Friday, February 13, 2009

Atlanta industrial real estate market worst in years

Published in the Atlanta Business Chronicle

Atlanta's industrial market just completed the worst single quarter in nearly a generation.
A surge in tenant turnover led to almost 4.1 million square feet in negative net absorption, or the amount of industrial space that was not occupied, according to King Industrial Realty.

"A combination of overwhelming tenant turnover and sluggish leasing activity led to unprecedented negative net absorption and further fueled economic uncertainty to finish the year," King said in a report released Feb. 12. "This downturn represents the worst single quarter for absorption since King Industrial Realty began tracking the Atlanta Industrial market more than 25 years ago."

Ten out of the 12 metro Atlanta submarkets recorded negative net absorption in the fourth quarter. The Interstate 85 North distribution market finished 2008 on an erratic note. It led all metro Atlanta submarkets with almost 1.9 million square feet of activity in the fourth quarter, but it was also hit hard with tenant turnover.

Only two areas fared well: the airport submarket, which managed to record 344,851 square feet of positive net absorption, and the Peachtree City submarket, with a modest 3,473 square feet of positive net absorption.

Atlanta’s industrial vacancy rate jumped 1 percent to 17.4 percent in the fourth quarter.

On a more positive note, the industrial market surrounding the airport recently landed another large tenant.

J.M. Smucker Co. (NYSE: SJM) said it's locating its new Southeast distribution hub near Hartsfield-Jackson Atlanta International Airport. Smucker, based in Orrville, Ohio, will lease DCT Industrial Inc.'s entire Southcreek IV building, a 557,000-square-foot distribution center.

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