YEAR-END 2012 | INDUSTRIAL
ATLANTA
MARKET REPORT
Second Consecutive Year of Industrial Gains in Atlanta
Updated May 2012
MARKET INDICATORS Projected
Q4 2012
Q1 2013
—
—
VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE
—
CAP RATES
Following its best year since before the Great Recession, the Atlanta industrial market showed solid gains yet again in 2012, and enjoyed a second consecutive year with over 6 million square feet of existing vacancies filled. This year’s industrial absorption of 7.4 million square feet almost matched 2011, but fell slightly short. Still, two successive years of strong absorption defines the extent of Atlanta’s industrial market recovery. Activity in 2012 was the product of numerous factors, none more meaningful than strong demand from large consumer product companies, as well as the expansion of third-party logistics firms in the metro area and the growth of small businesses. In addition, the Atlanta area has begun to experience a manufacturing renaissance in the areas of bioscience/pharmaceuticals, automotive parts and heavy equipment thanks to expansions and announcements this year by Baxter Pharmaceuticals, Toyota Industries, Kubota Corporation and Caterpillar Inc. The impact these successes will have on the Atlanta industrial market is extensive. Some of the biggest move-ins and lease transactions of 2012 came from large consumer product companies. Home Depot, Carter’s and Owens Corning were the three largest industrial transactions of 2012; all three committing to over 1 million square feet. In the cases of Home Depot and Carter’s, these requirements originated from the companies’ growing e-commerce business and the need for each to better serve this segment of their business. The expansion of third-party logistics firms also contributed a significant amount of positive absorption to the industrial market. New Breed Logistics, HK Logistics, TranSouth Logistics and UTI Worldwide each expanded operations in the Atlanta area this year as supply chain optimization has become a modern requirement. Lastly, the growth of small businesses in Atlanta over the past couple of years has played a beneficial role to the overall health of the industrial market. Considered “bread and butter” transactions, these tenants, ranging between 20,000 to 80,000 square feet, have incrementally contributed to the increase in occupancy levels throughout the year. Many consider the return and growth of these types of transactions as a measure to local economic conditions. continued on page 2
UPDATE $4.00 $4.00
$3.75 $3.75
$3.50 $3.50
30,000,000
16%
25,000,000
14%
www.colliers.com/atlanta
6%
5,000,000
4% 2%
$2.50 $2.50
2012
2011
2010
2009
2008
2007
2006
(5,000,000)
2005
0 2004
2012 2012
Bulk Warehouse*
8%
10,000,000
2003
Market AVG
2011 2011
2010 2010
2009 2009
$2.75 $2.75
10%
15,000,000
Square Feet
$3.00 $3.00
12%
20,000,000
$3.25 $3.25
*Bulk warehouse defined as warehouse space in excess of 100,000 SF with dock loading and minimum ceiling heights of 24 ft.
ATLANTA INDUSTRIAL
NEW SUPPLY, ABSORPTION AND VACANCY RATES
Atlanta Rental Rates Overall Market & Bulk Warehouse* (per sq. ft.)
(10,000,000)
0% -2% -4%
Absorption
Deliveries
Vacancy %
Atlanta’s industrial market absorbed 7.4 million square feet in 2012. The overall industrial vacancy rate decreased yet again in the fourth quarter and is now at 12.4%. There were no fourth quarter industrial deliveries. Almost 1.4 million square feet delivered in 2012. Construction activity increased to almost 4.5 million square feet. Atlanta’s total industrial inventory now stands at 609 million sq. ft.
MARKET REPORT | YEAR-END 2012 | INDUSTRIAL | ATLANTA
DEFINITIONS Absorption (Net)-The net change in occupied space over a given period of time, calculated by summing all the positive changes in occupancy and subtracting all the negative changes in occupancy.
Vacancy Rate-A percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Bulk Warehouse-A type of building designed to be used for bulk storage or materials, distribution or heavy manufacturing. Typically has a small amount of office space, ceiling heights of 24’ and bay depths of over 190’. Shallow-Bay Distribution-A type of building designed to be used for the distribution of materials or as a medium-sized manufacturing facility. Typically has 10%-30% of office, ceiling heights of 18’-24’ and bay depths of 120’-190’. Flex-A type of building designed to be versatile, which may be used in combination with office, R&D, quasi-retail sales and industrial warehouse and distribution uses. Typically has at least 50% office and ceiling heights under 18’.
Atlanta’s industrial market is poised to maintain its current course in 2013. Demand for industrial space remains elevated and continues to be driven primarily by manufacturing, third-party logistics and consumer product companies. With exception to a couple of speculative buildings under construction, new supply remains in check as well. Despite this, the Atlanta industrial market could see a slight uptick in vacancy at the beginning of the year due in part to the aforementioned spec industrial buildings coming online and also because of a slowdown of industrial leasing on the back end of 2012. Leasing activity dropped by approximately 35% in the latter half of the year due to uncertainty surrounding the economy. The effects of this slowdown will restrain absorption levels in the next couple of quarters. Going forward, the departure of some uncertainty will allow companies to focus their decision-making on new industrial requirements in the metro area. As higher absorption levels kick back in, overall vacancy should continue trending downwards. Another positive year of occupancy gains and increased leasing activity is expected for Atlanta’s industrial market in 2013.
VACANCY & AVAILABILITY
ABSORPTION & LEASING ACTIVITY
•
Atlanta’s industrial rate dropped for the sixth consecutive quarter, finishing the year at 12.4%. This a full 100 basis points down from year-end 2011.
•
Industrial absorption finished the year slightly below 2011. The total occupancy gain in 2012 was 7.4 million square feet.
•
The Northeast Atlanta industrial submarket saw the largest amount of vacant space filled this year; just over 4 million square feet
•
Northeast Atlanta accounted for 60% of this year’s absorption. The submarket’s largest move-ins were Carter’s and Bed, Bath & Beyond.
•
•
Industrial vacancy is expected to increase at the beginning of 2013 due to new deliveries and restrained leasing activity at the end of 2012.
Industrial absorption and leasing are expected to remain solid in 2013. The latter half of the year will be more robust than the first half as traction picks up on the largest requirements.
YEAR-END 2012 | Vacant Space By Type
YEAR-END 2012 | Net Absorption by Submarket
Shallow-Bay
Flex
(1,000,000)
CENTRAL ATLANTA
CHATTAHOOCHEE
STONE MOUNTAIN
NORTH CENTRAL
SNAPFINGER | I-20E
1,000,000
0
Warehouse
| COLLIERS INTERNATIONAL
2,000,000
SOUTH ATLANTA
FLEX 9,973,604 SF VCY RATE = 17.4%
Build-To-Suit-A term describing property that was developed specifically for a certain tenant to occupy. Can be either leased or owned by tenant.
P. 2
3,000,000
SHALLOW-BAY 9,864,641 SF VCY RATE = 12.9%
I-20W | FULTON IND
WAREHOUSE 55,689,978 SF VCY RATE = 11.7%
NORTHEAST ATLANTA
4,000,000
Square Feet
footage that is committed to and signed for under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity for buildings under construction or planned.
NORTHWEST ATLANTA
5,000,000
Leasing Activity-The volume of square
MARKET REPORT | YEAR-END 2012 | INDUSTRIAL | ATLANTA
UPDATE Largest Transactions (individual assets) in the Market for 2012 SALES ACTIVITY PROPERTY
SUBMARKET
SALES DATE
SALE PRICE
SIZE SF
PRICE / SF
BUYER
335 Greenwood Pl.
South Atlanta Ind
10/11/2012
$48,400,000
1,248,346
$38.77
USAA Real Estate
195 King Mill Rd.
South Atlanta Ind
6/22/2012
$43,500,000
1,505,000
$28.90
The Blackstone Group
1090 Broadway
Northeast Atlanta Ind
8/8/2012
$42,500,000
807,990
$52.60
UBS Realty Investors
747 Douglas Hill Rd.
I-20 West/Fulton Ind
4/30/2012
$40,000,000
913,000
$43.81
LaSalle Investment Mgmt.
8095 McLarin Rd.
South Altanta Ind
10/11/2012
$38,150,000
1,044,288
$36.53
USAA Real Estate
Jackson 85 DC - Bldg. E
Northeast Atlanta Ind
8/16/2012
$30,825,000
1,004,400
$30.69
Hillwood Investment Prop.
Jackson 85 DC - Bldg. F
Northeast Atlanta Ind
8/10/2012
$29,750,000
772,000
$38.54
Exeter Property Group
490 Westridge Pkwy.
South Atlanta Ind
8/30/2012
$28,985,000
900,640
$32.18
Koch Industries
1655 Roberts Blvd.
Northwest Atlanta Ind
12/26/2012
$27,225,000
198,200
$137.36
H.N. & Frances Berger Found.
Hartman V - 7545 Hartman
I-20 West/Fulton Ind
6/27/2012
$26,350,000
569,673
$46.23
Duke Realty
LEASING ACTIVITY PROPERTY
SUBMARKET
TENANT
LANDLORD
SIZE SF
TYPE
ProLogis Park I-75
South Atlanta Ind
Home Depot
ProLogis
1,118,508
Build-To-Suit
625 Braselton Pkwy-Bldg A
Northeast Atlanta Ind
Carter’s
Duke Realty
1,061,663
Distribution Lease
8095 McLarin Rd.
South Atlanta Ind
Owens Corning
ProLogis
1,044,288
Warehouse Lease
Stanton Springs Ind Park
Snapfinger/I-20 East
Baxter Pharmaceutical
TPA Realty Services
1,000,000+
New Manufacturing Plant
493 Westridge Pkwy.
South Atlanta Ind
Georgia-Pacific
Panattoni
900,640
Build-To-Suit
Majestic Airport Ctr. II- #4
South Atlanta Ind
Del Monte
Majestic Realty
780,000
Warehouse Renewal
2530 Wayne Poultry Rd.
Northeast Atlanta Ind
Toyota Industries
Toyota
598,800
Manufacturing Plant Expansion
1340 Satellite Blvd.
Northeast Atlanta Ind
Mitsubishi
IDI
559,407
Build-To-Suit
3060 SouthPark Blvd.
South Atlanta Ind
Jacobson Warehouse
First Industrial
498,258
Warehouse Renewal & Expansion
7700 Spence Rd.
South Atlanta Ind
Toto Plumbing
MD Hodges
498,050
Warehouse Renewal
HISTORICAL LEASING ACTIVITY & AVERAGE CAP RATES
45,000,000
12%
40,000,000
10%
Square Feet
35,000,000
8%
30,000,000 25,000,000
6%
20,000,000
4%
15,000,000 10,000,000
2%
5,000,000
0%
Total Leasing Activity SF
P. 3
| COLLIERS INTERNATIONAL
AVG Cap Rate %
2012
2011
2010
2009
2008
2007
2006
2005
0
MARKET REPORT | YEAR-END 2012 | INDUSTRIAL | ATLANTA
UPDATE
Market Comparisons
VACANCY
BLDGS
EXISTING PROPERTIES TOTAL SF
DIRECT VCY %
CENTRAL ATLANTA IND. Flex 95 36 Shallow-Bay Warehouse 255 Total 386
2,822,083 1,256,858 11,654,653 15,733,594
10.6% 8.5% 13.4% 12.5%
0.1% 0.0%
CHATTAHOOCHEE IND. Flex 111 27 Shallow-Bay Warehouse 359 Total 497
2,698,657 862,949 17,701,348 21,262,954
10.4% 2.3% 8.2% 8.2%
I-20 W / FULTON IND. Flex 98 Shallow-Bay 218 Warehouse 774 Total 1,090
3,063,527 12,773,329 74,917,904 90,754,760
NEW SUPPLY YTD SF
RENT
UNDER CONSTR SF
AVG RENT (NNN)
NET ABSORP CURR SF
NET ABSORP YTD SF
301,151 107,090 1,565,558 1,973,799
10.7% 8.5% 13.4% 12.5%
8.5% 8.5% 12.8% 11.7%
(62,500) (69,235) (131,735)
(28,003) (12,780) (384,310) (425,093)
-
-
-
$10.37 $2.33 $3.47 $4.40
0.3% 0.2%
279,849 20,000 1,504,693 1,804,542
10.4% 2.3% 8.5% 8.5%
10.9% 2.3% 8.5% 8.5%
13,646 (729) 12,917
(10,628) 92,870 (86,393) (4,151)
-
-
-
$7.86 $4.00 $4.20 $4.81
14.2% 12.0% 13.2% 13.0%
0.1% 0.3% 0.2%
434,248 1,540,601 10,078,031 12,052,880
14.2% 12.1% 13.5% 13.3%
15.4% 14.7% 13.6% 13.8%
37,791 335,411 92,198 465,400
-
-
NORTH CENTRAL ATLANTA IND. Flex 252 8,494,501 Shallow-Bay 116 4,686,153 Warehouse 399 15,223,109 Total 767 28,403,763
22.2% 10.3% 9.4% 13.4%
0.1% 0.0%
1,888,722 480,622 1,432,898 3,802,242
22.2% 10.3% 9.4% 13.4%
21.9% 10.4% 10.2% 13.7%
(27,302) 7,518 121,349 101,565
(33,810) (94,585) 179,921 51,526
-
-
NORTHEAST ATLANTA IND. Flex 646 18,704,570 Shallow-Bay 461 22,978,506 Warehouse 1,670 129,843,284 Total 2,777 171,526,360
20.4% 12.0% 10.0% 11.4%
0.7% 0.1% 0.2% 0.2%
3,947,282 2,797,995 13,186,561 19,931,838
21.1% 12.2% 10.2% 11.6%
21.1% 13.1% 10.6% 12.1%
(5,182) 223,409 617,328 835,555
(117,676) 335,583 4,190,271 4,408,178
-
NORTHWEST ATLANTA IND. Flex 306 9,954,243 214 9,206,110 Shallow-Bay Warehouse 820 42,687,794 Total 1,340 61,848,147
14.6% 12.7% 11.1% 11.9%
1.0% 0.1% 0.3%
1,556,558 1,172,383 4,775,101 7,504,042
15.6% 12.7% 11.2% 12.1%
14.4% 13.3% 11.1% 12.0%
(119,027) 52,538 (42,018) (108,507)
(190,326) 213,073 1,140,393 1,163,140
-
-
-
$8.40 $3.48 $3.90 $4.23
SNAPFINGER / I-20 EAST IND. Flex 119 2,950,345 103 4,702,223 Shallow-Bay Warehouse 436 37,018,207 Total 658 44,670,775
6.0% 9.2% 10.2% 9.8%
177,737 434,390 3,759,811 4,371,938
6.0% 9.2% 10.2% 9.8%
6.5% 9.3% 10.4% 10.0%
13,600 2,605 98,258 114,463
36,928 192,980 236,818 466,726
-
-
-
$7.16 $2.95 $3.03 $3.11
SOUTH ATLANTA IND. Flex 233 214 Shallow-Bay Warehouse 1,186 Total 1,633
5,375,457 13,316,216 129,033,830 147,725,503
11.2% 17.5% 12.4% 12.8%
0.1% 1.3% 1.2%
603,132 2,338,428 17,745,394 20,686,954
11.2% 17.6% 13.8% 14.0%
9.4% 19.1% 14.0% 14.3%
(97,692) 208,548 341,298 452,154
(161,826) 374,175 74,881 287,230
-
STONE MOUNTAIN IND. Flex 135 164 Shallow-Bay Warehouse 314 Total 613
3,415,553 6,910,645 16,361,494 26,687,692
22.4% 14.1% 10.0% 12.7%
0.6% 0.1%
784,925 973,132 1,641,931 3,399,988
23.0% 14.1% 10.0% 12.7%
23.8% 14.5% 10.0% 12.9%
29,248 30,780 (10,623) 49,405
(14,469) 2,606 44,835 32,972
-
ATLANTA MARKET GRAND TOTAL Flex 1,995 57,478,936 1,553 76,692,989 Shallow-Bay Warehouse 6,213 474,441,623 Total 9,761 608,613,548
16.9% 12.8% 11.3% 12.0%
0.5% 0.1% 0.5% 0.4%
9,973,604 9,864,641 55,689,978 75,528,223
17.4% 12.9% 11.7% 12.4%
17.0% 14.0% 12.0% 12.7%
(217,418) 860,809 1,147,826 1,791,217
(473,012) 1,352,099 6,521,746 7,400,833
-
0.4% 0.5% 0.5% 0.5% 0.5%
75,528,223 77,319,440 78,500,446 80,558,409 81,530,914
12.4% 12.7% 12.9% 13.3% 13.4%
12.7% 12.9% 13.3% 13.4% 13.7%
1,791,217 2,336,646 2,272,963 1,000,007 1,846,015
7,400,833 5,609,616 3,272,970 1,000,007 8,841,047
46,798 248,177 1,125,330 1,420,305
NEW SUPPLY CURR SF
U/C
VCY PRIOR %
-
TOTAL VCY SF
DELIVERIES
VCY CURR %
PROP TYPE
SUB VCY %
ABSORPTION
27,502 310,000 337,502
1,060,640 1,060,640
-
653,484 653,484
-
1,899,586 1,899,586
1,968,508 1,968,508
-
$6.05 $2.56 $2.88 $2.91
$9.48 $6.02 $4.50 $6.38
$6.31 $4.00 $3.26 $3.60
$8.65 $3.23 $2.77 $2.86
$4.94 $3.40 $3.17 $3.37
27,502 1,370,640 1,398,142
4,521,578 4,521,578
$7.40 $3.47 $3.11 $3.40
1,398,142 1,398,142 242,502 27,502 2,216,998
4,521,578 3,792,925 2,368,531 1,930,047 242,502
$3.40 $3.39 $3.45 $3.44 $3.51
QUARTERLY COMPARISONS AND TOTALS
QUARTERLY COMPARISON AND TOTALS Q4-12 9,761 608,613,548 Q3-12 9,761 608,613,548 Q2-12 9,758 607,457,908 Q1-12 9,757 607,242,908 Q4-11 9,756 607,215,406
12.0% 12.2% 12.5% 12.8% 13.0%
NOTE: STATISTICAL SET INCLUDES ALL INDUSTRIAL PROPERTIES 10,000 SF AND UP, EXCLUDING HEAVY MANUFACTURING PROPERTIES. WHILE COSTAR ATTEMPTS TO PROVIDE THE MOST ACCURATE DATA AT THE END OF EVERY QUARTER, REVISIONS ARE MADE THROUGHOUT THE YEAR ACCOUNTING FOR DISCREPANCIES IN PAST REPORTING.
1,155,640 215,000 27,502 114,769
SOURCE: COSTAR PROPERTY, COLLIERS RESEARCH
COLLIERS INTERNATIONAL |
P. 4
MARKET REPORT | YEAR-END 2012 | INDUSTRIAL | ATLANTA
CONSTRUCTION
RENTAL RATES
•
Around 1.4 million square feet of industrial space delivered in 2012. The largest addition was Georgia-Pacific’s 900,640 SF build-to-suit in South Atlanta.
•
Construction levels are expected to increase in 2013 with build-to-suits remaining the projects of choice. There are, however, a handful of developers looking to take advantage of the positive market activity and move forward on spec construction projects.
•
Average rental rates held steady from last quarter at $3.40/sf NNN. This rate is down $0.11/sf from the end of 2011.
•
The trend going forward shows rental rates firming up, yet still remaining a tenant’s market.
522 offices in 61 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118
INVESTMENT & SALES ACTIVITY Industrial investment activity in 2012 was the strongest it has been in five years. Around $943 million in sales volume took place.
•
•
CONSTRUCTION ACTIVITY (100,000 SF+) PROPERTY ADDRESS
$1.8 billion in annual revenue
• Over 2.5 billion square feet under
SUBMARKET
SIZE (SF)
DELIVERY DATE
management • Over 12,000 professionals
Home Depot BTS - ProLogis Park 75
South Atlanta Ind
1,118,508
Second Quarter 2013
600 Riverside Pkwy.
I-20 West/Fulton Ind
653,484
First Quarter 2013
Toyota - 2530 Wayne Poultry Rd.
Northeast Atlanta Ind
598,800
Second Quarter 2013
UNITED STATES: Atlanta Caldwell Zimmerman Executive VP | Colliers Manager Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 888 9000 FAX +1 404 870 2845
Mitsubishi BTS - 1340 Satellite Blvd.
Northeast Atlanta Ind
559,407
First Quarter 2013
Kubota - 1001 McClure Industrial
Northeast Atlanta Ind
500,000
Third Quarter 2013
7300 Oakley Industrial Blvd.-A100
South Atlanta Ind
353,400
Second Quarter 2013
PPG BTS - 7795 A Spence Rd.
South Atlanta Ind
285,600
First Quarter 2013
Kuehne + Nagel - Camp Creek BP
South Atlanta Ind
211,000
Second Quarter 2013
874 Thomas Pkwy.
Northeast Atlanta Ind
141,289
First Quarter 2013
Canton GAINESVILLE Cumming
CHEROKEE CO. F FULTON CO. F FORSYTH CO.
Allatona Lake
son
Lake Lanier
Woodstock
FO RS FU
Mountain Park
CHEROKEE CO.
Acworth
H YT O LT
OW CO.
N
Alpharetta
CO . CO .
Brase
NORTHEAST ATLANTA
e hooch e tac
Cha t
PAULDING CO. COBB CO.
NORTHWEST ATLANTA
INDUSTRIAL SUBMARKETS
Buford
HA GW INN LL CO . ETT CO .
Sugar Hill
NORTH CENTRAL ATLANTA
Rive r
BARTOW CO. CHEROKEE CO.
ersville
Roswell
Duluth
316 CO BB FU LT CO O . N CO .
MARIETTA
Lawrenceville DORAVILLE Norcross
CHAMBLEE SMYRNA
DECATUR Avondale Estates
oo
SNAPFINGER I-20 EAST
att
h ac
ATLANTA
e
CO .
r
R iv
ch e
glasville
Ch
EAST POINT COLLEGE PARK HAPEVILLE
DEKALB HENRY
Hartsfield-Jackson International Airport
CLAYTON CO.
Union City Fairburn
FULTON CO. COWETA CO.
Palmetto
. ON CO FULT CO. TTE FAYE
675
CO. CO.
W AL TO N
CO .
Lithonia
Conyers Covington RO C NE KDA WT LE ON CO CO . .
I-20 WEST / FULTON INDUSTRIAL
Snellville
STONE MOUNTAIN Stone Clarkston INDUSTRIAL Mountain
DE KALB RO CO CK . DA LE CO .
COBB CO. DOUGLAS CO.
GW IN DE NE KA TT LB C CO O. .
CENTRAL ATLANTA
G W IN NE TT
CHATTAHOOCHEE INDUSTRIAL
Austell
e
PAULDING CO.
DEKALB CO. FULTON CO.
Powder Springs
FOREST PARK Riverdale
Stockbridge
SOUTH ATLANTA Jonesboro
McDonough
nan
BU TT S
CO .
HENRY CO. CLAYTON CO.
Fayetteville
The Atlanta industrial market consists of nine submarkets. They include Central Atlanta, Chattahoochee Industrial, I-20 West/Fulton Industrial, North Central Atlanta, Northeast Atlanta, Northwest Atlanta, Snapfinger/I-20 East, South Atlanta and Stone Mountain Industrial. The major interstates in the region include: I-75, I-85, I-285, I-575, I-985, I-675 and I-20. Georgia 400 and US 316 also play important roles to Atlanta’s transportation system.
RESEARCHER: Atlanta Scott Amoson Vice President | Director of Research Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 877 9286 FAX +1 404 870 2845 This market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International-Atlanta, Inc., and certain of its subsidiaries, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 520 offices throughout 62 countries worldwide.
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