Atlanta Industrial Market Report
Key Findings
- Atlanta’s vacancy rate reached 7.6% by year-end 2024, the highest since 2020 as new supply exceeded market demand.
- Net absorption totaled 8.1 million square feet, a 30 percent increase from 2023.
- Rent increased by 5.6% YOY, with the average asking rent per square foot reaching $9.66.
- Transaction volume rebounded in 2024, with the highest trading value in small-bay warehouses under 50,000 square feet.
Atlanta Industrial By the Numbers
- Sales Volume: $4.3B
- Average Sale Price per SF: $111
- Cap Rate: 6.8%
- Vacancy Rate: 7.6%
- Rent Growth: 6.3%
- Average Market Asking Rent per SF: $9.66
- SF Under Construction: 17.9M
- SF Delivered: 5.7M
- SF Absorbed: 1.3M
Atlanta Demographics
- Unemployment Rate: 3.6%
- Current Population: 6,399,132
- Households: 2,385,637
- Median Household Income: $90,282
The metro is set to see robust population growth in the next few years as more residents continue to move. Residents are motivated by lower rent costs and an abundance of job opportunities. Aligning with data centers opening in Atlanta, Amazon is set to invest $11 billion in Georgia towards future developments for AI technologies.
Atlanta Industrial Market Performance
Atlanta’s vacancy rate remains elevated, but there was a slight recovery in industrial leases over 200,000 square feet, with 26 agreements signed in 2024. However, the demand for larger spaces is still below peak levels seen from 2020 to 2022. Availability is limited for smaller industrial properties under 50,000 square feet, which have a vacancy rate of just 5.2%, lower than the market average of 7.6%. The areas with the tightest supply of small industrial spaces are located north of the city, including Duluth/Suwanee/Buford and North Fulton/Forsyth County, where vacancy rates for buildings under 50,000 square feet are only 3.9%.
Atlanta saw record-high rent growth in 2022, with an 11.6% increase by the end of Q4 2022. While growth has slowed since then, rents continue to rise steadily. Smaller warehouse and manufacturing spaces (15,000 to 50,000 SF) are becoming more valuable as larger properties rely on subleases to address long vacancies. With minimal new construction in some areas, rents are expected to keep climbing as demand outpaces supply.
Construction
Industrial properties in Atlanta reached a slowdown in developments. The total square footage delivered during 2024 was 25% lower than the previous year. In total, around 14 million square feet came to market in 2024, which is a nine-year low. About 17.9 million square feet remains on the way. Properties over 500,000 square feet account for the greatest amount of new construction.
Sales
Sales decreased compared to the high in 2021, with similar transaction volume to pre-pandemic levels. As the market and debt rates continue to shift, buyers have had a difficult time connecting with seller price points. The average market cap rate rounded out at 6.8% in Q4 2024, with the average price per square foot stipulating towards $111. One of the more notable transactions that occurred was Costco Wholesale Corporation purchasing a 907,000-square-foot distribution center at $97 per square foot, or $88 million, in March.
2025 Outlook
Although some cities saw a slowdown in activity during 2024, Atlanta has shown its resilience and strategic geographical positioning for industrial assets, making it a top five industrial real estate market. As Fed rates were cut for the third time in December 2024, borrowing costs for industrial businesses are projected to lower and increase transaction volume moving forward.
With the high vacancy rates from 2024, new developments set to arrive, as well as demand expectations on an upward trend, will seemingly push for an equilibrium in the market. Additionally, rents should increase on a quarter-over-quarter basis. Transaction volume will record an uptick, due to a rapid amount of loans maturing, along with investors adjusting to the current interest rate environment.
