In at least one respect, 2014 was a decidedly unusual year for the metro Atlanta office market. Not known for noticeable rent growth — its Class A asking rate has increased, on average, only 0.6 percent per year over the past two decades — Atlanta saw that rate spike in 2014, by 5.2 percent.
Even more encouraging: the rise in Class A asking rates was not isolated to a specific area; the Central Perimeter led the growth with a 9.3 percent increase, but all of metro Atlanta’s submarkets saw some degree of increase. Furthermore, this is not a trend driven by new expensive
inventory. On the contrary, bullish landlords of existing buildings are leveraging Atlanta’s recent supply-demand imbalance, meaning rates are growing organically, as opposed to new inventory artificially pushing averages up.
Those are some of the finding of JLL’s new Atlanta Office Insight report for fourth-quarter 2014, which also outlines the trend of large occupiers gravitating to the metro area’s central spine and details Atlanta’s dropping vacancy rates.
Regarding the ongoing migration to the central corridors, the report notes that five large tenants re-committed to submarkets that make up Atlanta’s North-South spine in the fourth quarter, the most significant of these transactions being WorldPay’s 130,000-square-foot lease at Atlantic Station’s 201 17th, which brings the firm to Midtown from the Central Perimeter. WorldPay and other large occupiers are committing to central submarkets to expand their hiring pools by offering easy access to interstates for Cobb and Gwinnett residents and connectivity to public transit for in-town residents.
Meanwhile, ongoing job growth is set to further shave Atlanta’s office vacancy rates. The total office vacancy rate dropped throughout 2014 and began this year at 19.8 percent. Continued growth in office-using job sectors is likely to erase another 1.5 percentage points over the next 12 months, meaning metro Atlanta could end 2015 with an overall vacancy rate of 18.3 percent, which would represent a seven-year low.