Q3 2023 Atlanta Industrial Market Report

Atlanta’s industrial market slowed in the first half of 2023 after a period of tightening vacancies and increased leasing activity. Distribution-sector downsizings and layoffs have dampened absorption, coinciding with a surge in supply. However, this appears more like a return-to-normalcy than a significant downturn.

While vacancies are expected to rise in 2023, supply concerns appear manageable. However, large-box spec construction could lead to higher availabilities in spaces exceeding 250,000 square feet. In contrast, a structural shortage of small-bay space in infill locations persists. The demand for adaptive-reuse projects and space for the film industry is likely to continue reducing infill inventory as older spaces are repurposed.

Well-located assets near Hartsfield-Jackson International Airport and key interstate nodes continue to command significant rent increases, with rent growth surpassing the national average. However, the rate of growth is moderating as more space becomes available.

In the long-term, the challenging financing environment that contributed to the 2023 slowdown may strengthen market fundamentals. Construction starts have significantly declined since mid-2022, resulting in fewer deliveries in late 2024 and 2025.

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