You’ve all seen the cranes moving throughout the metro area. And throughout this year, you will see new office doors opening.
According to a Colliers International Atlanta report featured in a recent Atlanta Business Chronicle article, we can expect almost 3 million square feet of Class A office space to be delivered in 2020. And it appears to be much-needed.
For the past eight years, the metro area has created over 60,000 new jobs a year. With unemployment here at all-time lows, it’s no surprise that with the new jobs comes new residents. Our population has grown by almost the same amount for the same period of time. This influx of new people has stressed the office markets, as well as the residential markets.
Just as our housing inventory has been shrinking as builders try to keep up, our office market has been doing the same. Also, like our housing industry, according to a recent article in Curbed Atlanta, office rent-rates are reaching all-time highs. Home prices rose more than 4.2 percent last year, according to an article in the Atlanta Business Chronicle.
The housing industry and office industry certainly go hand-in-hand. As we grow our number of jobs here in Atlanta, we need more people to fill those positions, which means more families moving to the metro area that need places to live.
According to the Curbed article, metro Atlanta office buildings were trading for an average of $244.30 per square foot, a big jump from the $229 a square foot they were trading at last year. While it’s nowhere near the $980 per square foot that is demanded in Manhattan, The 6.3 percent growth in rates shows that vacant office space is in high demand.
Of the almost 3 million square feet of office space set to open this year, 1.26 million square feet will be in Midtown with two of the Atlantic Yard projects coming online. Atlantic Yards South Midtown will have 366,970 square feet and Atlantic Yards North Midtown will have 156,541 square feet. Anthem Technology Center in Midtown will have 352,000 square feet as well.
While Midtown is characteristically leading the way, the Perimeter area in Dunwoody and Sandy Springs is not far behind. Just over one million square feet of space will open there this year. The behemoth is the State Farm Phase II building. It will be the largest project opened anywhere in the metro area this year with 670,000 square feet of office space. Right across Hammond Drive and next to the Dunwoody MARTA Station will be the opening of Twelve24 and its 335,000 square feet of office space.
The Battery area will see about 485,000 square feet of new office come to the market, and Avalon in Alpharetta will open 10000 Avalon and its 249,579 square feet.
According to Pat Murphy, managing director at Cushman & Wakefield, there would have been more office development if developers could find more space.
“I think we’d see even more development if we had more good sites close to the city — there’s a real scarcity of those now,” Murphy said in a recent Atlanta Business Chronicle article.
Class A office employers are not the only ones looking for locations right now. Massive industrial projects are underway throughout the I-75, I-85 and the western part of I-20. Much of that development is being driven by the increased activity in the Port of Savannah. That port has grown to the point of becoming one of the most important ports for the transportation of goods along the entire eastern seaboard. And it is in the process of dredging the Savannah River so that it will allow supertankers, a move that could triple the port’s capacity.
Geoff Smith is a mortgage banker with Assurance Financial focusing on residential home loans for refinances and home purchases.
*The views and opinions expressed in this column do not necessarily reflect the views of Assurance Financial Group