SUTTON REALTY ADVISORS
ATLANTA, GA
TRENDS & INSIGHTS
Q1 2025
8.7%
VACANCY RATE
0.9 M SF
YTD ABSORPTION
2.1 M SF
NEW SUPPLY
10.3 M SF
UNDER CONSTRUCTION
The Atlanta Industrial market absorbed 0.9M SF in Q1 2025, 78% of the YTD Absorption being in the Northeast Atlanta submarket. The vacancy rate rose slightly to 8.7% due to bulk second-generation move-outs plus spec deliveries. 2.1M SF of new supply was delivered to the market in Q1 2025, and the current development pipeline is at its lowest level in ten years.
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The average lease rate decreased slightly to $7.71 PSF NNN. Due to lower new deal velocity, Landlords are currently offering higher concessions, typically in the form of free rent. In the near term, solid credit tenants hold significant bargaining power for both new leases and renewals. This is expected to change in Q3 and Q4, should tariff uncertainty subside and pent-up demand re-enters the market.
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Higher yield requirements have also slowed the pace of new project starts over the last two years. An interest rate cut by the Federal Reserve later in 2025 would spark many transactions currently on the sidelines. Fewer upcoming new deliveries are expected to bring downward pressure to vacancy rates in Q3 and Q4 2025 through 2026. Atlanta and the Southeast will continue to experience population growth, which will continue to drive industrial land acquisitions and spec development further out from Atlanta, in all directions, wherever infrastructure, interstate access, labor, and government entitlements are available. The pace will depend on the overall National and Southeastern economy.
Through Q4 2023, the Atlanta industrial market absorbed 6.8M SF on an annual basis. Projects that are still underway total nearly 26 million square feet. The vacancy rate has also increased to 6.8%.
TRENDS & INSIGHTS
YEAR END 2024
8.5%
VACANCY RATE
11.3 M SF
5.8 M SF
YTD ABSORPTION
NEW SUPPLY
11.4 M SF
UNDER CONSTRUCTION
In Q4, 2024 Year-End Absorption equaled 11.3M SF, which was roughly 53% above Year-End 2023. The vacancy rate rose to 8.5%, due to new bulk vacancies and the delivery of new speculative projects. Atlanta ranked #2 for new leasing, with the Atlanta Northeast submarket continuing to account for the majority of new leases. Yearly renewal activity showed strength and exceeded 20M SF. Duracell renewed 873,600 SF at Shugart Farms Lake Park Industrial, and Ball Corporation signed a new lease for 418,192 SF at Georgia North Industrial Park.
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5.8M SF of new supply was delivered in Q4 2024, and the development pipeline slowed to 11.4M SF under construction. The construction pipeline is at a decade-low, but there is a potential return for development in 2025 with increased leasing activity.
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The average lease rate decreased to $7.80/NNN. Landlords are offering more concessions, giving tenants more bargaining power and marking a shift towards a more favorable market for tenants.
Through Q4 2023, the Atlanta industrial market absorbed 6.8M SF on an annual basis. Projects that are still underway total nearly 26 million square feet. The vacancy rate has also increased to 6.8%.
TRENDS & INSIGHTS
Q3 2024
8.2%
VACANCY RATE
8.5 M SF
YTD ABSORPTION
4.8 M SF
NEW SUPPLY
13.8 M SF
UNDER CONSTRUCTION
The Atlanta industrial market held strong in Q3 2024 due to higher leasing activity. Vacancy slightly increased to 8.2%, which may decrease in the next year due to increased demand for space and less new supply. YTD absorption increased to 8.5 million sq. ft., with a quarterly absorption of 2.3 million sq. ft. 4.8 million sq. ft. of new supply was delivered in Q3, contributing to the rising vacancy rate.
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The development pipeline fell to 13.8 million sq. ft. from 15.7 million sq. ft. in Q2. This is due to several built-to-suits being delivered, and developers being more cautious to start new projects due to shifting interest rates.
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Leasing activity rose and remained strong through Q3. GreenBox Systems leased 1,006,500 SF at The Cubes at River Park in the Southeast/I-75 submarket. Dick Sporting Goods also renewed their lease for 913,700 SF in the Airport submarket.
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TRENDS & INSIGHTS
Q2 2024
7.9%
VACANCY RATE
6.2 M SF
YTD ABSORPTION
7.9 M SF
NEW SUPPLY
15.7 M SF
UNDER CONSTRUCTION
In Q2, the Atlanta industrial vacancy rate slightly increased to 7.9% from 7.3% in the previous quarter of 2024, due to more deliveries and moderate leasing demand. The market’s net absorption remained steady with a YTD absorption of 6.2 million square feet and a quarterly net absorption of 3.0 million square feet.
7.9 million square feet of new inventory was delivered in Q2, increasing Atlanta’s total inventory to 829 million square feet. The development pipeline has slowed down from 19.3 million square feet, with 15.7 million square feet currently under construction. The average rental rate slightly increased from $7.79 psf in Q1 to $7.87 psf in Q2.
Now new Atlanta development starts are at their lowest levels since 2016, and the city has experienced a recent solid uptick in leasing activity. With interest rates at a 15-year high combined with a challenging land entitlement environment, Atlanta will continue to experience rental rate growth in the medium – long term and vacancy rates trending lower.
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Through Q4 2023, the Atlanta industrial market absorbed 6.8M SF on an annual basis. Projects that are still underway total nearly 26 million square feet. The vacancy rate has also increased to 6.8%.
TRENDS & INSIGHTS
Q1 2024
7.3%
VACANCY RATE
3.2 M SF
YTD ABSORPTION
6.4 M SF
NEW SUPPLY
19.3 M SF
UNDER CONSTRUCTION
At the start of 2024, the overall vacancy rate has increased to 7.3% from the end of 2023, due to vacant speculative deliveries and a decrease in demand. The Atlanta industrial market absorbed 3.2 million square feet, and 6.4 million square feet of new supply was delivered. 19.3 million square feet of projects remained underway.
TRENDS & INSIGHTS
YEAR END 2023
6.7%
VACANCY RATE
7.4 M SF
YTD ABSORPTION
8.5 M SF
NEW SUPPLY
23.9 M SF
UNDER CONSTRUCTION
Through Q4 2023, the vacancy rate increased to 6.7%. The Atlanta industrial market absorbed 7.4 million square feet on an annual basis. 8.5 million square feet of new inventory was delivered. 23.9 million square feet of new projects remained underway at the end of the year.
TRENDS & INSIGHTS
YEAR END 2022
4.0%
VACANCY RATE
23.1 M SF
YTD ABSORPTION
45.4 M SF
UNDER CONSTRUCTION
833 M SF
TOTAL INVENTORY
At the end of 2022, the Atlanta industrial real estate market had its best performing quarter yet. The city ranked fourth in the country, netting over 6.5 million square feet in positive absorption, and a yearly total of 23.1 million square feet. The city also excelled in other areas in the market. It ranked second for square footage of undergoing projects, and third for new supply of industrial construction pipeline for the year.
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The city's unemployment rate slightly rose to 2.8%, but remained historically low. GDP landed at 2.4% for the end of the year, and the U.S. 10 Year Treasury Note was 3.2%.
Year-over-year, the overall lease rates increased by 37%.