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Atlanta’s office market shows a sharp divide as demand grows for Class-A buildings while Class-B spaces lose tenants, according to BisNow. Overall, landlords posted negative net absorption of 84,000 square feet in Q3, but Class-A offices gained 236,000 square feet, and Class-B lost over 320,000 square feet, highlighting a widening gap.
Strong Leasing Activity Focused on Premium Space
Leasing surged 41% from Q2 to 2.1 million square feet leased in Metro Atlanta during Q3. Of that, 1.7 million square feet was Class-A space. Major deals included UPS Supply Chain Solutions leasing back its 310,000-square-foot Alpharetta headquarters after selling it for $93 million, EY’s planned 102,000-square-foot move to Ten Twenty Spring, and Rivian’s 45,000-square-foot lease in the Junction Krog District.
Cost-Conscious Tenants Shift Strategies
Companies are becoming more cautious about rent and build-out costs. Many are renewing leases or relocating to similar buildings in other submarkets rather than investing in expensive upgrades.
Rents held steady at $32.38 per square foot overall, with Class-A rates rising to $34.35.
Shorter leases are in demand, but landlords resist due to high construction and renovation costs. Negotiations often end with compromise terms longer than tenants want, helping landlords cover expenses.
Limited Availability and Slowing New Development
Only 23% of Class-A space is “available performing,” meaning landlords can offer concessions and improvements. New office development slowed 40% from Q2 to just 342,000 square feet, mostly tied to the 1072 West Peachtree mixed-use tower.
This scarcity benefits renovated older Class-A buildings, as tenants have fewer new options. The market’s split between high-end and secondary offices looks set to continue.
