According to the most recent “Emerging Trends in Real Estate” market report by PwC and the Urban Land Institute (ULI), Atlanta ranked 3rd out of the 80 U.S. markets to watch in overall real estate prospects for 2023. As part of the “Super Sun Belt,” markets in the Southeast are still affordable for businesses and residents, even while powerhouse economies like Atlanta have attracted – and will continue to attract – a wide range of businesses.
The city offers a strong pipeline of talent from Georgia Tech and other area universities at comparatively lower salaries. Atlanta’s wealth of engineering talent played a major factor in AirBnB’s decision to place a hub there. According to a recent report by NAI Brannon Goddard, Atlanta’s office market has weathered the coronavirus storm better than most markets so far. Georgia’s capital has landed big deals from Microsoft, Deluxe Corp., and Mailchimp since the pandemic. Atlanta is one of the few cities where trailing 12-month net absorption is still positive.
According to Cushman & Wakefield’s recent Q3 2022 Atlanta office market report, a strong rebound in vacancy rates, absorption and leasing activity, and rental rates, more than offset a sluggish start for 2022. While the return-to-office has been measured as employers continue to evaluate in-person work, office demand remained active in Q3 when tenants inked deals totaling nearly 1.4 million square feet (MSF). That brought the year-to-date (YTD) leasing total to nearly 6.2 MSF, up 17.8% compared to the same period in 2021. Suburban Atlanta continued to drive office demand, accounting for 67.3% of all Q3 lease transactions.
The direct average asking rent accelerated to $31.05 per square foot (PSF) in Q3, up 3.6% compared to $29.99 PSF during the same period in the previous year. Atlanta also was among the national leaders in absorption gains. The metro captured 168,233 SF of positive net absorption during Q3, bringing the year-to-date total to 965,000 SF. Despite national economic headwinds, strong office leasing activity is expected to persist in subsequent quarters, keeping vacancy in check.
Atlanta has a growing economy that is 8th in the nation for GDP and is home to a wide variety of businesses that includes Fortune 500 companies. Following the trend of the last several months, workers will continue returning to the office in higher numbers and with increased frequency, while many will also embrace the new hybrid work model.
