Job growth, tightening office space and a relative lack of new development have helped rents for top-tier office towers within metro Atlanta grow at the fastest rate of any major metro in the country, a new report said Tuesday.
Asking rents in Class-A or trophy office towers have grown 27.3 percent since first quarter of 2014, according to real estate services firm JLL. Raleigh, N.C., and Oakland, Calif., were rounded out the Top Three U.S. cities.
A report last month by CBRE said the office vacancy rate in metro Atlanta hit an eight-year low in March.
Despite the spike in rents, asking prices in metro Atlanta – at $25.80 per square foot – remain below the national average.
Atlanta was left with a glut of office space following the financial collapse when several new speculative towers opened and companies slashed jobs.
But job growth has picked up after trailing the gains seen nationally, yet few speculative office towers – those built without a dedicated tenant – have been built. Three Alliance Center in Buckhead is underway and a few smaller towers have been pitched, but not started, in Midtown, near Cumberland Mall and Central Perimeter.
“Atlanta’s real estate market has entered the expansion phase of the cycle and the class A office sector has entered a “Landlords” market.” Mike Sivewright, JLL’s Atlanta region chief said in a news release. “With the rebound of the real estate market and little new office supply in the development pipeline asking rents are expected to continue to increase well beyond current levels, Atlanta’s trophy buildings remain largely occupied. As a result, many companies are looking to Class B space as their primary option.”