This year looks positive for Atlanta real estate

“Prediction is very difficult, especially if it’s about the future.”

The quote above from Niels Bohr, Nobel-winning physicist, is as funny as it is true. Most economists would agree that forecasting a performance result with a high degree of reliability is extremely challenging, as the myriad of events that may affect future conditions are unknown. So how do we predict what metro Atlanta commercial real estate market fundamentals will look like in 2014? Recent history, current trends and some forward-looking analysis are helping build a consensus among prognosticators as 2014 begins.

History tells us the market performed well in 2013, generally reaching pre-recession levels of activity in both the office and industrial sectors. It was the first year after the recession that exhibited characteristics of a recovery, and forms the basis for future growth potential. A little investigation reveals fundamentals are recovering in core submarkets, and that the volume of tenants seeking space is elevated relative to 2011 and 2012. Space options are tight in select areas. This local market momentum is reflected in some of the forward looking statements below:

“Generally speaking, European markets are showing signs of plateauing, while those in the Americas are seeing rents accelerate...” - CBRE EA

“Overall, it appears that fundamentals will continue to improve at a moderate pace, in line with the macroeconomic situation.” -Deloitte

“Space market fundamentals have slowly improved to the point where, even with slow demand, real income growth is likely to occur over the next two years.” - Urban Land Institute

“...with the demand outlook improving and new construction still at bay in most markets, the 2014 occupancy gains in US office markets should be the best of the entire recovery and should tip the scales toward greater rent growth during 2014 than in the past few years.” - Costar

The table below additionally offers rent growth forecast data for Atlanta from several sources for office space in 2014.

Forecasters clearly believe the next 12 months should bring more positive activity to metro Atlanta. Today, Niels Bohr might maintain predictions always have the potential of falling flat, and we’ll certainly know whether this is the case 355 days from today; however, recent Atlanta office performance metrics and current activity levels support the prospect of new growth.