-Bay 115 4,673,753 Warehouse 399 15,206,964 Total 765 28,357,799
22.0% 8.8% 10.2% 13.5%
0.1% 0.9% 0.2%
1,866,799 451,140 1,554,247 3,872,186
22.0% 9.7% 10.2% 13.7%
22.9% 9.7% 10.6% 14.1%
73,548 434 60,146 134,128
(11,887) (65,103) 58,572 (18,418)
-
-
NORTHEAST ATLANTA IND. Flex 640 18,478,964 464 23,226,550 Shallow-Bay Warehouse 1,657 129,362,250 Total 2,761 171,067,764
20.6% 13.1% 10.6% 12.0%
0.7% 0.3% 0.2% 0.2%
3,930,788 3,117,557 13,963,687 21,012,032
21.3% 13.4% 10.8% 12.3%
20.7% 13.9% 11.8% 13.1%
(100,142) 116,193 1,314,686 1,330,737
(94,137) 151,378 3,220,546 3,277,787
-
NORTHWEST ATLANTA IND. Flex 306 9,927,335 216 9,307,935 Shallow-Bay Warehouse 816 42,558,701 Total 1,338 61,793,971
13.9% 13.2% 10.8% 11.7%
1.0% 0.1% 0.3% 0.4%
1,482,138 1,235,371 4,715,764 7,433,273
14.9% 13.3% 11.1% 12.0%
14.7% 15.0% 12.3% 13.1%
(26,670) 156,519 527,733 657,582
(105,007) 159,335 1,097,011 1,151,339
-
-
-
$7.70 $3.49 $3.83 $4.12
SNAPFINGER / I-20 EAST IND. Flex 120 2,970,345 104 4,715,511 Shallow-Bay Warehouse 435 36,676,720 Total 659 44,362,576
7.1% 9.3% 10.5% 10.1%
211,337 436,995 3,852,069 4,500,401
7.1% 9.3% 10.5% 10.1%
5.8% 9.2% 10.5% 10.0%
(38,553) (4,982) (12,325) (55,860)
23,328 190,375 130,560 344,263
-
-
-
$6.70 $2.95 $3.05 $3.15
SOUTH ATLANTA IND. Flex 229 Shallow-Bay 217 Warehouse 1,171 Total 1,617
5,282,248 13,476,441 128,485,167 147,243,856
9.2% 18.4% 12.5% 12.9%
0.3% 0.1% 1.4% 1.3%
500,940 2,495,534 17,870,707 20,867,181
9.5% 18.5% 13.9% 14.2%
9.0% 18.9% 13.6% 13.9%
(24,210) 47,009 463,313 486,112
(64,134) 271,576 (24,871) 182,571
STONE MOUNTAIN IND. Flex 136 Shallow-Bay 164 Warehouse 313 Total 613
3,431,803 6,910,645 16,329,932 26,672,380
23.2% 14.1% 10.4% 13.0%
0.6% 0.1%
814,173 974,436 1,690,642 3,479,251
23.7% 14.1% 10.4% 13.0%
24.2% 14.5% 10.7% 13.4%
17,725 30,786 51,011 99,522
(43,717) 25,242 8,461 (10,014)
ATLANTA MARKET GRAND TOTAL Flex 1,983 57,042,803 1,561 77,182,971 Shallow-Bay Warehouse 6,173 472,985,362 Total 9,717 607,211,136
16.7% 13.7% 11.5% 12.2%
0.5% 0.2% 0.5% 0.5%
9,815,941 10,678,735 56,620,590 77,115,266
17.2% 13.8% 12.0% 12.7%
17.1% 14.0% 12.3% 13.0%
(72,123) 107,309 2,477,364 2,512,550
(296,960) 707,659 5,401,503 5,812,202
1,060,640 1,060,640
27,502 1,275,640 1,303,142
3,792,899 3,792,899
$7.40 $3.44 $3.15 $3.40
0.5% 0.5% 0.5% 0.5% 0.5%
77,115,266 78,567,176 80,613,269 81,624,326 83,337,013
12.7% 13.0% 13.3% 13.5% 13.8%
13.0% 13.3% 13.5% 13.8% 14.4%
2,512,550 2,261,093 1,038,559 1,827,456 4,439,864
5,812,202 3,299,652 1,038,559 8,630,946 6,803,490
1,060,640 215,000 27,502 114,769 470,006
1,303,142 242,502 27,502 2,216,998 2,102,229
3,792,899 2,350,631 1,912,147 319,602 434,371
$3.40 $3.45 $3.45 $3.52 $3.46
1,060,640 1,060,640
-
NEW SUPPLY YTD SF
RENT
VCY PRIOR %
-
NEW SUPPLY CURR SF
U/C
VCY CURR %
PROP TYPE
TOTAL VCY SF
ABSORPTION
27,502 215,000 242,502
1,060,640 1,060,640
-
653,484 653,484
-
1,735,307 1,735,307
1,404,108 1,404,108
-
$6.57 $2.58 $2.88 $2.92
$9.50 $6.01 $4.40 $6.37
$6.47 $3.95 $3.33 $3.63
$8.61 $3.15 $2.77 $2.84
$5.01 $3.29 $3.03 $3.27
QUARTERLY COMPARISONS AND TOTALS
QUARTERLY COMPARISON AND TOTALS Q3-12 9,717 607,211,136 Q2-12 9,715 606,150,496 Q1-12 9,714 605,935,496 Q4-11 9,713 605,907,994 Q3-11 9,711 605,793,225
12.2% 12.5% 12.8% 13.0% 13.3%
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.
SOURCE: COSTAR PROPERTY, COLLIERS RESEARCH
COLLIERS INTERNATIONAL |
P. 3
MARKET REPORT | Q3 2012 | INDUSTRIAL | ATLANTA
CONSTRUCTION
RENTAL RATES
•
Two deliveries occurred in the third quarter bringing the year-to-date total to just under 3.8 million square feet.
•
Construction starts this quarter include three build-to-suits and one manufacturing plant expansion. Home Depot’s e-commerce distribution center of 1,118,508 SF in South Atlanta was the largest project to begin.
SALES ACTIVITY
Build-to-suits continue to be the space of choice for a number of requirements in the market.
•
522 offices in 61 countries on 6 continents
The average rental rate for industrial space in Atlanta decreased by $0.05/sf this quarter. The trend overall shows rents are still bottoming, but are taking a while to settle.
•
•
Industrial investment volume was down 16% from the second quarter.
•
The absence of quality assets in the market is the reason why investment has not kept pace.
United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118 •
CONSTRUCTION ACTIVITY (100,000 SF+) PROPERTY ADDRESS
SUBMARKET
SIZE (SF)
DELIVERY DATE
Home Depot BTS - ProLogis Park 75
South Atlanta Ind
1,118,508
Second Quarter 2013
600 Riverside Pkwy.
I-20 West/Fulton Ind
653,484
First Quarter 2013
Toyota - 2530 Wayne Poultry Rd.
Northeast Atlanta Ind
598,800
Second Quarter 2013
Mitsubishi BTS - 1340 Satellite Blvd.
Northeast Atlanta Ind
559,407
Fourth Quarter 2012
Kubota - 1001 McClure Industrial
Northeast Atlanta Ind
500,000
Third Quarter 2013
PPG BTS - 7795 A Spence Rd.
South Atlanta Ind
285,600
First Quarter 2013
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
CO .
ATLANTA
e
DECATUR Avondale Estates
o
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
DE KALB RO CO CK . DA LE CO .
SNAPFINGER I-20 EAST
att
ho ac
Snellville
STONE MOUNTAIN Stone Clarkston INDUSTRIAL Mountain
r
R iv
ch e
glasville
GW IN DE NE KA TT LB C CO O. .
CENTRAL ATLANTA
G W IN NE TT
CHATTAHOOCHEE INDUSTRIAL
Austell COBB CO. DOUGLAS CO.
e
PAULDING CO.
DEKALB CO. FULTON CO.
Powder Springs
FOREST PARK Riverdale
$1.8 billion in annual revenue
• Over 2.5 billion square feet under
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.
management • 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
Stockbridge
SOUTH ATLANTA 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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