3rd Quarter 2007

The third quarter continued to show Atlanta’s office market making leasing gains, although at a moderating pace from the previous quarter and from 2006. 

And those gains rested entirely on the Class A trophy properties of Atlanta, which posted positive net absorption of a tad more than 1-million square feet for the quarter, down slightly from the previous quarter and nearly the same rate as the third quarter of last year.  Class B office properties, on the other hand, posted their second straight quarter loss of absorption of 32,700 square feet across the metro area.

Overall, the market absorbed more than 950,000 square feet for the quarter.

While overall leasing activity has inched back, it’s still been consistent throughout the year with 1.86 million square feet in new leases signed during the third quarter, including Manhattan Associates’ 160,000-square-foot lease at 2300 Windy Ridge Parkway and T-Mobile’s 152,000-square-foot lease at One Ravinia Drive in Central Perimeter.

Despite the influx of gleaming new office towers now under construction in Buckhead and Midtown – encompassing more than 2.5 million additional square feet of class A, high-rent office properties – the absorption activity has clearly demonstrated a shift away from the in-town markets this year back to the suburbs.

That shift has benefited Central Perimeter again as it led the market again with 714,000 square feet of positive absorption.  That was followed by the Cumberland/Galleria and Northwest submarkets, which posted 571,100 square feet of positive absorption during the third quarter.  Among the other submarkets:

• Downtown gleaned nearly 550,000 square feet of positive absorption.
• Buckhead posted 229,500 square feet of positive absorption – while developers are on track to build nearly 2 million square feet of new offices, including Terminus 200, Two Alliance Center and Regent Partners’ 3344 Peachtree tower.
• North Fulton – which includes the affluent bedroom community of Alpharetta --posted 199,600 square feet of positive absorption.
• Midtown absorbed 188,300 square feet.
• And companies in the Northeast Atlanta submarket – which includes Gwinnett County – gave up 23,000 square feet this quarter.

View Figures-At-A-Glance (Office Market Trends: Supply and Absorption Q4 07, PDF)
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