Less Is More
Activity in the Metro Atlanta area tumbled in the fourth quarter of 2010. Down
30 percent (almost three million square feet) from the third quarter 2010 total,
activity of 7,000,261 square feet is the lowest seen in the 12 county metro area since
the second quarter of 2009. That being said, seven of the 12 sub-markets examined
for this report actually saw an increase in activity. The decrease in activity for the
remaining five sub-markets, however, was overwhelming.
Activity in both the I-85 North and the Airport/Clayton & Henry County sub-markets
dropped more than a million square feet each. Yet, amazingly, these two sub-markets
still recorded positive net absorption. Two other sub-markets, Gwinnett/North Fulton
County and City of Atlanta South of I-20, also recorded positive net absorption. Again,
Gwinnett/North Fulton County accomplished this feat despite a 50 percent reduction in
The flip side of this coin is the Fayette/Coweta County sub-market. This sub-market
saw a 130 percent increase in activity; nevertheless, it fell to negative net absorption.
Furthermore, the -50,341 square feet recorded was far deeper than that seen in the third
quarter number of -142 square feet.
While a decrease in activity is always disappointing, this quarter’s results prove that
success depends on more than just deals consummated. Net absorption for the fourth
quarter of 2010 came in at -294,602 square feet . . . the best Metro Atlanta has seen in
over two years.
Of course, the offset to activity in the net absorption equation is the amount of space
returned to the market and that was the distribution sector’s saving grace. Those same
sub-markets that dropped so significantly in activity were successful in keeping more of
their tenants in place. In the fourth quarter, Gwinnett/North Fulton County returned half
the amount of space given back to the market during the third quarter.
Although the Atlanta distribution sector has certainly seen fluctuations in activity over
the past three years, those deviations alone are not responsible for the lows in the net
absorption suffered. With any luck, the increase in tenant stability we experienced at
the close of 2010 will continue as we begin a new year and, hopefully, will usher in
a return to positive net absorption.
Submarket trends and summaries can be downloaded instantly here
Wilson S. Covington
Senior Vice President
Tuesday, January 25, 2011
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