As 2012 crossed the halfway point, the Atlanta and Orlando office markets continued their gradual improvement, although their vacancy rates still exceed national averages, according to second-quarter CoStar Group reports.
At the end of June, Atlanta’s office vacancy rate stood at 16.1 percent, well above the national mark of 12.1 percent. Orlando’s rate was 12.5 percent.
Atlanta in Focus
While relatively high, Atlanta’s overall office vacancy rate has been declining for a while. At the end of third-quarter 2011, it was 17.4 percent, and it has dropped every quarter since, according to CoStar.
Interestingly, the vacancy rate in the Atlanta’s central business district – while currently lower than its suburban counterpart – has risen each quarter since third-quarter 2011 and reached 14.9 percent in second-quarter 2012. Conversely, the suburban rate has dipped each quarter during the same timeframe and stood at 16.3 percent in the second quarter.
Rents are on a positive trajectory. When the second half of the year drew to a close, the average asking rental rate for an Atlanta office property was $18.47 per square foot, up ever so slightly from $18.46 in the first quarter. Meanwhile, office cap rates climbed to an average of 9.28 percent in the second quarter, up from an average of 8.20 percent in the same period in 2011.
Orlando in Focus
Orlando’s overall office vacancy rate also has dropped consistently in recent quarters. At the end of third-quarter 2011, it was 13.4 percent. However, unlike Atlanta, the vacancy rate was higher in the central business district (13.9 percent) in the second quarter than in the suburbs (12.4 percent). Both rates have been declining steadily in recent quarters.
On a negative note, average asking rents were $18.35 per square foot in the second quarter, down 1.1 percent from the first three months of the year. Office cap rates have risen recently, with an average of 10.7 percent in the first half of this year, compared with an average of 8.4 percent during the same period in 2011.