The last four quarters in the Atlanta industrial market were something akin to a good old-fashioned roller coaster ride at the historic Southeastern Fairgrounds!
The absorption, activity and new construction sectors all went for a somewhat bumpy ride this past year.
What’s happening?
First, the quarterly absorption numbers for the Atlanta industrial market have been anything but steady. Eight quarters ago there was 7.9 million square feet of positive net absorption, followed by five negative quarters in a row (totaling 13.2 million square feet), then came two positive quarters (totaling 7 million square feet) and then back down to 2.8 million square feet of negative net absorption for the first quarter of 2025.
The annual absorption numbers were up and down as well. The last four quarters yielded 2.2 million square feet of positive net absorption, but a year ago, at this same time, the absorption numbers plummeted down to a negative 11.3 million square feet. Two years ago, the industrial market experienced 32.5 million square feet of positive net absorption.
Second, the activity numbers also were up and down. The second quarter of 2024 recorded 14.4 million square feet of activity, but that number dropped to 13.6 million square feet during the third quarter, followed by a jump upwards to 19.2 million square feet in the fourth quarter, and then only to see it drop all the way down to 11.3 million square feet for the first quarter of 2025.
Over the past six years, the year-over-year activity figures have fluctuated with the last four quarters recording 58.6 million square feet of activity, which was certainly better than the previous year’s total of 46.2 million square feet, but that was way down from the year before that of 75.4 million square feet. Prior to that, the annual activity numbers recorded were 87 million square feet (certainly outstanding numbers!), and the year before that was lower at 70.5 million square feet than the previous year, even lower than that being 55.6 million square feet.
Just a note here about the availability rate. With all the ups and downs in the absorption and activity numbers, you might wonder, how did it affect the Atlanta industrial market’s availability rate? Well, not as much as you might think, because it currently stands at 12.8 percent, which is only just up a little from the 12.7 percent publicized a year ago. Currently, the amount of industrial space now available in the Atlanta industrial market stands at just over 119.2 million square feet.
Third, the quarterly new construction numbers have also been up and down. The first quarter of 2025 crested at a slow pace with only 1.5 million square feet of new construction, while the previous quarter had climbed much higher to 3.5 million square feet. However, the third quarter of 2024 only managed to start 1.3 million square feet, but the second quarter of 2024 managed to record 3.1 million square feet of new construction.
The new construction numbers on an annual basis for the past four quarters were only 9.4 million square feet, which was down from the previous year’s 16 million square feet, and way below two years ago when there was 45.8 million square feet of new construction in the Atlanta industrial market.
Another note here is about the big-box deals. A year ago, at this time, the Atlanta industrial market had recorded only nine big-box deals for the previous four quarters that were 500,000 square feet or above, and there were no deals that were 1 million square feet or larger during that time frame. (The Atlanta industrial market probably did not see a 1 million square feet or larger deal completed for at least 18 months.)
The past four quarters, the Atlanta industrial market experienced 11 big-box deals and three of those were 1 million square feet or larger. While there has been uncertainly in our marketplace, as well as the rest of the United States, there has also been some pent-up demand where firms grew tired of waiting to expand their business operations.
Hot submarkets
There were three regions in the Atlanta industrial market that were the hottest over the past four quarters, totaling over 54.2 percent of all the activity. The Southwest submarket (I-20 West and I-85 Southwest) led the way with 21.1 percent (12.3 million square feet) of the activity, the close-in I-85 Northeast region was second with 17.8 percent (10.4 million square feet) of the activity and the I-75 South submarket came in third with 15.3 percent (8.9 million square feet) of the activity.
Despite the up and down nature of the net absorption numbers over the last couple of years in the Atlanta industrial market, there were three submarkets that posted the best absorption over the past four quarters with an impressive 85.5 percent of all the positive net absorption. The I-75 Northwest submarket recorded an astounding 52.7 percent (4.7 million square feet) of the positive net absorption, the Southwest submarket recorded the second most positive net absorption numbers with 17.3 percent (1.5 million square feet) and the I-20 East submarket followed with 15.5 percent (1.3 million square feet) of the positive net absorption.
Although the new construction numbers have been falling for the past couple of years, the three hottest areas for new construction in the Atlanta industrial market were the I-75 South submarket with 23.9 percent (2.2 million square feet), followed by the I-20 Southwest submarket with 20.3 percent (1.9 million square feet) and in third place was the I-85/Hwy 985/Hwy 316 Northeast submarket with 19.1 percent (1.8 million square feet).
Other factors
Well, tariffs appears to be the word of the day and uncertainty, at the moment, rules the day. The stock market is falling like a rock and thus creating a lot of fear and angst on Wall Street. At the moment, no matter who you talk to, no one knows for sure how this new tariff policy is going to shake out. My guess is that with the U.S. economy being the largest economy in the world, the other countries are going to start lining up to have meetings at the White House to resolve this issue and lower the tariffs that they have been charging the United States for years. I believe even China will eventually come to the White House as well, because we buy a whole lot more from them than they do from us, which means that they need our business more than we need theirs. It would appear that the U.S. has some leverage here.
A byproduct of this tariff situation should be that onshore manufacturing comes back to the United States, thus creating a lot of high-paying jobs, certainly shortening the supply chain and products like semi-conductor chips, pharmaceuticals, steel, ship building, etc., that are all crucial to our national defense and will once again be made domestically.
Regulations are going to be eased on the U.S. energy sector where exploration will be encouraged, and we will produce more energy (not just for domestic use, but to export as well) with the goal to be energy-independent, and to lower energy costs for the American people. When the cost of energy goes down, the cost of transportation goes down and thus the cost of everything that we buy in the store goes down as well. When the cost of the products that we buy in the store becomes lower, inflation will go down as well. And when inflation starts to abate, interest rates will fall too, making everything become more affordable.
At the moment, the stock market is not reacting well to the tariffs, and consumer confidence is up and down on any given day. There is uncertainty regarding the U.S. economy, but I am an optimist, and I am betting on the United State of America to solve these issues and to rise above them. As many have said, to make meaningful and lasting changes, and to attack our national debt, whether through tariffs, DOGE, etc., we are going to need to see short-term pain in order to have long-term gain for all of our futures.
Let’s hope that it works, so we can get off this roller coaster ride!
— By Sim Doughtie, president of King Industrial Realty Inc./CORFAC International. This article was originally published in the May 2025 issue of Southeast Real Estate Business.