Atlanta’s industrial market slammed on the brakes to begin 2023, even as rents sped to a new record high.

Leasing activity tallied 9.1M SF in the first quarter, the first time tenants leased less than 10M SF in a quarter since the third quarter of 2015, when activity was at 8.7M SF, according to Colliers Atlanta data.

“Companies have delayed capital deployment decisions amidst turmoil in the banking industry and continued concerns for the overall economy,” Colliers Research Manager Jonathan Koes said in an interview.

The drop in activity has taken a bite out of the industrial renaissance since the pandemic as consumers rapidly shifted to online shopping and pushed companies to gobble up more storage space. Leasing activity was nearly half what it was compared to the first quarter of 2022, according to Colliers.

Slower leasing activity hasn't deterred landlords from pushing up rents, which eclipsed $9 per SF in the first quarter, more than 16% higher than asking rents at the end of 2022, according to Colliers. The $9.10 per SF mark is the highest in Atlanta's history, and a 51% jump year-over-year.

While activity dropped, more than 1.7M SF of industrial space was absorbed in the quarter, matching the cycle near lows seen during the first three months of 2019, according to Colliers, but still up from the pandemic low of just 6K SF in Q1 2020. Koes said the last time any quarter fell to negative absorption was back in 2011, when tenants vacated a net of 249K SF during the second quarter.

New deliveries pushed vacancy up from 3.6% in the first quarter of 2022 to 4.4% at the end of March, which is still below the historic average of 5.4%, according to the report.

The largest lease signed this past quarter was with Carlisle, which moved into 676K SF at Interstate South in Atlanta. ATLFreight.com's sublease 300K SF at Southpark Logistics was the second-biggest, followed by Lipsey Logistics' 157K SF deal at 1005 Raco Court in Atlanta, according to Colliers.

Despite the slowdown, developers are still underway with nearly 40M SF of new warehouse spaces in Metro Atlanta, 21% of which is pre-leased.