On about 110 acres in Buford, an Atlanta developer plans what not long ago was almost unthinkable — a massive warehouse built on spec.
Four years ago, there was enough empty industrial and warehouse space along the I-85 corridor northeast of Atlanta up to Hall County to fill about dozen Perimeter Malls. But as the economy has slowly awakened and new development stopped, companies have started snapping up empty buildings. Vacancy has been cut by more than a third, and large blocks of space are getting harder to find.
Georgia — whether by sea, rail, freeway or its world’s busiest airport — is a logistics hub. Distribution and manufacturing-related jobs are critical to the economy.
Warehousing, transportation and manufacturing jobs are rising again after a recession-era swoon. In March Georgia added about 8,500 jobs in these sectors as the state’s unemployment rate improved by a tenth of a point to 7.0 percent.
Big players in those sectors aren’t just filling existing space, they’re also looking to build.
“The area is tight, there’s not a lot of existing product,” said Mike Irby, vice president of Taylor & Mathis, which plans two buildings in Buford, one of them speculative.
The financial collapse and resulting Great Recession didn’t just savage the housing market, retail centers and office towers, it also stymied the industrial real estate market as consumer spending evaporated and corporations pulled back on expansion plans.
In the first quarter of this year, companies filled nearly 5.6 million square feet of warehouse and manufacturing space, or more than half as much space as companies soaked up in all of 2013, according to data from real estate services firm CB Richard Ellis.
“Companies have cash and they are making investments again,” said Todd Barton, first vice president of industrial properties at commercial real estate services firm CB Richard Ellis in Atlanta. “We definitely have made the turn.”
Metro Atlanta’s glut of empty distribution and industrial space peaked in 2010 at more than 92 million square feet, or about 45 Perimeter Malls, according to data firm CoStar Group. That number is now about 69 million square feet, or a little more than 2007 levels, the year the recession started.
After three years – 2008, 2009 and 2010 – when more space was emptied than filled, three years of corporate expansions and improvements in consumer spending have started to fill those empty centers.
Metro Atlanta’s industrial base has long weighed heavily toward logistics and distribution. But the region has seen major jobs announcements and expansions in both logistics, including children’s retailer Carter’s, and manufacturing, with projects for Kubota and numerous auto suppliers.
The development wheels are definitely turning in the world of warehouse and manufacturing center development.
The civilian authority tasked with redeveloping Fort Gillem says it will soon take control of about half the 1,400-acre post, and is close to landing two tenants for major distribution facilities. The Atlanta Journal-Constitution previously reported that one of the prospective tenants could be Kroger, which has been scouting sites for a new distribution center.
Fulton County recent struck a deal with developer Majestic Realty for a nearly 300-acre warehouse development at the county's airport near I-20 at Fulton Industrial Boulevard. Majestic plans to lease the property and build nearly 3 million square feet of space in a $120 million project that county leaders hope will create hundreds of jobs.
Cushman & Wakefield, another large real estate firm, said first quarter “absorption” of empty space was “some of the strongest the Atlanta market has ever seen.”
Northeast Atlanta, the I-20 corridor west of the city and I-75 south of the city were the strongest markets.
Many data firms use different methodologies, and Cushman & Wakefield said the metro area filled 5.1 million square feet, and has about 45.6 million square feet of vacant space.
“The Atlanta market is finally seeing the activity we would expect in a full recovery,” Ray Stache, a senior director in Atlanta for the industrial practice of real estate services firm Cushman & Wakefield, said in a first quarter report.
Irby, with Taylor & Mathis, said there are plans to develop two buildings in Buford. One is a 262,000-square-foot building – aimed at serving the supply chain of some retailer or distributor – is one of the few proposed buildings along I-85 that will could come out of the ground without a tenant.
The other site will likely be larger and geared to the needs specific company, Irby said.
With little new space planned, and companies scouting the market, “All those factors have led to a real tightening in the northeast submarket,” he said.
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