Several indicators continue to point to a healthy industrial market in Atlanta, according to George Krauth, director of research for Colliers Cauble & Co. The city is continuing to see a tremendous amount of absorption in its large bulk warehouse buildings. Vacancy rates are holding steady, and active leasing continues as new construction remains strong.

The majority of industrial development is taking place in the Northeast and Southside submarkets. Southside activity is due to land availability, relatively low land costs and a sufficient labor pool. These two areas illustrate how the Atlanta area is a leading location for distribution and transportation.

Duke-Weeks Realty Corp. has jumped north of Atlanta to Braselton with a speculative 506,300-square-foot distribution center. "Developers feel that moving north up the Interstate 85 corridor is the next logical step in the Northeast submarket," says Krauth. Gwinnett County is running out of available industrial land and the prices for what is left are becoming unaffordable.

Duke-Weeks is also building a 507,000-square-foot speculative distribution center in Henry County that will be expandable to 1.1 million square feet. Distributors are using South Atlanta as a gateway to Florida. Those users will continue to look to Henry County as available space wanes in other markets.

Crescent Resources is a relative newcomer to the Atlanta area. The company recently broke ground on a 150,000-square-foot build-to-suit for ADVO Inc., which was represented by Colliers Cauble & Co.

Major leases that were closed towards year-end 2000 include GE Energy's lease of 360,000 square feet at Majestic Airport Center II, and at Airport Distribution Center Two, Ryder Integrated Logistics recently leased 193,000 square feet and Lucent Technologies signed a lease for 214,000 square feet. Colliers Cauble & Co. represented the landlord in both transactions.

Industrial rental rates per square foot in Atlanta range from $2.65 to $2.90 net for bulk warehouse and $2.90 to $3.50 for net business distribution. Service centers, which are comprised of approximately 50 to 75 percent office space, rent for $8.50 to $11.00 net. Vacancy rates are at 8.6 percent overall.

The strength of the Atlanta industrial market is in its diversity. Area properties are looking for all types of tenants. Bulk distribution is currently driving new development as area developers are building for the big box users.

"There is speculation that the local economy is slowing and that new job growth will be less than we have seen in the recent past," Krauth notes. "Nevertheless, demand appears to be steady and we absorbed just under 14 million square feet of space by year-end 2000, which accounted for another outstanding year. Our forecast for 2001 is continued growth in the industrial market."

George K. Krauth is director of research with Colliers Cauble & Company.


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