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Atlanta Office Market Shows Signs of Recovery

The Atlanta office market is experiencing a revitalization with increased leasing activity.

News Summary

The Atlanta office market is rebounding, showing signs of recovery with a notable increase in leasing activity, reaching 2.4 million square feet in Q4 2024. Major corporations are signing new leases, leading to optimism despite a high vacancy rate. The ongoing trend of return-to-office mandates from firms like JPMorgan and Amazon may further boost occupancy rates. Forecasts for 2025 suggest even more significant deals ahead, showcasing Atlanta’s potential as a thriving business hub, though challenges in the construction sector remain.

Atlanta Office Market Shows Signs of Recovery

Atlanta is buzzing with news as the office market demonstrates signs of recovery following a challenging period. By the end of 2024, it seems the market may have hit its lowest point, which is a relief to many hoping for stability. It appears that businesses are slowly rediscovering the value of in-person work, leading to an uptick in leasing activity.

Leasing Activity on the Rise

The fourth quarter of 2024 painted a vibrant picture for the Atlanta office market, with leasing activity reaching an impressive 2.4 million square feet. This marks an 18% increase from the previous quarter. The total leasing activity for the entire year reached nearly 10 million square feet, the highest the market has seen in five years. It’s wonderful to see a city like Atlanta revitalizing its office spaces!

AIG made headlines with a major lease of 179,000 square feet at Perimeter Summit, leading the surge in leasing activity. This was not just a one-off; companies are increasingly signing new leases and expanding their spaces. In fact, nearly two-thirds of the leases signed in the last quarter were fresh agreements and expansions, showcasing an undeniable shift toward investment in office space.

Major Lease Signings

Among the notable deals, Eversheds Sutherland secured a 94,000 square foot lease at Bank of America Plaza, making it one of the largest leases of the quarter. SouthState Corp. also joined the wave with a substantial lease of 87,000 square feet at Prominence Tower in Buckhead. These transactions signal a cautious but optimistic future for office occupancy rates.

Market Trends and Predictions

Despite the current vacancy rate being around 33%, which is a record for Atlanta, experts are optimistic. They suggest that as more companies implement return-to-office mandates, absorption rates might increase over the next couple of years. Additionally, the number of companies touring office spaces in Metro Atlanta is exceeding the national average, indicating a healthy interest in new leases.

Furthermore, well-known corporations like JPMorgan Chase, Amazon, AT&T, and UPS are now requiring employees to return to work five days a week. Small to mid-sized companies are also following suit, further contributing to the momentum building in the office market.

The Construction Landscape

While the recovery is apparent, we still see challenges in the construction sector. Activity levels are at their lowest since 2011, with only 2 million square feet of new office space opened last year, and over 80% of that space remaining unoccupied. Despite this, Atlanta has been recognized as the No. 3 city for headquarters relocations, showcasing its overall appeal as a business hub.

What Does the Future Hold?

Looking ahead, forecasts for 2025 indicate that we can expect more significant office deals, spurred by new companies entering the market and continued return-to-office initiatives. The first half of 2025 saw five office leases, with a combined total of 752,300 square feet — the highest since before the pandemic. A notable mention is Atlanta Gas Light, which signed the largest lease of the first half, totaling 264,300 square feet.

As exciting as this recovery sounds, brokers remind us to temper our enthusiasm, as it’s still early to declare a full recovery despite these promising trends. The market is definitely on the mend, but it will take time to see how these indicators translate into sustained growth.