Industrial Landscape Breakfast Shines Spotlight on Atlanta’s Surging Industrial Sector

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Wit Truitt – Industrial Lead

Wit Truitt – Industrial Lead

Atlanta’s industrial market is in the midst of a vibrant recovery, and 2015 could be “a record-breaking year” for the sector in the metro area.

Those were two of the conclusions to be drawn from JLL Atlanta’s Industrial Landscape breakfast, held Thursday morning at the Mandarin Oriental hotel in Buckhead. The event featured the release of this year’s Atlanta Industrial Index Report, a comprehensive presentation on the state of the city’s industrial sector and remarks by Bryan Ward, director of transportation for The Home Depot.

Last year proved to be a strong one for Atlanta’s industrial real estate market, and the sector closed the year with a vacancy rate of 8.7 percent, its lowest in almost 14 years, according to the report. Yearly net absorption totaled 16.3 million square feet in 2014, a figure not matched since 2000.

Heartened by the rising demand, developers are now feeling confident enough to build speculative industrial projects. Of the 16.3 million square feet currently under construction in metro Atlanta, nearly 60 percent — 9.6 million square feet — is speculative.

Despite the spate of new construction, “oversupply does not appear to be a concern as demand is still currently ahead of deliveries,” the report concludes.

As for rents, the Northeast, Northwest and south-side submarkets are experiencing the biggest increases, while the Northeast is witnessing the strongest drop in tenant concessions.

JLL Executive Vice President Wit Truitt, who manages the Atlanta office’s Industrial and Logistics group, told the crowd the momentum will continue this year. Atlanta “is poised to have a record-breaking year in 2015,” he said.

In a discussion with JLL Managing Director Rich Thompson, who leads the firm’s global Supply Chain & Logistics Solutions team, The Home Depot’s Ward said the retailer has placed an emphasis in 2015 on optimizing its supply chain and building its direct fulfillment and delivery capabilities.

The dangers of an insufficient supply chain were illustrated by Target’s failures in Canada, Ward said. “They couldn’t keep product on the shelf.”

The retail world is just beginning to feel the impact of e-commerce, and Home Depot is aiming to eventually provide two-day delivery for 90 percent of online parcel orders, Ward added. Comparing e-commerce to a baseball game, both Thompson and Ward agreed that it’s only in the second inning.

Ward also noted that the return of the housing sector has created an upward pressure on wages in the distribution and transportation labor markets, as workers in those markets now have more job options.

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