Industrial's Big Comeback

Dick's Sporting Goods. Millennium Mat. Hitachi Kiki USA. Total Sweeteners Inc. Ricoh Americas Corp. What do these names all have in common? They're part of an industrial resurgence in Atlanta not seen since before the recession. (Rise of the machines isn't just the name of the worst Terminator movie.)

As we approach another Atlanta State of the Market event next week (tickets here), we are taking an advance glimpse at a commercial real estate market seeing signs of a significant comeback. And Pattillo Construction's Larry Callahan, one of our key panelists for next week's shindig, says he's optimistic that this recovery is the real thing this time. “I think there's a rising confidence level that's been exhibited throughout the business community,” he says. “It's been a long, slow slog to get here. The Atlanta region has been lagging a lot of other areas of the country. The result of that is now we are a bargain.” (It's similar to how no one wanted records for 25 years and then people started buying a lot of records because they were cheap and now it's a huge industry.)

According to the latest CBRE industrial report, industrial landlords absorbed 5.5M SF Q1, a level not seen in seven years. And four positive quarters of absorption in a row have seen 13M SF in metro Atlanta get gobbled up by tenants, such as the ones named above who were some of the largest leases this past quarter. And even better, average occupancy is now just hovering at 11% across the metro.

According to King Industrial, the pipeline of industrial prospects totals some 54.5M SF, activity not seen since 2007. But thus far—and this may be a good thing—spec development has been tamed, Larry says. This recovery has seen many a build-to-suit, though. Larry says his firm is just underway with a 60k SF build-to-suit with BakeTech at Royal Woods Industrial Park in Tucker. Further absorption and lower vacancies means the last piece of the recovery puzzle is nearing its place—rising rents. When that happens, then we'll see a surge of spec development here, Larry says. (So start speccing on where you might wanna spec.)

We also just learned that Mobis Parts America just renewed  its 451,200 SF lease at 2155 Breckinridge Blvd in Lawrenceville. Mobis, which distributes parts to Hyundai, Kia, and other auto companies, has been here since 1999. We reported here in 2012 that Mobis also took 300k SF in a former Owens Corning facility at 1200 Oakley Blvd. Colliers International's Lee Cardwell and Chris Cummings brokered for Mobis.

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