Lincoln Industrial INSIDER REPORT Q3 2022
Momentum Strong as Atlanta Industrial Sees Third Straight Positive Quarter in 2022
ABSORPTION, DELIVERIES AND VACANCY RATE
The Atlanta industrial market saw positive absorption of 5,091,256 square feet in Q3, bringing the market’s year-to-date total to 15,625,844 square feet. This figure is in-line with the historical quarterly absorption figure for a healthy Atlanta industrial market. Atlanta’s vacancy rate increased by 50 basis points (0.5%) from 3.5% to 4.0% in Q3 despite the positive absorption. This was thanks to over 9.4 million square feet of deliveries. While much of this new supply is leased, construction and supply chain delays have slowed tenant occupancy timelines. The strongest submarkets for the Atlanta industrial market in Q3 were its largest: Northeast Atlanta, Airport/I-85 South, Northwest Atlanta, and I-20 West/Fulton – the four largest submarkets in Atlanta – were also the four best performing. Rental rates increased throughout the market, with the overall average NNN asking rate rising 7.9% in Q3 to $6.15 per square foot.
Market Snapshot
4.0%
vacancy rate
5,091,256 net absorp Q3
45,000,000
8%
40,000,000
7%
35,000,000
6%
30,000,000
5%
25,000,000 4% 20,000,000 3%
15,000,000
2%
10,000,000
1%
5,000,000 0
2017
2018
2019
Absorption
2020
Deliveries
2021
2022 YTD
0%
Vacancy Rate Source: CoStar
15,625,844 net absorp YTD
51,475,184 under constr sf
Source: CoStar, LPC Research
LEASING ACTIVITY Despite tight vacancy, the Atlanta industrial market has seen strong leasing momentum thanks to a robust construction pipeline and the delivery of new supply. With 10.7 million square feet of signed deals in Q3 of 2022, there have been over 52 million square feet of industrial leases signed in Atlanta over the past 12 months. New construction has been the largest leasing driver, with 27 buildings totaling over 9.4 million square feet delivering just in Q3 alone. In buildings that were built in 2022, 72.9% of the space is already leased across the whole Atlanta industrial market. Currently, about 25.7% of the 51 million square feet under construction are leased. Both figures are positive indicators that should lead to more groundbreakings in the coming quarters. TOP LEASES Q3 2022
Tenant
Property
Submarket
Owner/Developer
SF
Lease Type
Dollar General
500 Business Center Dr
I-75 South
Growth Capital Partners
712,040
New Lease
Conn’s Home Plus
Mt. Zion Rd - Clayton 75
I-75 South
Hillwood Development
705,833
New Lease
Syncreon Technology
7965 Bowen Rd
Airport/I-85 South
Becknell Industrial
686,038
New Lease
Unis
7550 Wood Rd
I-20 West/Fulton
The Silverman Group
500,400
New Lease
Cardinal Health, Inc.
874 Thomas Pky
Northeast Atlanta
Pattillo Industrial
382,894
Renewal
Buske Logistics
81 Brown Loop NW
Northwest Atlanta
Hillwood Development
339,963
New Lease
Zurn Industries
6280 Best Friend Rd
Northeast Atlanta
Prologis
262,288
Renewal
Ceva Logistics
934 Peeples Valley Rd
Northwest Atlanta
Transwestern Dev. Co.
250,874
New Lease
85 S Holland Dr
Northeast Atlanta
John Drake
198,289
New Lease
7980 Spencer Rd
Airport/I-85 South
Blackstone
192,780
New Lease
1412 Battle Creek Rd
Airport/I-85 South
AEW Capital Mgmt
176,086
New Lease
Hitachi Transport Systems Kenco Logistics Carter’s
lpcsoutheast.com The information contained herein has been obtained from the owner of the property or from a source deemed reliable. While Lincoln Property Company has no reason to doubt its accuracy, we do not guarantee it.
LINCOLN INDUSTRIAL INSIDER REPORT Q3 2022
INVESTMENT SALES
INDUSTRIAL INVESTMENT SALES VOLUME Industrial Investment Sales Volume
The Atlanta Industrial market saw over $800 million in sales volume in Q3, with the average transaction price per square foot reaching $115. This is a slight dip in sales from recent quarters, perhaps reflecting uncertainties in the debt markets that have plagued the office sector. The area that is still seeing solid activity is large assets with good-credit tenants in long-term leases. Atlanta has remained attractive to national institutional investors, with 80% of the market’s investment coming from firms outside the state of Georgia such as Blackstone, Prologis, and KKR.
$3.5B $3.0B
$115 avg transaction price/SF
$2.5B $2.0B $1.5B $1.0B $0.5B $0.0B
2020 Q4
2021 Q1
2021 Q2
2021 Q3
2021 Q4
2022 Q1
2022 Q2
2022 Q3
Source: CoStar
RECENT INVESTMENT SALES Property
Submarket
Price
SF
$/SF
Date
Buyer
Airport/I-85 South
$134,500,000
1,505,690
$89.33
Sep 8, 2022
Kin Properties
I-75 South
$93,000,000
1,538,196
$60.46
Oct 12, 2022
Growth Capital Partners
Northeast Atlanta
$90,000,000
850,500
$105.82
Apr 28, 2022
Ares Management
700 Palmetto Logistics Pky Airport/I-85 South
$81,648,000
1,008,474
$80.96
Aug 31, 2022
Black Creek Group
800 Cassville White Rd
Northwest Atlanta
$48,800,000
376,980
$129.45
May 26, 2022
KKR
7450 Factory Shoals Rd
I-20 West/Fulton
$38,850,000
254,100
$152.89
Apr 28, 2022
Blackstone
I-75 South
$28,000,000
296,972
$94.29
Jul 7, 2022
United States Cold Storage
1595 Oakley Ind Blvd 195 King Mill Rd 250 Logistics Center
1420 Greenwood Rd
IT’S FULL STEAM AHEAD IN NORTHWEST ATLANTA INDUSTRIAL The availability of Class A industrial space has continued to shrink while rental rates have climbed in the Northwest Atlanta Industrial submarket. The submarket’s vacancy rate has fallen 80 basis points (0.8%) since the start of 2022, while the average NNN rental rate has increased 16.7% over the past year. This already tight market is not expected to get any major relief in terms of new supply: with the latest delivery of Stonemont’s three-building ‘Kennesaw 75’ project and Oakmont’s ‘Cobb International’ development, it will be over a year until the in-fill I-75 market comes close to seeing any new deliveries. The lack of available, developable land in the southern part of the I-75 Northwest corridor has been the primary contributor to the dearth of supply in the submarket, which has caused developers to expand the geographies of where they are willing to build in Northwest Atlanta. Developers since 2019 have begun to push into Cartersville, Cassville, Adairsville and Calhoun to seek out new development opportunities as local and regional distribution hubs seek to open new facilities on the interstate that stretches from Miami to the Canadian border. Outside of its incredible access, I-75 in Northwest Georgia is also home to the ‘flooring capital of the world’ with manufacturing companies such as Shaw and Mohawk Industries having massive footprints along the interstate, particularly near Dalton and Calhoun. Lincoln Property Company Vice President – Industrial Turner Fortin says that this highway access is paramount to prospective tenants: “The northwest market has always been a highly desirable location for tenants due to great demographics and access to a major interstate in I-75. For many years prior to 2019, the cities north of Kennesaw/Acworth were largely untapped due to challenging development sites that are just now coming to fruition.” Fortin’s long-term outlook for Northwest Atlanta Industrial is positive, with new supply and construction eventually driving leasing: “With large name brands such as Amazon, Chick-Fil-A, & Vanderlande locating large footprints in this corridor, we anticipate seeing many other brand names be attracted to this new expansion of the I-75N submarket as either regional or national hubs as Class A product continues to be delivered within the submarket.”
lpcsoutheast.com The information contained herein has been obtained from the owner of the property or from a source deemed reliable. While Lincoln Property Company has no reason to doubt its accuracy, we do not guarantee it.
LINCOLN INDUSTRIAL INSIDER REPORT Q3 2022
CONSTRUCTION OUTLOOK 27 buildings totaling over 9.4 million square feet delivered in Q3 of 2022, the highest figure on record for the Atlanta industrial market (narrowly edging out Q4 of 2021, where 9.1 million square feet delivered). The market has seen over 31 million square feet of new supply deliver in the past 12 months. Many of these deliveries have been concentrated in the Northeast Atlanta Industrial and Airport/I-85 South Industrial submarkets, which saw a combined 5.9 million square feet deliver in Q3 alone. Groundbreakings have continued as developers are still looking to go vertical: 39 new buildings broke ground in Q3.
SF UC % Leased SF Proposed
156 51 27 buildings under constructrion
msf under construction
Stone Mountain
Q3 deliveries
North Central ATL Ind
Northeast ATL ind
Snapfinger/ I-20E Ind
I-75 South Ind
AIrport/I-85 South Ind
I-20 West/ Fulton Ind
Northwest ATL Ind
Central ATL/ Chattahoochee
816,365
16,387,949
1,927,973
5,251,188
8,436,242
7,686,238
10,969,229
-
-
8%
30%
41%
39%
26%
37%
4%
-
-
1,519,899
18,784,953
5,872,110
21,962,590
11,462,782
11,746,532
16,834,868
-
1,726,176
INDUSTRIAL SUBMARKETS NORTH CENTRAL ATLANTA IND
NORTHWEST ATLANTA IND
NORTHEAST ATLANTA IND
STONEMOUNTAIN
I-20 WEST/FULTON IND
CENTRAL ATL / CHATTAHOOCHEE
SNAPFINGER/I-20 EAST IND
I-75 SOUTH IND AIRPORT/I-85 SOUTH IND
lpcsoutheast.com The information contained herein has been obtained from the owner of the property or from a source deemed reliable. While Lincoln Property Company has no reason to doubt its accuracy, we do not guarantee it.
LINCOLN INDUSTRIAL INDISDER REPORT Q3 2022
MARKET STATISTICS Total Inventory SF
Vacancy Rate Q3 ‘22
Vacancy Rate Q2 ‘22
Net Absorp Q3 ‘22
Net Absorp 2022 YTD
Deliveries Q3 ‘22
Under Constr
Avg Rent (NNN)
AIRPORT/I-85 SOUTH IND
144,761,915
5.5%
4.2%
946,135
2,784,944
2,982,541
8,436,242
$5.48
CENTRAL ATL/CHATTAHOOCHE IND
20,232,335
5.5%
5.8%
66,663
(107,181)
-
-
$11.20
I-75 SOUTH IND
70,241,015
3.2%
3.5%
980,258
1,999,431
782,946
5,251,188
$5.14
I-20 WEST/FULTON IND
112,501,951
2.8%
2.1%
251,039
849,755
1,033,728
7,686,238
$6.10
200,087,623
4.1%
2.8%
288,798
5,372,542
3,002,610
16,387,949
$5.76
85,438,691
4.5%
5.5%
1,987,190
3,224,353
1,224,369
10,969,229
$6.26
19,553,421
2.3%
2.5%
36,201
413,538
-
816,365
$10.12
45,790,006
3.9%
4.1%
445,148
600,981
351,545
1,927,973
$6.30
23,551,110
1.3%
1.2%
89,824
487,481
96,000
-
$6.83
722,158,067
4.0%
3.5%
5,091,256
15,625,844
9,473,739
51,475,184
$6.15
581,188,439
4.1%
3.7%
5,158,357
13,395,054
8,273,739
51,045,184
$6.31
MANUFACTURING
79,818,973
4.4%
3.4%
324,730
1,967,996
1,200,000
430,000
$4.30
SHALLOW BAY
61,150,655
2.4%
1.8%
(391,831)
262,794
-
-
$6.67
722,158,067
4.0%
3.5%
5,091,256
15,625,844
9,473,739
51,475,184
$6.15
BY SUBMARKET
NORTHEAST ATLANTA IND NORTHWEST ATLANTA IND NORTH CENTRAL ATLANTA IND SNAPFINGER/I-20 EAST IND STONE MOUNTAIN IND Total Market
BY PROPERTY TYPE WAREHOUSE & DISTRIBUTION
Total Market Source: CoStar, LPC Research
Lincoln Southeast Industrial Listings
Forsyth 400 Commerce Center Bldg 100
Forsyth 400 Commerce Center Bldg 200
Airport West 500
Joe Frank Harris Pkwy SE
2705-2715 Ronald Reagan 2705-2715 Ronald Reagan 3625 Naturally Fresh Blvd, Joe Frank Harris Pkwy SE, Blvd, Cumming, GA Blvd, Cumming, GA Atlanta, GA Emerson, GA
Conyers Logistics Center
170 Chastain Meadows
Westridge Logistics Center
2107 Eastview Pky, Conyers GA
170 Chastain Meadows Ct NW, Kennesaw GA
450 Westridge Pkwy, McDonough, GA
85,237 SF
110,197 SF
218,370 SF
306,376 SF
201,600 SF
38,400 SF
113,104 SF
Delivering Q3 2022
Delivering Q3 2022
Delivering Q3 2022
Delivering Q2 2023
Existing
Existing
Existing
Lincoln Property Company Atlanta tracks industrial buildings that are 25,000 sf or greater.
Need More Market Intel?
Spencer Papciak Research Manager 678.498.7676 spapciak@lpc.com
Turner Fortin Vice President 404.863.9931 tfortin@lpc.com
Lincoln Property Company Southeast 3405 Piedmont Road, Suite 450 Atlanta, GA 30305 404 266 7600
About LPC SE: Lincoln Property Southeast is a commercial real estate firm offering a comprehensive suite of value-added services for our clients. With our substantial local presence and history in the Southeast region, we are ideally situated to provide a superior service, which comes from knowing the goals and challenges faced by our clientele: tenants, investors, lenders and owners of commercial real estate. Our people and our philosophy are the key ingredients for Lincoln’s solid track record of success. The information contained herein has been obtained from the owner of the property or from a source deemed reliable. While Lincoln Property Company has no reason to doubt its accuracy, we do not guarantee it.
lpcsoutheast.com