2nd Quarter 2018 Office Report

The first half of 2018 is setting a pace to outperform 2016.  Overall, new construction is a concern in some markets but most market participants are optimistic about the balance of 2018 for the metro Atlanta office market.  Below is a quick summary of the 2018 Quarter Two Metro Atlanta Office Market stats as compiled by Crossroads Appraisal Group from information obtained from CoStar.

If you would like a PDF version of the information below, it is available here for your convenience.

SUPPLY

A total of 16,408 office buildings were identified in metro Atlanta housing about 312.3 million square feet.  Supply has been increasing each year since 2012 in terms of square feet with number of buildings declining in 2015 and 2016 as a result of redevelopment projects.  However, the first half of 2018 has seen a significant increase in new buildings delivered.

VACANCY TRENDS

Vacancy rates trended down from 2012 to 2015 and has since flattened out.  The stabilization of the vacancy rate is more a result of new construction and not a market slow down.

ABSORPTION, DELIVERIES & UNDER CONSTRUCTION

However, of slight concern is the fact that construction began outpacing absorption in 2016, which is a trend that has continued into 2018.

TRANSACTION VOLUME

Sales activity in the market has generally trended up with 2016 recording the six year high.  Volume pulled back in 2017, but was still the second highest of the past six years.  2018 is currently on pace to be the second highest year of the data set.

VALUATION HISTORY

Values generally trended upward from 2012 to 2016, while cap rates were compressing. 2017 recorded a slight pullback in values, but the first half of 2018 has seen a rebound exceeding 2016 values.

RENT TRENDS

Rents have been trending positive since 2013 and continue to grow despite the new construction.

CONCLUSION

The post recession high in most of the performance indicators for the metro Atlanta office market was in 2016 with 2017 still strong but indicating a slight cooling off as cap rates increased and values declined.  However, the first half of 2018 is setting a pace to outperform 2016.  Overall, new construction is a concern in some markets but most market participants are optimistic about the balance of 2018 for the metro Atlanta office market.

Has there ever been a time when you wish you had access to a commercial appraiser?  Perhaps a time when a deal was falling apart because of what you considered a bad appraisal and you were not sure what to do next.  We have a solution, we would like to invite you to join our Facebook group “Atlanta Commercial Appraisers For Investors & Brokers” where you will have access to several of Atlanta’s top commercial appraisers who are ready and willing to answer appraisal and or other market related questions.  In the group, we will be sharing quarterly market reports similar to the one above, keeping you up to date on the changes in the appraisal industry that directly impacts you and providing guidance and advice on items such as how to challenge a bad appraisal.  This is an open forum for you to get your questions answered and facilitate your ability to close deals.  (Click here to join our group)

Looking forward to interacting with you in the Group!

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