By Tonie Auer, Southwest Correspondent
-- Despite the poor fourth quarter results and bleak
economic news, Atlanta's office market ended 2008 with positive
absorption of 391,300 square feet--but that's down more than 2.4
million square feet from the 2.9 million absorbed in 2007, according to
figures from Atlanta-based Richard Bowers & Co.
The forth quarter saw a negative absorption 411,900 square
feet--the first quarter of negative absorption in the market since the
first quarter of 2006, according to a Richard Bowers & Co.
fourth-quarter 2008 and year-end Atlanta office market report.
“The first quarter of negative absorption indicates we have a
market in flux,” David Morgan, a broker in the office properties
division of Richard Bowers & Co, told CPN. “That is to say
we see some slowing in the amount of space that companies are ready to
commit to leasing. My guess is that many groups see the general
economic climate slowing and these companies are looking for ways to
reduce the outflow of cash. We have just finished a year with many
uncertain events from the cost of energy and credit to the settling of
the political contest. Ultimately, all of this filters into the amount
and price of office space.”
For 2008, the urban corridor significantly outperformed the suburbs
with 308,900 square feet of positive absorption in the urban corridor
and 82,300 square feet in the suburbs, according to the report.
Downtown showed the greatest positive absorption for the urban corridor
by more than 350,000 square feet at a total of 374,640 for the year,
second in the Atlanta market only to the I-285/GA 400 submarket’s
376,800 square feet. The I-285/I-85/Northlake submarket absorbed
193,360 square feet, followed by the NE Expressway-North submarket at
120,080 square feet.
Over the past year, vacancy rates have edged up nearly a full
percentage point from 15.48 percent in the fourth quarter of 2007 to
16.31 percent for fourth quarter of 2008. Average quoted rental rates
have increased from $21.15 to $21.66 over the same time period, the
report stated. While the effects of the global economic slowdown
contributed in part to an increase in vacancy rates despite relatively
few deliveries in 2008 (a slowdown not foreseen one year ago), average
rental rates have indeed increased, though not by as large a margin as
anticipated, the report stated.
As for the outlook for 2009, look for a bit of caution as many
companies continue to cut costs and look for available credit sources,
Morgan said. “Atlanta is positioned better (than other metropolitan
areas) because our region has a balanced service economy. We are not
tied to a particular industry and as a region, we are situated within
two hours to almost two-thirds of the nation's population. In the
second half of this New Year we may begin to see businesses and banks
taking a more aggressive stance related to expanding their market
share.”
The expectations of the new presidential administration and lower
fuel costs will boost confidence in the business climate, Morgan added.
“This is a great time to be in the market if you need to extend or
renew an office lease. The strongest landlords will have access to
funds for tenant improvements and concessions. Look for leasing
activity to start out slowly this year but ramp up quickly later in the
year as pending federal assistance both in the finance and
infrastructure arenas begins to take affect,” Morgan said. “Markets
with the highest volume of available class A space should do well,
along with the urban corridor and downtown in particular given its
plethora of amenities and transportation access points. Traffic
congestion around major retail centers in both the urban and suburban
submarkets may become a more important consideration for companies
considering relocation, particularly for new deliveries in those
areas.”
Richard Bowers--the largest independently owned commercial real
estate firm in metro Atlanta--was established in 1980 and represents
clients and owners in office, retail, and industrial sales and leasing,
land and investment sales, financial services, development, relocation
services, interior design and construction management, and property
management. In 2007, the company completed 323 property sales and
leasing requirements totaling 2.67 million square feet of space.
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