Atlanta office leasing slows as economic uncertainty meets tight supply

The Atlanta area continues to have a glut of unused office space, but the companies looking for the cream of the workspace crop are increasingly finding limited choices.

It’s turned high-end office districts like Midtown or along the Beltline into a fast-paced game of musical chairs where companies are vying for a select handful of open spaces.

“There’s only so many blocks, and there’s more users than blocks of space,” said Ellen Stern, an Atlanta-based senior vice president with real estate service firm CBRE.

Nearly a third of all office square footage remained available to rent at the end of June, according to CBRE. The overall pace of leasing has also slowed. But there’s a wide gap between luxury office properties, often called class A or trophy, and aging and less-opulent buildings called class B.

For the Class A variety, only 20% of space was available to rent at the end of June.

Average monthly rents for Midtown office space increased to $44.70 per square foot by the end of June, an 11% increase from the same time a year ago, according to CBRE data. Asking rents across the entire metro increased only 4% during that span, indicating prospective tenants are willing to pay more for the buildings they want in the neighborhoods they desire.

Compounding the competition is the lack of new office space being built. No new office buildings have finished construction in metro Atlanta so far this year, and about 474,000 square feet is currently being developed, a more-than-decade-long low, according to CBRE.

The Atlanta area continues to have a glut of unused office space, but the companies looking for the cream of the workspace crop are increasingly finding limited choices.

It’s turned high-end office districts like Midtown or along the Beltline into a fast-paced game of musical chairs where companies are vying for a select handful of open spaces.

“There’s only so many blocks, and there’s more users than blocks of space,” said Ellen Stern, an Atlanta-based senior vice president with real estate service firm CBRE.

Nearly a third of all office square footage remained available to rent at the end of June, according to CBRE. The overall pace of leasing has also slowed. But there’s a wide gap between luxury office properties, often called class A or trophy, and aging and less-opulent buildings called class B.

For the Class A variety, only 20% of space was available to rent at the end of June.

Average monthly rents for Midtown office space increased to $44.70 per square foot by the end of June, an 11% increase from the same time a year ago, according to CBRE data. Asking rents across the entire metro increased only 4% during that span, indicating prospective tenants are willing to pay more for the buildings they want in the neighborhoods they desire.

Compounding the competition is the lack of new office space being built. No new office buildings have finished construction in metro Atlanta so far this year, and about 474,000 square feet is currently being developed, a more-than-decade-long low, according to CBRE.