The Atlanta area saw some of the largest increases in office rents on a percentage basis in North America over the past two years, and one report said the region’s boom in high-tech jobs has played a role in that.
Metro Atlanta ranked third among the Top 30 tech markets in overall office rent growth, with rates increasing nearly 18 percent from the middle of 2015 to mid-2017, according to a report by CBRE Research.
The Atlanta area remains a affordable office market for corporate expansions, with average asking rents that are in the middle of the CBRE Tech-30 list. But as available space remains tight and relatively little new speculative office space is being built, at least compared to past economic expansions, rent growth has put the squeeze on some firms.
The Atlanta area added more than 8,000 high-tech jobs in 2015 and 2016, ranking 13th among top North American tech markets, the report said. On a percentage basis, the Atlanta area’s 12 percent growth rate in tech jobs ranked 22nd in the group of 30 tech cities identified by CBRE.
Atlanta office space long has been dominated by law firms, banks and other professional services firms. But that has begun to change.
“These [technology] tenants are helping to diversify the rent rolls of buildings historically dominated by professional service firms,” CBRE Senior Vice President Jeff Keppen, said in a news release. “This is leading to higher rents and higher occupancies but more importantly new energy and a culture conducive to attracting talent.”
The Atlanta area has seen a number of high-profile corporate expansions, including new software development centers and innovation labs, in the past few years.
These include expansions by Anthem, Sage Software, GE Digital and Honeywell.
In October 2016, Anthem announced plans to lease office space at Bank of America Plaza, the city’s tallest tower, and add 1,800 new jobs. Last month, the company said it would move into a new office tower to be built near Technology Square by Atlanta-based Portman.
The new 21-story tower, to open by 2020, will offer the company room for future expansion to 3,000 IT professionals, including contractor positions.
Travis Garland, the head of leasing at Portman, said in an interview in October that tech firms crave Midtown and proximity to Georgia Tech.
“It’s very important for companies to be as close as possible to Tech Square,” he said. The main selling point, he said, boils down to one thing.
“It’s talent,” he said.
According to CBRE, Midtown rents of $29.50 per square foot are about 18 percent more than the metro Atlanta average. Space in newer top-tier or Class A buildings often fetches far more. Midtown vacancy is about 14.8 percent compared to a regional average of 17.6 percent, the report said.
That crunch in available space comes as Atlanta and the state of Georgia pitch the region for Amazon for the e-commerce giant’s second headquarters campus. Amazon has said it wants a campus that equals its Seattle headquarters of 8 million square feet.
“HQ2,” as the project is known, is billed as a $5 billion project that could create 50,000 jobs.
State recruiters delivered a response to Amazon’s request for proposals with sites that include suburban and urban property. The state is said to have explored sites near existing buildings with available office space, as the company is said to require 500,000 square feet to 750,000 square feet immediately, and about that much in additional space every 18 months through 2027.
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