Office leasing activity in Atlanta is significantly below historic norms. But that could have to do with rising rents and a lack of space, a popular brokerage firm reports.

A recent Savills Studley report notes office leasing activity in Atlanta has been down 25%, or 1.5M SF leased per quarter (the last two years) versus its historic norms—an average of 2.4M SF the prior eight quarters. Absorption this past quarter just topped 400k SF, led by WellStar's 113k SF deal at Two Parkway Center and Equifax's 100k SF consolidation at One Atlantic Center (chart).

Savills Studley market lead Chris White (below, second from left with Bo Keatley, John Flack and David Rubenstein) tells us there are a variety of factors related to the slowdown: Many of the big deals have already put pen to paper, rental rates have taken a drastic rise—nearly 5% to a record above $30/SF—putting the kibosh on appetites to expand, and then, “I guess lastly there are definitely less opportunities out there for larger space requirements.” It's a situation that could potentially spur a building boom in office once office rents creep up a little higher. Chris also notes that sublease space has popped in the past year, which could be an “early sign of [a] hiring slowdown.”

Still, it's not all doom and gloom. For one, Chris says rents are hitting record numbers for the metro area, above $30/SF for select Class-A space. And the Q2 absorption is actually a major improvement from the near zero activity at the beginning of the year, according to a recent Colliers International report. And word of new deals hitting the market—including the recent RFP for IBM's Weather.com that we reported here—have stirred an Atlanta office market that seemed to have hibernated through much of the record heat wave this summer.