Atlanta Industrial Development, Sales Gain Momentum

Atlanta’s industrial market entered the final month of the second quarter with a substantially larger development pipeline than a year earlier. Nearly 14 million square feet was underway at the end of May, more than double the volume recorded during the same period last year and above the national average relative to existing stock.

Investment volume also climbed to $1.3 billion, although average sale prices declined year-over-year. Meanwhile, vacancy remained below the national rate as rents continued to rise, according to Yardi Matrix data.

Development pipeline balloons year-over-year

As of the end of May, Atlanta had nearly 14 million square feet of industrial space under construction across 45 properties, according to Yardi Matrix. The pipeline represented 2.4 percent of total stock, above the 1.8 percent national average.

Dallas had 32.6 million square feet under construction, while Phoenix followed with 25 million square feet. Philadelphia’s pipeline totaled 8.7 million square feet, while Kansas City had 3.5 million square feet underway.

Atlanta’s pipeline was more than twice as large as during the same period last year, when 11 projects totaling 6 million square feet were under construction. Developers also broke ground on 19 properties encompassing 7.7 million square feet year-to-date through May.

PNK Group began construction on PNK Griffin 200, an approximately 1 million-square-foot speculative industrial facility in Griffin, Ga., outside Atlanta. The project is the second building at the industrial park. In April, PNK completed a 306,000-square-foot build-to-suit manufacturing and distribution facility for Rinnai America Corp.

Located at 35 S. McDonough Road, the site is south of Atlanta along U.S. Route 41 and offers access to Interstate 75. Griffin is also home to a range of manufacturing and other industrial companies.

Industrial deliveries remained close to last year’s pace

Developers added nearly 3 million square feet of Atlanta industrial space across 13 properties year-to-date through the end of May. Completions accounted for 0.5 percent of total stock, matching the national average.

Dallas led the comparison group with 12.4 million square feet delivered. The Inland Empire completed 1.8 million square feet, followed by Philadelphia with 1.1 million square feet and Kansas City with 976,920 square feet.

Industrial deliveries remained close to the same period last year, when eight facilities totaling 3.2 million square feet came online.

Holder Properties and Tamarack Investments delivered Buildings 200 and 300 at Coal Mountain Industrial Park, a 608,642-square-foot development in Cumming, Ga. Located at 4005 Settingdown Road, the property is near Georgia State Route 400. DeKalb-Peachtree Airport is 37 miles away, while Marietta, Ga., and Atlanta are both within 47 miles.

Investment volume advances as pricing declines

Atlanta’s industrial sales volume reached $1.3 billion as of the end of May, according to Yardi Matrix. Some 88 properties totaling 13.2 million square feet changed hands across the metro.

Industrial assets traded at an average of $121 per square foot. The Inland Empire recorded an average of $172 per square foot, followed by Phoenix at $169 per square foot and Philadelphia at $159 per square foot. Chicago and Kansas City posted lower averages of $91 and $79 per square foot, respectively.

Investment volume increased from the same period last year, when Atlanta recorded $770.4 million in sales. Average prices, however, were below the $145.84 per square foot registered at that time.

Basis Industrial and One Investment Management acquired a 621,759-square-foot collection of shallow-bay warehouses across metro Atlanta for $89.5 million. Middour Investments sold the portfolio in an off-market transaction, while Bank of Montreal provided acquisition financing.

In April, the partnership also purchased an 839,001-square-foot shallow-bay industrial portfolio for $144.6 million. The collection comprises five properties across the Atlanta and Orlando, Fla., metros.

Vacancy remains below several major markets

Atlanta’s industrial vacancy rate stood at 8 percent as of the end of May, below the 8.8 percent national average. Chicago registered a 9.9 percent vacancy rate, followed by Philadelphia at 9 percent and the Inland Empire at 8.5 percent. Phoenix and Kansas City posted lower rates of 6.7 percent and 6.1 percent, respectively.

Average in-place rents in Atlanta reached $6.88 per square foot, up 6.8 percent over the previous 12 months. Leases signed during that period averaged $8.47 per square foot.