Costco Wholesale recently purchased land in bulk on Atlanta’s Southside.
The membership-only box store paid $40 million in late July to acquire 33 acres along Roosevelt Highway, according to Fulton County property records. The land, which straddles the city limits of both Union City and the city of South Fulton, is near an existing Costco distribution center at 4250 South Fulton Parkway.
It’s unclear what Costco plans to do with the property, which is currently a mix of vacant land and truck parking lots owned by an affiliate of Atlanta-based developer TPA Group. Neither company immediately responded to a request for comment from The Atlanta Journal-Constitution. Costco’s website says it will only comment on locations that will open within three months.
The sale, which was first reported by the Atlanta Business Chronicle, comes at a time when metro Atlanta’s industrial sector is beginning to cool after years of record-setting activity. Nearly every metric — from leasing activity to project deliveries — softened during this year’s second quarter, according to real estate firm CBRE.
The firm’s analysts, however, said the slowdown in industrial leasing and construction is not a reflection of Atlanta’s demand for warehouse space beginning to decline. Instead, it’s the effects of an uncertain economy and high interest rates, prompting companies to slow their pace.
“Headwinds related to economic uncertainty have begun to affect certain industrial fundamentals in Atlanta,” CBRE said in second-quarter industrial report. “The market, however, is poised for a quick rebound when conditions improve.”
The region surrounding the Atlanta airport remains one of the city’s industrial powerhouses. At the end of June, only 3% of warehouse space near the airport was vacant. Metro Atlanta’s overall industrial vacancy rate has held steady at 4.5%, which is a near-record low, according to CBRE.
By contrast, nearly a third of Atlanta’s office space was either vacant or listed as available for sublease at the end of June, a record high.
Atlanta’s industrial market has been on a tear for years, peaking in 2021 with a record-breaking 34.5 million square feet of positive absorption, meaning more space was leased than vacated, according to CBRE. That figure dipped to 23.7 million square feet last year and is on track to decrease again this year — about 6.7 million square feet had been absorbed by midyear.
Sublease activity, where a tenant leases out unwanted space to another company at a discount, saw its largest-ever increase during the first half of the year in metro Atlanta. It increased 66% from the first quarter to the second quarter, CBRE found. Despite that, average annual rental rates for industrial space continued to increase, reaching a new high of $7.19 per square foot — a 4% increase from the prior quarter.
Costco, which operates 17 wholesale stores across Georgia, has been steadily growing its footprint. The Issaquah, Washington-based company has grown into the third-largest global retailer behind Walmart and Amazon and currently averages 23 new locations each year.
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