Atlanta office market: more momentum, but vacancy still high

Summary:  Though total vacancies are high (19.8% downtown, 20.9% in the burbs), with the drive, according to Jones Lang LaSalle attributing the improvement to an increase in employment (up 57,100 since last year, unemployment claims down almost 26%).  Improvements are expected through 2014.

Atlanta --(Atlanta Business Chronicle)--
Atlanta’s building owners are seeing better leasing volumes and more tours from corporate tenants, according to a new report from Jones Lang LaSalle Inc.

“Atlanta’s economy continues to recover and since this time last year, the metro has gained 57,100 jobs,” the commercial real estate services company said in its third-quarter report on the office market.

“Layoffs have abated and unemployment claims are down [almost 26 percent] since July.

This year, State Farm announced at least 800 new jobs for the Perimeter and PulteGroup relocated its headquarters from Detroit to Buckhead, one of the city’s most affluent districts.

Total vacancy remains high, at 19.8 percent in urban office markets and 20.9 percent in suburban areas. The Perimeter, Atlanta’s largest office market at than 17 million square feet, saw vacancy fall to 14.6 percent among its class A towers. Older buildings farther away from amenities fared much worse, as vacancy stood at roughly 37 percent.

Trophy buildings in Buckhead are largely filled, according to Jones Lang LaSalle. Leasing activity in Midtown, the Perimeter and along the northwest side of the city in the Cumberland Galleria remain strong.

Employers are focused on intown or Perimeter office markets with access to transit and major transportation corridors like Ga. 400 and Interstate 285.

“We expect momentum through 2014, with Atlanta demand firmly back in growth mode,” the report said.

Total office vacancy:

Intown

Buckhead — 18.5 percent

Downtown — 23.5 percent

Midtown — 17.5 percent

Suburbs

Perimeter — 19.5 percent

North Fulton — 18.4 percent

Northlake — 19.1 percent

Northeast — 27 percent

Northwest — 20 percent

South Atlanta — 19.9 percent

Source: Jones Lang LaSalle