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Brisk Demand Powers Atlanta Industrial Activity

Growing demand for industrial space northeast of Atlanta has led locally-based IDI to start site work on its latest project, Jefferson Distribution Center, a master-planned business park in Jackson County, Ga. IDI, a full-service industrial real estate company, plans to develop up to five buildings totaling 2.8 million sq. ft. at the park.

Located on 225 acres at the intersection of Interstate 85 and Georgia Highway 82, Jefferson Distribution Center is about 50 miles northeast of Atlanta.

“This is an excellent location for regional distribution,” says Lisa Ward, vice president of leasing in IDI’s Atlanta regional office. “The site fronts Interstate 85 at a full interchange, and it is located in the largest bulk distribution market in metro Atlanta, where vacancy rates for bulk space are only about 8%.”

Demand for nearby industrial space has been brisk, attracting the likes of Sears Logistics (773,000 sq. ft.), Haverty’s (610,000 sq. ft.), Progressive Lighting (1 million sq. ft.) and The Home Depot (546,000 sq. ft.).

IDI expects to start construction on the park’s first building, an inventory facility of about 1 million square feet, in the third quarter.

Jefferson Distribution Center is IDI’s second master-planned business park in the northeast Atlanta submarket. Also in Northeast Atlanta, IDI has developed seven buildings totaling 2.8 million sq. ft. at Hamilton Mill Business Center, where space is currently available for lease. To date, the Atlanta regional office has developed 15.9 million sq. ft. of space, while nationally, IDI has developed 119 million sq. ft. of space.

Boston-based Colliers International expects rents in most North American markets to hold steady or increase in the coming months. The firm is forecasting rents for prime warehouse space in the Atlanta market of $3.83 per sq. ft. and prime land values to register $2.30 per sq. ft.

For investors, Atlanta’ industrial market remains a favorite, primarily for its regional location and affordability. Last year, Whirlpool Corp. committed to a new 1.5 million sq. ft. facility to the south of Atlanta, and earlier this year Newell Rubbermaid announced it is building an 800,000 sq. ft. distribution facility 20 miles southwest of downtown.

According to CB Richard Ellis research, Atlanta’s northeast industrial market had the greatest absorption of any local market in 2007, with tenants taking 3.7 million sq. ft. of space. Overall market vacancies fell 0.3% from third-quarter 2007 to 14.8% by the start of 2008 and the lowest vacancy rate since the end of 2001.

“The geography of the Atlanta market has allowed it to better navigate through tougher times than many other large markets,” says the latest CBRE report. The city has been helped by the emergence of coastal Savannah as one of the busiest ports in the U.S. However, CB’s industrial experts are tempering their 2008 expectations, based on the impact of the credit and housing crises, the presidential election and high oil prices.

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