Future Cities
2023 North America Industrial Big Box Review & Outlook: Atlanta
April 4, 2023 5 Minute Read
Atlanta is the Southeast’s primary big-box market, with the region’s strongest distribution network. The market experienced record rent growth in 2022, even with record new product. But with still-available inventory, stronger cost-efficiency, a business-friendly climate and deep labor pool, Atlanta remains a top market for distributors.
Demographics
Atlanta is the major population center of the Southeast and one of the country’s fastest-growing metropolitan statistical areas (MSAs). Over 6.3 million people live within 50 miles of the market core, with a projected five-year growth rate of 3.6%. Nearly 30 million people live with 250 miles of the market core, with 23% aged 18-34.
Figure 1: Atlanta Population Analysis
Source: CBRE Location Intelligence, Q4 2022.
The Atlanta MSA has 136,163 warehouse workers—a workforce that is expected to grow by 9.4% by 2032, according to CBRE Labor Analytics. The average wage for non-supervisory warehouse workers is $16.88 per hour, on par with the national average.
Figure 2: Atlanta Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics, Q4 2022.
*Median wage (1 year experience); non-supervisory warehouse material handlers.
Location Incentives
Over the past five years, there have been 93 publicly known economic incentives deals totaling over $317 million for an average of $9,497 per new job in metro Atlanta, according to Wavteq.
CBRE’s Location Incentives Group reports that top incentive programs in metro Atlanta include the Regional Economic Business Assistance (REBA) program. REBA is considered a “deal-closing” discretionary cash grant in that it incentivizes companies to consider Georgia over other states or countries for their location or expansion. REBA funds may be used for any fixed-asset costs, including infrastructure, construction, real estate and personal property.
Another metro Atlanta program is the Job Tax Credit, which awards businesses for creating net new full-time jobs. To qualify, companies must have local headquarters or R&D operations in one of the following industries: manufacturing, warehousing/distribution/logistics, software development, contact centers, data centers, telecommunications or financial technology.
Figure 3: Atlanta Top Incentive Programs
Source: CBRE Location Incentives Group, Q4 2022.
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.
Logistics Driver
Atlanta offers port, rail, air and road logistics options. With service from CSX Transportation, Norfolk Southern and nearly two dozen short-line railroad companies, Atlanta has the most extensive rail system in the Southeast and serves as the region's largest intermodal hub. Interstate highways connect to 80% of the U.S. population within a two-day truck drive.
Atlanta Hartsfield-Jackson International Airport continues year-over-year gains in cargo volume. Georgia's seaports are magnets for international trade and investment. As the westernmost container port on the U.S. East Coast, the Port of Savannah enjoys a significant geographical advantage in reaching inland markets. Opened in 2018, the Appalachian Regional Port is also a gateway to North American markets. A network of major interstates, including north-south corridors I-95 and I-75 and east-west routes I-16, I-20 and I-85, means key cities and manufacturing points throughout the Southeast and Midwest can be reached within a one- to two-day drive.
Georgia's seaports are magnets for international trade and investment.
Capital Markets
Despite economic concerns, Atlanta had its second-largest year for big-box investor sales volume. Investors continue targeting large facilities because of strong fundamentals, including a top-five ranking for lease transaction volume. Atlanta’s future is bright due to the market’s many logistical and demographic advantages. This will keep investor demand strong, leading to price and cap rate stabilization in H2 2023.
Supply & Demand
Atlanta is North America’s sixth-largest big-box industrial market, with 366 million sq. ft. of total inventory. Annual net absorption totaled 20.2 million sq. ft., down 20% from 2021. Lease transaction volume declined 10% but ranked fifth in the nation. General retailers and wholesalers were the most active occupier type. Completed construction volume more than doubled year-over-year, to 27.7 million sq. ft. Vacancy rates increased 150 basis points (bps) to 5.7%. CBRE projects vacancy rates will continue increasing, with only 15% pre-leased of the 38.1 million sq. ft. under construction. Reductions in construction starts will give the market time to absorb new space, potentially dropping vacancies back to 2022 levels by mid-2024.
Figure 4: Share of 2022 Leasing Activity by Occupier Type
Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Figure 5: Lease Transaction Volume by Size Range
Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Figure 6: 2022 Construction Completions vs. Overall Net Absorption by Size Range
Source: CBRE Research, 2022.
Figure 7: Direct Vacancy Rate by Size Range
Source: CBRE Research, 2022.
Figure 8: Under Construction & Percentage Preleased
Source: CBRE Research, 2022.
Figure 9: First Year Taking Rents (psf/yr)
Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Explore Big Box Insights by Market
Over 5 million people live within 50 miles of the region’s core, with a 5.1% expected five-year growth rate—the second-highest of any region in the Southeast.
Nearly 30 million people—24% aged 18-34—live within 250 miles of downtown Louisville, with a 1% projected five-year growth rate.
Memphis has over 1.4 million people within 50 miles of its core, and 23.4% are aged 18-34.
