The office market in Atlanta, Georgia is taking a beating from the growing bank and government tax foreclosures and continuing economic slump. The flood of vacant office spaces in Atlanta has prompted industry experts to predict that it would take at least 12 years before they could find occupants and for the city to recover from its slump.
Experts pointed out that the glut in the commercial real estate market has hindered construction of new towers in the Atlanta metropolitan area for the years to come. In Buckhead, over 3 million-square-foot of office space is empty.
The trend in the Atlanta office market indicates the difficulty of building managers and owners to find tenants in the current market that has more office space supply than demand.
The increase in bank and government tax foreclosures and unemployment has also left many office spaces unoccupied. In metropolitan Atlanta, the 24-million-square-foot vacant office space had a negative absorption rate of 59,000-square-foot from July to September this year. The third quarter negative absorption was the fourth in a row.
Industry experts said that if the market would start to improve now, with an estimated 500,000-square-foot office space being filled every three months, it would still take about 12 years for all the current empty spaces to be filled up.
Normally, quarterly absorption of office space was about 300,000 square feet to 700,000 square feet. Industry experts said that in 2007, they predicted that the office market would recover by 2010. But now, they are not sure if there would be a recovery anytime soon.
The massive job loss across the region has taken its toll on the commercial market. For the last three years, nearly 50,000 employees have become jobless as companies trim down their spending and downsized their operation in order to survive the long-running economic downturn.
The vacancy rate in the Atlanta office market rose by 18.1 percent in the third period from 15.7 percentage points for the same quarter a year ago. Downtown Atlanta vacancy rate was up by 13.6 percent in the third quarter while the suburban office market vacancies reached 17.4 percent from 15.3 percentage points.
Industry experts said that current trends, including increasing unemployment, bank and government tax foreclosures and continuing rent decline, are working against the immediate recovery of the office market in Atlanta.
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