Atlanta at Forefront of North American Industrial Growth

Christa DiLalo • 2/18/2020
Over the next couple years, the industrial market – both nationally and in Atlanta – will remain one of the leading product types to watch, according to Cushman & Wakefield’s 2020 North American Industrial Outlook.

Metro Atlanta remains poised for continued strong performance due to its status as a critical distribution hub and the economic center of the Southeast.

Atlanta Port of Savannah 

Image courtesy of James Correa

The forecast for North American industrial absorption in 2020-2021 is a healthy 459.9 million square feet (msf). Atlanta is ranked the No. 3 market for demand over the same time period, with a projected 30.1 msf of absorption. The city experienced its highest annual leasing total in history in 2019, with more than 31.5 msf of new leases signed throughout the year, according to Cushman & Wakefield Atlanta’s Q4 2019 Industrial Report.

New supply—which finally surpassed demand in 2019—will continue to do so over the next two years. Supply levels nationally are projected to reach 573.4 msf from 2020 to 2021. Atlanta is slated to deliver 34.9 msf, the third-highest in the country. Nonetheless, national vacancy will remain anchored around the 5% mark, ending 2021 at 5.2%—an uptick of 60-bps from year-end 2019.

U.S. asking rents are expected to increase by 6.8% and reach a new nominal high of USD $6.95 psf by year-end 2021—up from USD $6.51 psf in 2019. According to the report, North American cities that will post some of the strongest rent growth will be those with the highest demand such as Dallas/Fort Worth, Inland Empire, Atlanta, Chicago, PA I/80-I-78 Distribution Corridor, Indianapolis and Central New Jersey. In the fourth quarter of 2019, the direct average net asking rental rate in Atlanta rose 2.4% over one year to $4.60 psf.

Industrial has been the investors’ darling in recent years, and there is no indication of this love affair coming to an end any time soon. According to the 2020 PwC/ULI Emerging Trends in Real Estate survey report, industrial remains the most attractive property type both for investment and development. In fact, Atlanta experienced a record-breaking number of construction completions in 2019, with nearly 19.6 msf of new product added to the Metro Atlanta industrial inventory.

Over the next couple of years, we expect the North American industrial market to remain one of the leading product types to watch. Economic indicators, with strong links to industrial fundamentals, point to continued growth in both 2020 and 2021. Robust consumer spending supported by stable inflation, wage growth, and low unemployment bode well for industrial demand, not to mention structural changes related to eCommerce.

View Cushman & Wakefield's 2020 North American Industrial Outlook.

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