The Atlanta industrial market showed signs of stagnation through the first half of 2025, with Q2 reflecting a clear slowdown in activity. Due to a decline in larger-scale deals and major move-outs, Atlanta had its first quarter of negative net absorption since Q4 2023. Despite this, the Atlanta Northeast submarket experienced a positive quarterly absorption of 1.4 M SF, well above all of Atlanta.

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As a result of Atlanta’s negative quarterly absorption, the vacancy rate increased to 9.3%, its highest in over a decade. This pullback in bulk leasing appears to reflect a market correction, as many occupiers over-secured long-term space commitments in recent years, reducing current demand. In addition, Atlanta is losing population growth to tier II and tier III cities such as Charlotte, Nashville, Tampa, and Chattanooga.

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The average lease rate remained flat at $7.71 NNN psf. Landlords are holding pricing power in smaller, newer spaces that are closer in. On the other hand, Landlords in second-generation bulk warehouse spaces located farther out are seeing reduced leverage in negotiations, with asking rents beginning to soften in these submarkets. In general, newer buildings are more favored by tenants than second-generation, less modern buildings.

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4.4 M SF of new supply was delivered in Q2, and the construction pipeline fell to 6.4 M SF, its lowest in over a decade. Moving forward, developers are likely to take a cautious approach, prioritizing build-to-suit and smaller spec projects that better match current demand and leasing pace.

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Overall, broader economic and political uncertainty weighed on the sentiment of both tenants and investors. Leasing activity may stay subdued in the near term, but should rebound once confidence and large-space demand pick back up.