What area is your expertise?
Atlanta industrial
What trends do you see presently in industrial development in your area?
Spec developments has slowed given uncertain economic conditions. Spec space to be delivered this year is 4.9 million square feet, down about half from this time last year. Almost all new development is bulk warehouse of 400,000+ square feet.
What type of industrial product is doing well in your area?
The bulk market has been active. Distribution is stable.
Who are the active industrial developers in your area?
DCT Industrial, First Industrial Realty Trust, Duke Realty Corp., Majestic Realty Co., IDI, Raco, Panattoni Development Co., John W. Rooker and Associates, Robert Pattillo Properties, McDonald Development, Jadow Realty and M.D. Hodges.
Please name one or two significant industrial developments in your area. What impact will these projects have on the market?
IDI’s newly planned Meridian 75 Logistics Center is a 200 acre park along Interstate 75 near Macon. The park will accommodate 3 million square feet when completed and Majestics Airport Center III where the developer has started 4 buildings including a 600,000-square-foot bulk warehouse.
Where is the majority of development taking place? Why is this area doing well?
Northeast and Airport submarkets — Both submarkets are well located to the Interstate systems for full distribution coverage to the Southeast.
What area do you expect to be the next big industrial development market? Why?
I-85 north to the South Carolina state line. Availability of sites, Interstate and infrastructure availability and a solid labor force.
Please describe the industrial leasing activity in your area.
First quarter 2008 absorption was just over 900,000 square feet, which is modest compared to recent years.
Please describe the industrial sales activity in your area.
Investment sales have slowed amid economic uncertainty and reluctance of lenders to commit to debt placement.
Please give a measure of industrial vacancy rates and a measure of available sublease space.
Industrial vacancy is 15.2 percent with an additional 1.3 percent available for sublease. The metro-Atlanta Industrial Market is 450 million square feet.
What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year?
The spread required by lenders over the government indexes have spread to a point that will slow investment activity. Interest rates should stabilize given the Fed’s recent reductions.
What industries do you expect to expand in the next year to absorb a great deal of industrial space?
Retailers and those firms importing product through the port of Savannah will continue to expand their logistics network in Atlanta to serve the Southeast.
Would you like to make any additional observations about the industrial market in your area?
We are cautiously optimistic that there will be positive absorption for the remainder of the year and that average rental rates will climb slightly as construction pricing continues to increase for new product.
Submitted by D. Michael Chambers, senior vice president with the Atlanta office of NAI Brannen Goddard. Posted 04/08/08.
D. Mike Chambers