Atlanta made waves in January when it was chosen as one of 20 finalists for Amazon’s $5B HQ2. The e-commerce giant’s interest in Atlanta comes as development dollars pour into its highly active data and office markets. Big-name companies are flocking to the city, drawn to its large-scale, business-friendly projects.
“Unlike other major metros where we’re seeing a general decline in transactions, the Atlanta market is continuously busy,” EBI Consulting Marketing Manager Amanda Wimble said. “From office buildings to industrial projects, there’s no end in sight for the momentum being built in Atlanta. The buzz around making the shortlist for Amazon HQ2 will only amplify that.”
Here are three reasons CRE pros should keep their eyes on Atlanta.
1. Amazon HQ2
Many see Atlanta as a top contender for Amazon’s HQ2. A highly educated workforce, a number of viable development sites, robust distribution and shipping networks, major research institutions, accessibility and public transit are key reasons Amazon selected Atlanta as a finalist.
A strong inventory of affordable housing stock would support the potential influx of Amazon workers. Atlanta is more affordable than the Wall Street Journal’s “top tier,” comprising Washington, D.C., Northern Virginia, Montgomery County, Maryland, and Dallas. If Atlanta is selected, the multibillion-dollar investment and 50,000 jobs would be transformative.
2. Data Center Boom
Atlanta’s data center market had a strong 2017. Vacancy rates below 10% and mounting demand have inspired confidence in speculative data center development, according to CBRE.
A number of major data center players are planning to invest in Atlanta. CyrusOne announced its plans to open a $200M data center campus at the Riverside West Industrial Park in Douglasville. Switch is planning a $2.5B, 1M SF data center campus in Metro Atlanta called “The Keep,” which will run on 100% renewable energy sources and allow Switch to keep up with user demand in the Southeast.
Social media giant Facebook is reportedly considering Atlanta for a 400-acre complex. A potential $42B investment spread over two decades, the complex would be Atlanta’s largest economic development project to date.
“There’s tremendous telecom development in Atlanta to support the population growth,” Wimble said.
3. Office Market Heat
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After adding 2.1M SF of office in 2017, Atlanta’s largest wave of deliveries on record, the market is far from saturated. Its pipeline instead looks relatively lean for the number of companies that want to locate there.
In 2017, Q4 absorption was the highest of the year at a positive 600K SF, according to Colliers, indicating positive leasing momentum. Class-B vacancy rates dropped 30 basis points and rents rose by 6.1% last year.
After 16 consecutive quarters of average rent increases, office space was at $24/SF in December. Several popular submarkets saw averages closer to $50/SF. Atlanta’s job and wage growth in 2017, at 2% and 2.4%, respectively, were significantly higher than the national average, according to a Cushman & Wakefield report. These fundamentals point to a very positive outlook for Atlanta’s office market.
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