Tishman Speyer's Chris Ahrenkiel told attendees at Bisnow's Future of Buckhead at the Grand Hyatt in Buckhead that local landlords are about to see the biggest rents ever gotten in the submarket. Couple that with job growth over the next two years at 20,000 office jobs, and rents should jump by 20% during that time. There are only two significant trophy office buildings underway—Riverwood 200 in the Cumberland/Galleria area and Tishman's own Three Alliance Center in Buckhead—so rents are now topping $40/SF on the newest and best product, sticker shock for many Atlanta tenants.

Still, Regent Partners' David Allman (far right) says Atlanta is still relatively inexpensive at $40 per SF when compared to some of its peers. Both Chris and David were part of a Buckhead office panel that included Cushman & Wakefield's Ken Ashley, OliverMcMillan and BlackRock's Robert Welanetz, and Stewart Title Guaranty Co's Rob Reeder, who moderated. “But when you're talking about your good spaces, the good deals are over,” David says.

It's not just that companies are willing to pay more for any space. Ken notes that it's the co-working space that has really taken the rent jumps by storm, such as Atlanta Tech Village, which in effect charges $40/SF. “Ponce City Market even charges higher rates than Bank of America Plaza, the highest building in the Southeast. Clearly, people are voting with their feet for community.”

Former Atlanta Mayor and Buckhead Business Coalition head Sam Massell noted it best: In 2010, during the recession, office sales in Buckhead were $10M. By 2012, that number shot up to $329M. A year after? $638M. In 2014: $690M. This year? Sam says office trades in Buckhead are approaching $1.9B.

Even as the Fed finally begins to inch up short-term rates, investors still see office as a safe, predictable investment. “What makes Buckhead attractive to an investor is that it's supply constrained,” Chris says. And even with cap rates sub-6%, he adds that Atlanta is still considered a bargain, given that the last five office investments Tishman eyed in other markets will ultimately trade at more than $1k/SF.

Conversely, Ken says that activity among potential office tenants in Buckhead is “way, way down.” Certainly the potential is there, as more than 1M SF of tenant leases expire in the next two years. And there are certainly some notable musical chair tenants in the market, including Merrill Lynch, Morgan Stanley and AON. But Buckhead is a victim of a perfect storm—a lack of big blocks of available space, even with an 11% vacancy rate, and rents reaching levels never seen before. “People are having to adjust to these extraordinary increases,” Ken says.