Atlanta Office Activity Contracts in Q1

How investment sales, vacancy and other key metrics stack up against this market’s peers, according to the latest CommercialEdge report.

Science Square Labs in Midtown Atlanta
Perkins + Will designed the 368,258-square-foot Science Square Labs. Image courtesy of Trammell Crow Co.

At the end of the first quarter, Atlanta’s under-construction office pipeline was above the national figure, but lagged many peer markets, according to CommercialEdge research. Development activity seems to have stagnated in the metro, as no construction starts were registered in 2024’s first quarter and only one property came online.

At the end of March, the vacancy rate in the metro was lower than the national figure, as Atlanta showed higher office occupancy rates than comparable markets. Some large leases were recorded; however, they were mostly renewals or downsizings.

Atlanta office development stalls

As of March, some 3.5 million square feet of office space were under construction in Atlanta across 20 properties, accounting for 1.7 percent of existing stock. The relative pipeline was slightly above the national rate of 1.5 percent. The metro lagged comparably sized markets, such as Nashville (4.5 percent), Austin (3.9 percent) and Charlotte (2.8 percent), but surpassed Denver (1.2 percent) and Phoenix (0.5 percent).

One of the largest properties underway at the end of the first quarter was Science Square Labs, a 368,258-square-foot life science building, part of the first phase of the larger Science Square mixed-use development. In the meantime, developers Trammell Crow Co. and Georgia Institute of Technology brought the 13-story tower online, at the end of April.

The Interlock phase one
The Interlock’s first phase occupies 9 acres in West Midtown Atlanta. Image courtesy of Commerical Edge

In 2024’s first three months, a single property of 180,240 square feet came online in Atlanta. The volume of deliveries was below Denver’s (317,548 square feet), Charlotte’s (364,000 square feet) and Austin’s (635,250 square feet), but above that of Dallas (126,200 square feet) and Nashville (32,000 square feet).

The property that came online is the second phase of SJC Ventures’ The Interlock, a larger 263,890-square-foot mixed-use development. It encompasses 92,000 square feet of retail space and a 682-bed student housing tower, along the aforementioned 180,240 square feet of office space. Last year, Armada Hoffler paid $215 million for the retail and office components of The Interlock’s first phase, comprising a total of 311,000 square feet.

Atlanta’s office sales volume contracts

Throughout 2024’s first three months, some 656,000 square feet changed hands across six properties for a total investment volume of $82 million. These figures represent a 24.7 percent decrease from the same period last year, when $108.9 million were invested in the Atlanta office market across nearly 1 million square feet.

The building at 2300 Windy Ridge Parkway SE in Atlanta.
Wildwood Center went through multiple upgrades over the last decade, including a new lobby and the addition of a 30,000-square-foot fitness center. Image courtesy of Vision Properties

As of the end of the first quarter, the metro’s average price per square foot clocked in at $125, an 11.5 percent decrease from March 2023. Atlanta’s office prices considerably lagged most of its peers’, including Denver ($140.1), Phoenix ($187.3) and Austin ($506.6), but surpassed Houston ($98.3) and Philadelphia ($92.5).

In terms of financing, one of the largest recent deals in the Atlanta office market was Vision Properties securing a $65 million refinancing for Wildwood Center. Franklin BSP Realty Trust provided the 5-year loan for the 692,707-square-foot building.

Lower vacancy than the U.S. rate

The office building at 271 17th St. in Atlanta.
The office building at 271 17th St. in Atlanta is LEED Gold certified. Image courtesy of Cushman & Wakefield

As of the end of March, the vacancy rate in Atlanta clocked in at 17 percent, below the national figure of 18.2 percent. The metro fared better than markets like Dallas (21.7 percent), Austin (22.0 percent) and Denver (22.7 percent), but not as well as Nashville (15.5 percent).

Recently, Lionstone Investments secured a leasing agreement for 164,221 square feet at 271 17th St. The tenant, Piedmont Healthcare Inc., plans to consolidate three of its offices at the 25-story building, as it’s reducing its footprint by more than 50 percent.

Architecture and construction management company Pond also renewed its 101,891-square-foot lease at Peachtree Ridge in Norcross, Ga. The building is currently owned by OA Development, which picked it up in 2017 for $18.2 million. The tenant has been at the property since 2005 and is currently occupying 64 percent of the 160,000-square-foot building.

Peachtree Ridge
Peachtree Ridge is a 159,962-square-foot office building. Image courtesy of Transwestern

Coworking performs well in Atlanta

As of the end of March, Atlanta’s coworking sector comprised some 4.4 million square feet of space, accounting for 2.1 percent of total office stock. The share of flexible space was above the national figure of 1.8 percent, also higher than in peer markets such as Charlotte (1.3 percent) and Austin (1.7 percent), but lower than in Raleigh-Durham (2.6 percent) and Nashville (2.9 percent).

The largest flexible office operator in Atlanta was Regus with a portfolio of 597,240 square feet across 27 locations. Other key coworking providers in the market were WeWork—with a sizable 355,117-square-foot footprint across six properties—and Industrious, with 332,145 square feet in 10 locations.

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