Metro area's industrial development still lagging

By Gertha Coffee

The Atlanta Journal-Constitution

The stockpile of empty industrial facilities in metro Atlanta was hardly dented this year, despite some recent large transactions.

Illinois-based Kraft Foods Co. inked a deal this month for a nearly 1 million-square-foot, warehouse and distribution facility  in south Fulton. That deal followed an earlier announcement by Dendreon Corp., a Seattle-based biotechnology company, that it will build a 155,000-square-foot plant in south Fulton.

But the companies are building new facilities,  so the deals won't take any vacant property off metro Atlanta's sluggish industrial market, which has lost more than 5 million square feet of industrial occupancy during the course of the economic downturn, according to Jones Lang LaSalle.

That includes 3.5 million square feet this year, the commercial real estate services company reported in its third quarter overview of the industrial sector.

It will take several quarters of improvement to translate into net new demand for industrial real estate, according to Jones Lang LaSalle, as businesses continue to cut back.

Although leading indicators like manufacturing and retail spending appear to be picking up, job creation and consumer confidence lag.

“Looking forward to 2010, the industrial market is probably going to have a little rougher recovery,” said Lanie Rea, research manager for Jones Lang LaSalle in Atlanta. “One of the problems is it’s very heavily manufacturing and construction-oriented. Since the start of the downturn, the construction industry has sort of dwindled away. Companies have gone bankrupt and severely downsized.

"In 2010, we will see stabilization as consumer confidence will start to come back and demand for product will grow," she said. "But how long that will take is anybody’s guess.”

Industrial property sales in Atlanta for the 12-month period ending Sept. 30, the most recent data available,  totaled $328 million vs. $1.3 billion for the prior 12-month period, according to LoopNet, an online commercial real estate listings service.

Statewide, Georgia Power has seen year-to-date industrial sales down 12.4 percent for the first three quarters of the year, compared with the same period in 2008, said spokeswoman Christy Ihrig.

"We're expecting 2010 will be better than this year," she said,"not booming, but better than the sales we got this year."