February 20, 2019
For the past decade, Midtown has been on fire.
Rents are up more than 50% since the start of this decade, and continue to grow by high single digits. Although average Class A rents in Midtown are in the $35 per square foot range, some of the most expensive properties are approaching $50/SF and that’s higher than much of Buckhead.
Vacancy in Midtown is just 8.5%, and more than 1.7 million square feet of new office space is under construction, including 725 Ponce, CODA near Georgia Tech, T3 at Atlantic Station and NCR’s second headquarters building to name a few.
Thousands of new condos and apartments are being built, along with restaurant and retail space and adaptive re-use such as Parkside Partners’ proposed project called the Boundary, which is just north of 17th Street.
Taken together, these facts point to a Midtown real estate bubble that will probably lose a little air in the coming years.
All that new space will satisfy pent-up demand, and rents should settle into a new normal in the low $40s range starting next year and will probably flatten for several years after that, according to forecasts by CoStar.
That’s not to say that Midtown is in for a bust. The supply-and-demand equation is simply going to tip a little to the tenant’s favor as landlords get more competitive to fill those shiny new buildings.
We think tenants in Midtown, or those considering moving to Midtown, should stay informed and keep these macro issues in mind. Market dynamics and the needs of employees can change quickly, and that’s why we focus on culture, data and speed.
Let’s talk about how to elevate your workplace. You can reach us here.