In looking at absorption numbers for the industrial market in Atlanta, I am struck by the continued negative absorption numbers for multiple quarters.

• 2008 Q2: -1.2M SF absorption
• 2008 Q3: -.5M SF absorption
• 2008 Q4: -1.7M SF absorption
• 2009 Q1: -1.9M SF absorption

That's almost -5M SF of absorption over the past year with rising vacancy rates. Kudos to Atlanta industrial developers for cutting off the supply engine almost completely - there is less than 100K SF of industrial space under construction in Atlanta.

In looking at the current office construction activity throughout the U.S., a number of things jump out at me:

• Atlanta has just over 4,000,000 SF under construction with only 15% preleased. Drilling into the data shows me that 2,000,000 SF of that is in five buildings in the Buckhead submarket where under 2% has been preleased. This is a recipe for disaster.
• Seattle has over 6,000,000 SF of office space under construction, which seems inordinately high considering the size of Seattle.
• NYC has almost 13,000,000 SF under construction and is only 36% preleased. With the continuing troubles in the financial sector, I wonder how many of those leases will hold.

Interesting article in the AJC today about office space:

Leasing demand for office space in metro Atlanta was dismal in the first quarter of 2009, and the situation will grow worse as new office towers in Buckhead and Midtown open in an already glutted market, analysts said Thursday.

“Mostly what we’re seeing is renewals, no new leasing,” said Scott Amoson, director of research for Atlanta-based Colliers Spectrum Cauble, a commercial real estate brokerage firm. “Companies looking to pull the trigger on new deals are waiting until the market gets into a better position. Right now, it’s an oxymoron, since they could get good deals.”

Metro Atlanta’s overall 17 percent office vacancy rate was basically flat from the end of last year. But it is up 1.1 percent compared with the same quarter last year, according to the first-quarter 2009 Market Report released Thursday by Colliers.

A full office market recovery for metro Atlanta won’t begin until early 2010, although leasing activity is expected to pick up by the end of this year, Colliers reported.

Complete article here...

I still can't get over the dire situation in Buckhead, with almost 2M SF about to deliver. Even in the best of times did we see Buckhead able to absorb that kind of volume?

Buckhead Office Tower Gets First Tenant - Cousins Properties Inc. (NYSE: CUZ) announced it has signed its first lease at Terminus 200, the 25-story office tower under construction at Cousins’ development in Atlanta’s Buckhead submarket.

Firethorn Holdings, LLC, a mobile banking company, will... [CoStar Atlanta News]