According to the most recent “Emerging Trends in Real Estate” market report by PwC and the Urban Land Institute (ULI), Atlanta ranked 8th out of the 80 U.S. markets to watch in overall real estate prospects for 2022.  As part of the “Super Sun Belt,” markets in the Southeast are still affordable for businesses and residents, even while powerhouse economies like Atlanta have attracted – and will continue to attract – a wide range of businesses.  With 16 percent of the “Emerging Trends” universes population, the Super Sun Belt markets will generate 28 percent of its new jobs between now and 2025.  Focus group participants provided the following insights: “Atlanta has the third-highest percentage of college-educated workers in the U.S. and the highest concentration of colleges and universities in the Southeast.”

Atlanta has emerged as a budding startup hub with a list of newly minted unicorns and growing venture capital interest in recent years.  The city’s allure has even attracted the likes of home retail giant AirBnB, which recently decided to locate its East Coast engineering hub there.  The city offers a strong pipeline of talent from Georgia Tech and other area universities at comparatively lower salaries.  Atlanta’s wealth of engineering talent played a major factor in AirBnB’s decision to place a hub there.

Kevin Crook, the Director of Acquisitions for California-based Investors Management Group, said the firm’s investment focus will remain largely on suburban Atlanta because of the suburban flight taking shape, especially given the region’s base of highly educated workers.  “I think people, because of COVID, are looking forward to a little more space,” Crook said.

According to a recent report by NAI Brannon Goddard, Atlanta’s office market has weathered the coronavirus storm better than most markets so far.  Georgia’s capital has landed big deals from Microsoft, Deluxe Corp., and Mailchimp since the pandemic.  Atlanta is one of the few cities where trailing 12-month net absorption is still positive.  The direct average asking rent continued its upward climb, jumping to $29.90 per square foot (psf), a 4.6% year-over-year (YOY) uptick and a new historical high for Metro Atlanta.  Suburban submarkets experienced a substantial rent growth of 5.7% over the past two years.  Long-term, the region’s highly educated workforce, lower rents than core coastal cities and relatively affordable cost of living should continue to attract brand-name office tenants.

According to Colliers recent Q2 2022 Atlanta office market report, a strong rebound in vacancy rates, absorption and leasing activity, and rental rates, more than offset a sluggish Q1.  Atlanta’s overall vacancy rate now stands at 16.7%, a 40 basis point decrease over last quarter.  Atlanta office absorption recovered in Q2 in a big way.  The office market closed the quarter at a little over +1M square feet of absorption.  Year over year, this represents a major change from the height of the pandemic when absorption year to date reached over -3M square feet.  Strong quarter results were recorded in several suburban submarkets.  Overall, deals continue to get done in Atlanta as tenants assess future space needs.  The average rental rate for Atlanta office space has continued its trend of increasing.  Overall asking lease rates in Q2 2022 were $30.07 compared to $29.47 in Q2 2021.  In summary, the Q2 2022 Atlanta office market rebound is expected to continue as leasing activity gains traction during the “flight to quality movement.”

Touring activity has picked up significantly as the market begins its return to pre-pandemic employment levels.  Multiple users, particularly financial and technology companies, are now in lease negotiations for large transactions, and the Metro Atlanta Chamber currently reports the most robust economic development pipeline in its history.

Atlanta has a growing economy that is 8th in the nation for GDP and is home to a wide variety of businesses that includes Fortune 500 companies.  The relocation of payment processing giant NCR is expected to bring more than 3,500 jobs to the metro Atlanta region.  500 people move to Atlanta every day!  Two million more people are expected by 2030.  Atlanta’s population has grown by over 14 percent in the last decade.  Atlanta has shown promising population growth and employment, which are two signs of a healthy real estate market.

Following the trend of the last several months, workers will continue returning to the office in higher numbers and with increased frequency, while many will also embrace the new hybrid work model.