Atlanta Leads Country in Vacancy Declines

improvement

We’ve been saying for months that the Atlanta commercial real estate market is experiencing a very positive bounce-back from 2008’s recession, and now we have the figures to prove it. Not only is Atlanta doing well, the city is actually leading the entire country in vacancy rate declines – Atlanta dropped 60 basis points as more tech and healthcare firms seek space in the market. The steady improvement Atlanta is experiencing is due to several things:

Construction – while Atlanta has several very exciting projects underway across the Metro area, we aren’t seeing the onslaught of retail and condo construction that we were in 2005 and 2006. Developers are, for the most part, only building the products that the market has been so starved for over the past 7 years. Many retailers are actually shrinking their amount of space given the rise of e-commerce.

Multi-Family – most CRE professionals agree that Atlanta was starved for multi-family units after coming out of the recession. Many people lost their homes and credit and had to result to apartment living to lower their costs of living, but the units just weren’t there. Developers are hoping to capitalize on both this demographic as well as the Millennial demographic by building in-town apartment towers; there are currently 10,000 units under construction inside the Perimeter right now.

Self-Control – investors are exercising more self-control during this construction cycle than they did the last. Investors are staying away from the speculative developments that ended up tanking and instead focusing on product where demand is evident.

Interest Rates – because more and more countries are investing in US Treasury Bonds, the 10-Year Treasury bond yield continues to remain very low; it is expected to remain below 3% through the end of the year. Low interest rates mean good things for investors, who are starting to pump more capital into the market now that it is showing more signs of stability.

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