For the past 2 years, employment growth in Atlanta has been below the national average, which has created the soft real estate market. The ability of local employers to increase earnings and, in turn, create new jobs is the key to recovery, according to Neal Golden, senior executive vice president of U.S. operations for Newmark & Company Real Estate.

Neal Golden, Newmark & Company Real Estate

“There is little new construction in Atlanta — deliveries in 2003 are projected to be the fewest in 9 years as investors and developers are unwilling to take any risks,” Golden notes.

Jud Bass, senior advisor with Sperry Van Ness/Summit Advisors, agrees. “As one would expect at this point in the real estate cycle, speculative development has come largely to a screeching halt. Build-to-suit activity continues; however, developers are now competing with existing owners of speculative projects that have large blocks of available space,” he explains.

According to Bass, the Midtown submarket area has the most concentrated office development activity in the metro Atlanta area at the moment. More than 1 million square feet of speculative office product is currently under construction. The area has an extensive fiber optics network and access to MARTA rail service; it also encompasses the Georgia Institute of Technology campus. The submarket is attractive to both high-tech and old economy firms.

Sperry Van Ness/ Summit Advisors

“Developers are looking to create an environment similar to New York City’s Fifth Avenue and Chicago’s Michigan Avenue where people live, work and play,” Golden comments. “The 138-acre Atlantic Station mixed-use project is sure to change the landscape of Midtown. The new 17th Street bridge over Interstate 75/85 will be the gateway to approximately 12 million square feet of office, residential, retail and hotel space.”

Jacoby Development and AIG Global Real Estate Investment Corp. are developing Atlantic Station on the former Atlantic Steel Mill site. “Construction has commenced on the first office building, a 400,000-square-foot speculative project, of which 235,000 square feet is under lease to two major tenants: SouthTrust Bank and Arnall Golden Gregory LLP. The building is set to deliver in April 2004,” says Bass.

Another significant development is the construction of the new Symphony Center Project, a 41-story, 625,000-square-foot office tower in Midtown. “The new office building, combined with the vacant space throughout Atlanta, will only increase an availability rate that has already risen steadily with each passing quarter and will continue the trend of negative net absorption,” says Golden.

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