Link in to Lincoln: January Update on the South
In what could be an encouraging sign for 2017, vacancy rates continued to show improvement in most segments and markets in the Southeast in the fourth quarter of 2016.
In three key markets – Atlanta, Miami and Orlando – office vacancy rates fell throughout the last year. Each quarter showed new improvement in the office sector, with a strong fourth quarter finish in all three cities.
The same was true of industrial vacancy rates, except in Atlanta. While Miami and Orlando benefited from declining industrial vacancy rates on a quarterly basis, Atlanta experienced a small uptick.
Vacancy in Atlanta’s industrial market rose from 7.3 percent in the second and third quarters to 8.0 percent in the fourth quarter of 2016, while vacancy in the office market fell from 15.2 percent in the first quarter of 2016 to 14.8 percent at the end of the fourth quarter. Tenants making big office moves in 2016 included State Farm at Park Center, Kaiser Permanente at Pershing Point Plaza, and WellStar Health System at Riveredge Summit. Among the biggest industrial transactions of 2016 was the sale of Gwinnett 316, a 2,280,939-square-foot industrial building in Lawrenceville that sold for $102 million.
In Miami, industrial vacancy fell from 4.2 percent in the first quarter of 2016 to 3.7 percent in the fourth quarter, and office vacancy dropped from 10.2 percent to 9.4 percent over the same period. More good news came in terms of office rental rates, which ended the fourth quarter at $33.44, an increase over the previous quarter.
Industrial vacancy in Orlando decreased from 6.7 percent in the first quarter of 2015 to 5.2 percent in the fourth quarter, while vacancy in the office market dropped from 10.0 percent in the first quarter to 8.1 percent in the fourth quarter. Big lease signings contributed to Orlando’s strong industrial showing, including a 562,816-square-foot lease signed by Samsung.
INDUSTRIAL/OFFICE VACANCY RATES – ATLANTA
1Q’16 2Q ’16 3Q ’16 4Q ’16
Office 15.2% 15.0% 15.0% 14.8%
Industrial 7.5% 7.3% 7.3% 8.0%
Source: CoStar Property
INDUSTRIAL/OFFICE VACANCY RATES – MIAMI
1Q’16 2Q ’16 3Q ’16 4Q ’16
Office 10.2% 10.0% 9.7% 9.4%
Industrial 4.2% 4.2% 3.8% 3.7%
Source: CoStar Property
INDUSTRIAL/OFFICE VACANCY RATES – ORLANDO
1Q’16 2Q ’16 3Q ’16 4Q ’16
Office 10.0% 9.2% 8.7% 8.1%
Industrial 6.7% 6.2% 5.9% 5.2%
Source: CoStar Property