Atlanta office space for lease continues to climb 1st quarter 2010

Atlanta office space for lease continues to climb 1st quarter 2010

The Atlanta Office market has seen an increase in vacancy, mainly to contracting of companies and higher unemployment. The vacancy rates are topping 20%, levels that have not been seen since the bust of the dot com era. Metro Atlanta's unemployment rate has also increased to 10.8%.

Total net absorption was negative (163,000) square feet in the first quarter as market conditions continued to weaken as continuing a fourth consecutive quarter of negative net absorption. Average asking rent fell slightly to $19.

Overall leasing activity appears to be stabilizing across the market. However, the new building deliveries in Buckhead with Phipps Tower and 3630 Peachtree has sent that submarket's vacancy to 29%. Buckhead's class A office market will fair better for the larger tenants looking at the newer class A buildings as they provide more attractive options than the older class A buildings.

We can continue to see a soft market with aggressive rental concessions from landlords to lure new tenants as well as retain current tenants.

Tenant's Market

The recession is affecting all markets and all industries. As we have continued to see unemployment numbers rise, vacancy rates have increased and rents have decreased. Landlords are willing to work with shorter lease terms to get them through the next couple years, anticipating a turn around in 2011 or 2012.

Tenants with good credit have found flexibility and many options available in the market. Though short term leases are more prevalent, a tenant can really take advantage of a soft market with securing a long term lease of seven years or more. This can be seen with tenants who are able to foresee a clear view of the long term strategy of the company, and in coordination, align their real estate needs with their strategic plan.

We see opportunity to significantly save on overall occupancy costs. There are many possibilities to upgrade the space, increase the square footage, and even move up from a class B building to a class A building. It is important to exercise caution with reevaluating your current lease, as some landlords are financially unstable.

It is necessary to engage a tenant representative for advisory services, to benchmark the tenant's current building and market situation in order to capitalize and take advantage of the market.

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