The office sector in the Atlanta market is currently strong however, much will be affected due to the pandemic. The charts below highlight a few key performance indicators of the office real estate in Atlanta. The inventory, vacancy rate, and market rent have grown as construction has decreased compared to a year ago. Construction has grown in recent years, specifically in the Midtown area. Although rent growth has decreased it still well above the national average. As many offices are closed and employees are kept away from the workplace we may see a further rise in vacancy rates in the future. The uncertainty of the economy will most likely translate into this real estate sector.
The vacancy rate has been kept in check as there has been a steadiness in new leasing deals. On the other hand, 2020 and 2021 will have the largest new supply since 2010 which will likely put pressure and increase vacancy rates and there are pending move outs that will affect the market as well. Compared to coastal metro cities Atlanta office space and cost of living is relatively low while quality of labor in terms of education level is not sacrificed. Atlanta rent growth surpasses the historical average and national benchmark but has slowed down in recent quarters. The average national pricing is $320 per square foot which is much more expensive compared to Atlanta’s $200 per square foot. The pandemic has impacted transaction activity in the market however, direct effects on office real estate are still uncertain. The pandemic may push rent prices and occupancy further down which in turn would affect property values. The decrease in sales volume could be in part to the decrease of high valued assets in the metro area which will most likely change as more investors build and acquire high end properties.
All data from CoStar Group