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Atlanta’s pipeline booms; construction costs – and asking rents - continue to rise
As 2019 came to a close, Atlanta continued to see a robust development pipeline and strong tenant demand. With more than 5.0 million square feet (msf) under construction, the office pipeline is at its most active in a decade. Large occupiers are vacating older space and anchoring new developments. These shifts boosted overall availability in Atlanta to 19.7% as the quarter ended – up 50 basis points year-overyear. New buildings also bring higher asking rents. The Midtown submarket is seeing average Class A asking rents upwards of $40.00 per square foot (psf), with new developments now asking well over $50.00 psf. Tenant costs to build out space continue to rise due to the high demand for skilled labor, as well as the rising costs of materials. While generous landlord concessions can offset out-of-pocket costs, a typical buildout for second-generation space generally ranges $60.00 - $90.00 psf, while first-generation space can cost from $80.00 -$110.00 psf.