Q1 2025 - Atlanta Office Highlights
- Gregg Metcalf
- Apr 8
- 5 min read
Updated: Apr 10
click chart below for a zoomed in view
THE BREAKDOWN...
• Leasing—
Leasing activity showed signs of continued momentum following a record-breaking year for deal volume in 2024. There is still end-of-month data to be collected before historical comparisons of total leasing volume can be made.
o Q1 leasing volume: 1.9 million s.f., across 186 transactions (as of 2 weeks before quarter close)
o 6 deals signed were greater than 50,000 s.f., and 2 deals were greater than 90,000 s.f.
o Average deal size increased 2.0% YoY to 10,176 s.f.
o Renewals accounted for 17% of leasing volume, which is the lowest share of any quarter since Q2 2019.
This means that new deals/expansions were more prominent than in a long time.
o North Fulton, Buckhead and Central Perimeter submarkets landed the most square footage leased (all deal types), same top 3 as last quarter
o The average term length of new direct deals >20,000 s.f. was 120 months
• Inventory—
The year started off with no new deliveries and no new groundbreakings, as expected. The under construction pipeline sits at the lowest level since the 1980s, with just one project slated for delivery this year (Truist’s BTS). The shifts on the supply side consisting of a shrinking supply pipeline coinciding with inventory removals point towards a more balanced market in the quarters to come and put downward pressure on vacancy as quality assets benefit from spillover demand.
o Under construction pipeline sits at 474,000 s.f. across 2 properties; as of now, no new product will be delivering after 2026
o Under construction pipeline is 52.7 % pre-leased
o Truist’s BTS in the Northwest is slated for a Q3 2025 delivery
o 1072 W Peachtree in Midtown is slated for an early 2026 delivery
o Conversions/redevelopments: Conversion/redevelopment activity should be picking up more and more in 2025, both locally and nationally. Atlanta is observing a multitude of new uses planned for office buildings/their sites, including apartments, religious facilities, schools, industrial, and senior housing. True office to resi conversions are rare in the market; office to resi denotes
redevelopment (demolition) of office assets.
o 927,722 s.f. was removed from office inventory in Q1 across 4 properties
• Absorption & vacancy—
Atlanta’s overall quarterly absorption was negative, and more so than the modest occupancy losses observed last quarter. The largest move-out was less than 85k s.f., meaning no huge move-out drove negative absorption. With no end to the flight-to-quality trend in sight, Class B assets
accounted for 70% of the market’s overall absorption, while Trophy assets recorded positive absorption (+114,579 s.f.). Additionally, assets built in the 2010s and 2020s averaged positive absorption in contrast to their older counterparts.
o Q1 2025 Trophy net absorption: +114,579 s.f.
o Q1 2025 Class A net absorption: -334,776 s.f.
o Q1 2025 Class B net absorption: -516,485 s.f.
o Q1 2025 total net absorption: -736,682 s.f.
o Buckhead, Midtown and Central Perimeter all incurred positive absorption this quarter
o Q1 2025 overall market direct vacancy: 24.8%, up 130 bps YoY but down 10 bps QoQ
o Negative absorption but decreased vacancy points to the effects of inventory removals taking shape
o U.S. National absorption: -8,349,420 s.f.
o Q1 2025 absorption by asset class: Assets built in the 2010s and 2020s averaged positive absorption in contrast to their older counterparts.
• Asking rents—
Asking rents increased 40 bps QoQ, and 6 out of 7 major submarkets recorded positive quarterly rent growth.
o Both nationally and in Atlanta, landlords saw some relief in concessions for the second consecutive quarter in Q1. But concession offerings in well-located quality assets are still elevated relative to this time last year. Landlords able to provide up-front capital for tenant improvements are better positioned to land new tenants.
o Q1 2025 Trophy direct asking rents: $60.63/s.f. Gross, 3.6% increase YoY
o Q1 2025 Class A direct asking rents: $34.15/s.f. Gross, 0.8% increase YoY
o Q1 2025 Class B direct asking rents: $25.83/s.f. Gross, 7.3% increase YoY
o Q1 2025 overall market direct asking rents: $33.80/s.f. Gross, 1.3% increase YoY
• Sublease space—
Sublease availability has continued to decline and now represents only 3.6% of all inventory. Sublease availability dipped by 8.5% (585k s.f.) QoQ and is down over 1 million s.f. from this time last year. Regarding sublease space removed, more sublet space was subleased than withdrawn/expired (60% of removed space was subleased).
o Sublease availability: 6,329,301 s.f.; 3.6% of inventory
o NCR in Midtown added over 400k s.f. more to the sublease market, but overall availability still declined
o 58.8% of sublease space removed was subleased
o 18.2% of overall quarterly leasing activity was sublease deals
3 Key Takeaways—
There was a spike in negative absorption, but beyond the surface there was positive absorption among Trophy assets, assets built in both the 2010s and 2020s, and across 3 major submarkets (Midtown, Buckhead, and Central Perimeter).
The anticipated impact of inventory removals on market fundamentals is beginning to take shape as vacancy declined by 10 bps QoQ despite negative absorption (almost 1 million s.f. was removed from inventory).
Additionally, continuing RTO mandates and increasing new-to-market requirements, along with large block leasing activity, points to an encouraging office market landscape ahead in 2025, despite some concern around the increasingly uncertain economic environment.
How to Stay Ahead
Conduct a Needs Analysis to align your real estate strategy with your business objectives.
Secure and Optimize Office Location(s), Space(s), and Lease(s).
Maximize Profitability, Recruitment, and Retention
Many companies lose millions of dollars due to lack of employee engagement, loss of top talent, and inefficient or unneeded office space.
Working with Gregg Metcalf, clients gain the insights, the analysis, and the plan to obtain the lease and office space that retains the best employees, attracts top talent, and maximizes productivity as well as profitability.
To Contact Gregg Metcalf:
email: gregg.metcalf@jll.com
mobile: 404.661.9284
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