YEAR-END 2011 | INDUSTRIAL
ATLANTA
MARKET REPORT
Atlanta Industrial Experiences Best Year Since 2007
MARKET INDICATORS Projected
Q4 2011
Q1 2012
VACANCY
For the second consecutive year, tenants in Atlanta’s industrial market occupied more space than vacated. Over 9 million square feet of industrial space was absorbed in 2011. This is the highest amount of occupancy gain since before the Great Recession. Almost 70% of the space absorbed this year occurred in the last six months. During this time, expansions and regional consolidations by large corporations, along with the return of small business growth filled over 5.6 million square feet of vacant space in the Atlanta market. As a result, the overall industrial vacancy rate in Atlanta dropped to 13.6%; down from 14.8% at the end of 2010. In conjunction with strong absorption levels, the absence of new spec development factored into the decrease in vacancy. The year was highlighted by the first quarter move of Clorox into its new 1.2 million square foot distribution facility in South Atlanta. Aldi’s move into a new 482,223 SF distribution facility and SANY America’s occupation of a new 409,600 SF facility were also significant build-to-suit developments delivering this year. Relocations and expansions by consumer product and manufacturing corporations from both inside and outside the Atlanta market were also important contributors to the positive activity in 2011. Transactions such as these exemplify Atlanta as a regional leader in attracting corporations looking to streamline their distribution networks. Examples of companies which relocated to the area or expanded their Atlanta operations this year include Lowe’s, Electrolux, Phillips Van Heusen, Home Depot and Corrugated Office Supplies.
NET ABSORPTION CONSTRUCTION RENTAL RATE
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CAP RATES
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Excluding delivered product, Atlanta’s industrial market over the past couple of years has managed to backfill almost 100% of the space vacated during the Great Recession. However, when factoring in the 17.2 million square feet of industrial deliveries during this same time frame, the more realistic percentage of space recovered from the economic downturn falls somewhere closer to 21%; still significant nonetheless. What is puzzling about this though, is the positive absorption in 2010 and 2011 has occurred without any true employment growth in the area. Since 2008, metro Atlanta’s total employment has dropped 2%. This suggests companies are leasing more space while employing less people. 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 $3.75 $3.75
30,000,000
16%
25,000,000
14%
20,000,000
12%
$3.50 $3.50
10%
Market AVG
Bulk Warehouse*
*Bulk warehouse defined as warehouse space in excess of 100,000 SF with dock loading and minimium ceiling heights of 24 ft.
www.colliers.com/atlanta
4% 2011
2010
2009
2008
2007
2006
(5,000,000)
2005
0 2004
$2.50 $2.50
6%
5,000,000 2003
2011 2011
2010 2010
2009 2009
2008 2008
$2.75 $2.75
8%
10,000,000
2002
$3.00 $3.00
Square Feet
15,000,000 $3.25 $3.25
2% 0%
(10,000,000)
-2%
(15,000,000)
-4% Absorption
Deliveries
Vacancy %
Atlanta’s industrial market finished the year with just over 9 million square feet absorbed; the strongest year since 2007. Deliveries totaled 2,216,998 SF which is the smallest amount ever delivered on record in a year. Overall industrial vacancy in Atlanta has dropped significantly since its peak in 2010; down to 13.6%. The coming year should see much of the same results as 2011.