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NREI's Stephen Ursery looks at Atlanta's multifamily and industrial markets

Do you ever find yourself dying to put your hands on the latest information, analysis and forecasts concerning Atlanta’s commercial real estate market? If so, Northbrook, Ill.-based Grubb & Ellis Co. has the cure for what ails you. The company’s Atlanta office has produced "2001 Real Estate Forecast: Atlanta," in which the firm gives the city’s industrial and multifamily markets a clean bill-of-health.

Grubb & Ellis predicts that Atlanta’s industrial market will add about 10 million sq. ft. of new space this year and that the sector’s vacancy rate will once again be around 8.5%. "2001 is expected to follow the trend established in 2000 in which new construction proceeded at a slower and more cautious rate," says the report.

Last year, 11.6 million sq. ft. of new space entered the Atlanta industrial market, according to the study. Business distribution and bulk warehouse properties made up approximately 97% of the new space. The Northeast and South Atlanta submarkets added the most space, with approximately 4.6 million sq. ft. and 4.2 million sq. ft., respectively. Grubb & Ellis also reports that Atlanta absorbed more than 14 million sq. ft. of industrial space in 2000 and recorded a 9% vacancy rate. Once again the Northeast and South Atlanta submarkets led the way, absorbing more than 3 million and 2 million sq. ft., respectively.

The area’s industrial growth "will continue to be concentrated in the Northeast and South Atlanta markets," the report adds. "South Atlanta will continue to grow along the [Interstate] 75 South corridor as a distribution quadrant for the nation’s fourth most populous market, Florida."

Meanwhile, improvements to the cargo operations of Atlanta’s Hartsfield International Airport "will result in the air-freight companies and their demand for industrial space in South Atlanta," the report notes. "The core business for many of these air-freight companies is expanding at a rate of 12% per year, and many of these companies are now providing logistics and storage for their clients."

On a cautionary note, Grubb & Ellis reports that Atlanta’s explosive growth during the last decade means there is now a dearth of land that is "suitable for industrial development," particularly in the Northeast and South Atlanta submarkets. Consequently, there is a move toward new areas, such as the South Fulton Parkway corridor and Douglas County, located just west of Atlanta.

Grubb & Ellis has a good opinion of Atlanta’s multifamily market as well. "Overall, the Atlanta multifamily investment market remains healthy with a promising future for investors," the report says. "Atlanta’s service-oriented, yet highly diverse economic base makes it a prime multifamily investment market. Market facts reflect a narrowing balance between supply and demand."

According to the report, Atlanta has created an average of 65,000 new jobs each year since 1986. Grubb & Ellis predicts that the city will welcome 81,500 new jobs this year. In other good news from the report, the overall Atlanta apartment market has an occupancy rate of just more than 96%, and rents are growing at a rate of approximately 4% per year.

As for the makeup of Atlanta apartment investors, the report notes that "institutional and private investors remained resolute [in 2000], investing heavily in apartments, condominiums and land throughout" metropolitan Atlanta.

As for problems in the market, Grubb & Ellis notes that the rezoning and permit-approval processes for apartments are not moving as quickly in light of some counties’ efforts to cut back on new apartments. Overall, however, the firm describes Atlanta’s apartment market as "well-positioned for 2001."

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