Atlanta's industrial developers are grabbing the bull by the horns. And riding that thing into the record books, to boot.
As of Q3, developers have nearly 19M SF of prime industrial space under construction throughout the Metro Atlanta area, according to a newly released report from Cushman & Wakefield. That's the single largest amount of square footage under construction for a single quarter in Atlanta's history, shattering our previous record of 14.8M SF, set in 2000. The activity also puts Atlanta third in the US for development, behind Dallas and Chicago.
While development nearly doubled net absorption so far this year (it's nearly 10M SF as of October, according to C&W), the report notes activity is strong, with 17.6M SF in leases done so far this year, including 7.4M SF this quarter alone, capped by Variety Wholesalers' 1.4M SF lease inked at 60 Herring Road.
Despite this performance, spec deliveries—9.1M SF this year so far—have prompted vacancy rates to inch up nearly 100 basis points year-over-year to 8.6% as of Q3.
"Even with an influx of newly delivered speculative properties, vacancy is expected to remain at a healthy percentage throughout 2016," the C&W report says. "Strong market fundamentals coupled with increasing demand for big box space make Atlanta one of the top markets in the nation for industrial real estate."
It's hard to dissuade developers when megadeals keep getting inked, and the market's activity is buoyed by tenant activity often focused on building out e-commerce delivery networks. Most recently, we reported that FedEx is expected to ink a 1M SF deal with Duke Realty for its Park 85 project in Braselton for its FedEx Ground operations—a key player in last-mile delivery for online purchases.
The activity has yet another player positioning a new project: Charlotte-based Red Rock Developments, which just filed a DRI to develop Saben Tatum Road, a three-warehouse, 3M SF industrial park off I-85, just south of Fairburn in Palmetto, at the intersection of Johnson and Tatum roads.
Red Rock says the project will deliver by November 2019. We also recently reported how both Seefried Properties and Prologis were readying projects in Buford.
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