4Q 2012 | Atlanta Industrial Market Report

Page 1

YEAR-END 2012 | INDUSTRIAL

ATLANTA

MARKET REPORT

Second Consecutive Year of Industrial Gains in Atlanta

Updated May 2012

MARKET INDICATORS Projected

Q4 2012

Q1 2013

VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE

CAP RATES

Following its best year since before the Great Recession, the Atlanta industrial market showed solid gains yet again in 2012, and enjoyed a second consecutive year with over 6 million square feet of existing vacancies filled. This year’s industrial absorption of 7.4 million square feet almost matched 2011, but fell slightly short. Still, two successive years of strong absorption defines the extent of Atlanta’s industrial market recovery. Activity in 2012 was the product of numerous factors, none more meaningful than strong demand from large consumer product companies, as well as the expansion of third-party logistics firms in the metro area and the growth of small businesses. In addition, the Atlanta area has begun to experience a manufacturing renaissance in the areas of bioscience/pharmaceuticals, automotive parts and heavy equipment thanks to expansions and announcements this year by Baxter Pharmaceuticals, Toyota Industries, Kubota Corporation and Caterpillar Inc. The impact these successes will have on the Atlanta industrial market is extensive. Some of the biggest move-ins and lease transactions of 2012 came from large consumer product companies. Home Depot, Carter’s and Owens Corning were the three largest industrial transactions of 2012; all three committing to over 1 million square feet. In the cases of Home Depot and Carter’s, these requirements originated from the companies’ growing e-commerce business and the need for each to better serve this segment of their business. The expansion of third-party logistics firms also contributed a significant amount of positive absorption to the industrial market. New Breed Logistics, HK Logistics, TranSouth Logistics and UTI Worldwide each expanded operations in the Atlanta area this year as supply chain optimization has become a modern requirement. Lastly, the growth of small businesses in Atlanta over the past couple of years has played a beneficial role to the overall health of the industrial market. Considered “bread and butter” transactions, these tenants, ranging between 20,000 to 80,000 square feet, have incrementally contributed to the increase in occupancy levels throughout the year. Many consider the return and growth of these types of transactions as a measure to local economic conditions. 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

2012 2012

Bulk Warehouse*

8%

10,000,000

2003

Market AVG

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

*Bulk warehouse defined as warehouse space in excess of 100,000 SF with dock loading and minimum ceiling heights of 24 ft.

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 %

Atlanta’s industrial market absorbed 7.4 million square feet in 2012. The overall industrial vacancy rate decreased yet again in the fourth quarter and is now at 12.4%. There were no fourth quarter industrial deliveries. Almost 1.4 million square feet delivered in 2012. Construction activity increased to almost 4.5 million square feet. Atlanta’s total industrial inventory now stands at 609 million sq. ft.


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