Southside Dominating Industrial Activity In 2018
In the past two years, three companies have taken massive amounts of warehouse space at Coweta Industrial Park, enough to convince Pattillo Industrial Real Estate to launch a 300K SF distribution center without a tenant signed up before shovels hit the dirt, its CEO said.
Coweta Industrial is south of Atlanta off Interstate 85, an area that has seen the strongest industrial activity in all of Metro Atlanta's booming industrial market.
“You may think of that as being way down there, but when you're in Coweta County, you're only 25 miles from the biggest airport in the world,” Pattillo CEO Larry Callahan said. “There has been a lot of activity on the southside, we included.”
Atlanta remains one of the hottest industrial markets in the country. Its activity has been predominantly focused on the southside of the metro area — where land can accommodate sprawling warehouses, and is close enough to both the nexus of the city's population and Hartsfield-Jackson International Airport.
“South Atlanta remains the juggernaut of industrial activity,” Colliers International officials said in a recent report, noting that landlords absorbed 3.1M SF in the first quarter alone.
Deals so far this year include Saddle Creek's 1.2M SF lease at Southwest 85 Logistics Center, HD Supply's 1M SF deal at Gillem Logistics Center, Newell Brands' nearly 750K SF lease at 4475 South Fulton Parkway and Carlisle Tire, which leased 676K SF at 493 Westridge Parkway, according to Colliers International.
“This accounts for more than 80% of the Atlanta market’s total, and is just above the quarterly bulk absorption average of the past four years,” Colliers officials stated in another report focused on bulk distribution centers.
Callahan is among the panelists in the spotlight for Bisnow's upcoming Atlanta Industrial event. He is not the only one seeing activity boil on the southside.
“The majority of the deals that have hit on the southside are large,” Solution Property Group partner Mal Hill said. "It's difficult to find entitled sites close to population on the northside."
Currently, Solution is marketing Creekside Distribution Center in East Point, and Hill said the majority of the prospects they have been seeing have needed in excess of 600K SF. For tenants, to find land sites that are equivalent of what can be found south of Hartsfield-Jackson Atlanta International Airport, they are having to search farther up Interstate 85 into North Georgia.
“We're seeing great activity across the board. There is good demand both on the small and medium spaces,” Smith said. “In every submarket [where] we have product, we have a depth of tenant demand on those buildings.”
Outside of South Atlanta, tenant activity has been focused on those seeking anywhere from 50K SF to 250K SF, what Smith called the “bread-and-butter” users of the industrial market. The segment has been healthy for landlords, especially since those properties tend to be even closer to key Metro Atlanta population hubs.
Hill, Smith and Callahan all say the industrial market should remain healthy through 2018, a sentiment Colliers recently echoed.
“Given the strong start, it is anticipated Atlanta’s big-box market will once again see annual absorption top 10M SF,” Colliers officials said.
Taking into account that Atlanta's total industrial market is nearly 700M SF, developers are currently adding more than 14M SF of new distribution centers. That accounts for just 3% of the total industrial market, which is generally in line with total economic growth, Callahan said.
“History would tell you this is an old cycle and it is just about to die. But economic cycles don't die of old age. They can keep going,” Callahan said. “We are clearly in one of the best markets that I've ever seen, and I think it will continue for awhile.”
Hear more from Callahan, Hill and Smith along with Core5 Industrial Partners Managing Director Lisa Ward, Trammell Crow Senior Vice President Mark Dishaw and Ackerman & Co. President Kris Miller at Bisnow's Industrial: Atlanta's Most Prolific Industry event 7:30 a.m., Thursday, June 14, at the Creekside Distribution Center.