Metro Atlanta’s industrial market has yet to feel the effects of rising interest rates, corporate layoffs or other challenges brought by global economic uncertainty.
Multiple large projects were recently announced for the I-85 and I-985 corridors north of the city, including a 2.2-million-square-foot logistics park in Jackson County and a 586,000-square-foot industrial park near Gainesville. Both developments consist of speculative space, meaning they do not have named tenants attached to the projects.
Todd Barton, senior vice president in CBRE’s industrial properties group in Atlanta, said they’re not alone. Dozens of speculative projects remain in the works for metro Atlanta, which he said shows developers are not worried about finding tenants or overflooding the market.
“We don’t really feel that we’re in danger of being overbuilt, especially given the tenant demand we’re seeing,” he told The Atlanta Journal-Constitution.
Atlanta’s industrial market has been on a tear for years, peaking in 2021 with a record-breaking 34.5 million square feet of positive absorption, meaning more space was leased than vacated, according to CBRE. At the end of 2022, that figured dipped to 23.7 million square feet, but Barton said that’s still an incredible year of growth.
Industrial vacancy is also at 4.5%, a near-record low, according to CBRE.
Additional new supply is on the way, especially northeast of Atlanta along I-85. Nearly 49 million square feet of industrial space is under construction, most of which is along that northeast corridor, according to CBRE.
Tim Evans, vice president of economic development for the Greater Hall Chamber of Commerce, said industrial demand remains hot in his region. He said there are 25 speculative projects set to deliver in 2023, including the Gainesville industrial park.
“As the developers start construction, before they can get vertical on the building, most of it is already leased,” he said.
Located off I-985, the two-building project is being developed on a 57-acre site by Chicago-based Logistics Property Company. The developer recently purchased the land from the Hall County Development Authority for an undisclosed price. It’s expected to deliver during this year’s fourth quarter.
While the COVID-19 pandemic caused turmoil across several industries, Evans said the breakdown in international supply chains has boosted domestic industrial demand. He cited MedMix, a Swiss medical device manufacturer, as an example, since the company announced in January it will invest $20 million in Hall County to build a 300,000-square-foot facility.
“We realized in 2020 and 2021 that a six-week container trip from across the Pacific is no longer something that you can depend on,” he said. “So more and more, we’re seeing a movement to have suppliers closer.”
Not far away in Jackson County, Trammell Crow Company expects to deliver the first phase of its massive logistics park by 2025. The Jackson 85 North Business Park will be located on a 287-acre site.
Credit: Trammell Crow Company
Credit: Trammell Crow Company
Barton said Georgia’s industrial space is diversified among several types of manufacturing, processing and logistics industries, which helps insulate the region from potential recessions and economic downturns.
“We’ve got such a diverse tenant base and diverse geography, we really don’t expect to see leasing fundamentals change very much,” he said.
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