Overall, the forecast for Atlanta’s industrial real estate market is very strong but we have come to realize that nothing will compare to the boom of 2019 and 2020. These were the pandemic years when e-commerce exploded with people’s growing expectations of receiving packages within one business day and without leaving their house. 

What are the key data points for Atlanta’s industrial market?  

• Year-to-date absorption already surpassed 2023’s total by just over 260,000 square feet, with recently completed owner-user developments accounting for the largest occupancies of the quarter 

• Construction starts continue to be slow in comparison to the last few years but, unlike last quarter, were predominately speculative starts 

• Vacancy is at its highest point in roughly eight years but is mostly attributed to completion volumes as only two large-block move-outs took place 

• Five large block move-ins occurred, the largest being Project Archer (Target’s recently delivered 2.2 million square foot distribution facility), that was occupied shortly after completion and Newcold also occupied shortly after completing their 790,000 square foot facility; interestingly, both large-scale projects occurred in South I-75, the leading area for quarterly and year-to-date absorption in the market 

While owner-user projects boosted absorption quite a bit this quarter, (Target’s occupancy accounting for 28.5 percent of year-to-date absorption for instance), demand was also generated by new deals in speculative product. So far this year, 20 million square feet of leases have been signed, up 1.4 million square feet from this time last year. Of year-to-date leases, 67.6 percent were new deals. 

Speculative construction is ramping back up, with nearly 70 percent of year-to-date completions being speculative and another 10.6 million square feet of spec space underway. The number of groundbreakings is roughly in line with Q1 starts, however, speculative development is the majority; whereas, the beginning of the year saw only 25 percent of starts being speculative. Of the developments that have delivered to date, 43.1 percent is already accounted for. While this includes owner-user product, BTS and spec, speculative deliveries are 16.8 percent leased. 

Looking Ahead  

The market appears to be in a stabilization period and Atlanta’s fundamentals remain strong, evidenced by year-to-date leasing and absorption. Vacancy increased to the highest point since Q4 2016 but is likely to drop given recent leasing volumes. Though there were two large-block move-outs that occurred, the boost in vacancy is largely attributed to the 10.6 million square foot of speculative deliveries, around 5.3 million square feet for both quarters this year. And the uptick in speculative construction is warranted when looking at tenant requirements, more than 60 million square feet of active requirements are in the market. 

Learn More 

The primary source for this article was JLL’s United States Industrial Market Dynamics, Q2 2024 report. You can gain more market insights by reading the full report here.  

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