Mid-Year 2020 Industrial Market Report
The Atlanta Industrial market had an outstanding second quarter. The market absorbed more space than what was delivered (4.4 MSF vs. 4.2 MSF). This is the second time this has occurred since Q3 2018, causing the vacancy rate to hold steady at 7.2%. Despite limitations, tenants have continued to conduct business during the shutdown. Leasing activity has held strong at just over 11.5 MSF with major leasing activity this quarter centered around e-commerce businesses. Amazon leased over 2 MSF in two separate projects and Walmart leased an additional 1 MSF.
Due to a strong market, Atlanta achieved nice gains in rental rates. Year-over-Year Atlanta has had a 6.4% rise in rates, only eclipsed by Nashville and Grand Rapids. Average rental rates across the market topped $6.01 with Northwest and North Central surpassing that average.
Under construction activity slowed slightly due to permitting problems with government offices shutdown. 15 buildings, totaling 4.4 MSF, started construction this quarter bringing the total under construction to 22 MSF. Year-to-date, 30 buildings have delivered totaling 9.59 MSF, 66% of which have been leased. We project 17 buildings, comprising 7.27 MSF, should be delivering in Q3, of which 2.85 MSF or 39% is currently preleased. As restrictions ease, we expect to see an increase in activity as developers capitalize on tenant demand in e-commerce and transportation sectors.