Metro Atlanta has been the best market in the country to lease up a warehouse in 2021.

Tenants absorbed 10.82M SF at Metro Atlanta distribution centers and warehouses during the first three months of the year, the highest rate in the nation, according to Colliers.

The soaring absorption rate — the second-most recorded in a quarter in Atlanta history, just behind Q4 2014 — contributed to record-breaking vacancies and rents. The market's vacancy rate was at an all-time low of 5.4% in the first quarter, and asking rents are now higher than $5 per SF, a record high, according to Colliers.

Metro Atlanta warehouses beat Dallas, which tallied 10.7M SF of absorption, for the top spot on the list, followed by the largest industrial market in the country, Inland Empire in California, which saw 10.3M SF of absorption, according to Colliers.

Goodyear Tire & Rubber Co.'s 1.5M SF move-in at Orchard Hills Industrial Park in Newnan was the largest contributor to the region's absorption figure, followed by Zinus USA, which invested $108M to create a new manufacturing and distribution facility at a former Toys R Us warehouse in McDonough.

The strength of the industrial market is prompting developers to break ground on 30 new buildings comprising nearly 10M SF, pushing the total amount of square footage under construction to just under 29M SF — another record high, according to Colliers.

While activity in the market remains strong, CRG Integrated Real Estate Solutions partner Mike Demperio said new development could slow in the coming months because of steel price hikes. Steel is a critical component of the construction of industrial real estate, but with prices rising from $450 per ton in August to $1,200 per ton in March, Demperio said construction costs could outweigh developers' abilities to raise rents fast enough for new projects to make financial sense.

“I think everybody needs to be a little cautious with how much we build and where we build it," Demperio said.