Demand for Atlanta office space remains low

Leasing demand for office space in metro Atlanta was dismal in the first quarter of 2009, and the situation will grow worse as new office towers in Buckhead and Midtown open in an already glutted market, analysts said Thursday.

“Mostly what we’re seeing is renewals, no new leasing,” said Scott Amoson, director of research for Atlanta-based Colliers Spectrum Cauble, a commercial real estate brokerage firm. “Companies looking to pull the trigger on new deals are waiting until the market gets into a better position. Right now, it’s an oxymoron, since they could get good deals.”

Metro Atlanta’s overall 17 percent office vacancy rate was basically flat from the end of last year. But it is up 1.1 percent compared with the same quarter last year, according to the first-quarter 2009 Market Report released Thursday by Colliers.

A full office market recovery for metro Atlanta won’t begin until early 2010, although leasing activity is expected to pick up by the end of this year, Colliers reported.

Massive job losses continue to impact office vacancies nationwide, according to a report by Jones Lang LaSalle. Nationally, vacancies closed the first quarter of 2009 at 16.5 percent, up from the first-quarter 2008 level of 12.8 percent.

Markets that ended the quarter with vacancy levels higher than the national rate included West Palm Beach, Dallas, Detroit, Jacksonville, New Jersey, Cleveland and Atlanta, among several other markets, the report said.

Lanie Rea, research manager at Jones Lang LaSalle in Atlanta, said companies are hesitant to commit in the current economic climate.

“Even though the first quarter may not look that good,” she said Thursday, “Atlanta has been through this before. The market is resilient. It may take a little bit, but we will bounce back. But whether that happens next quarter or a year from now is what is hard to pinpoint.”

For the second consecutive quarter, Atlanta’s industrial market also saw a number of tenants leave, Colliers reported. Industrial vacancies hit 12.8 percent, the report said, and likely will peak at 13 percent before the economy begins to recover.