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ATL CRE 2025

Written by

Kevin Sandlin

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Earlier this week, CBRE announced the complete (CBRE already owned 40%) purchase of Industrious, bringing to light the new business segment within CRE known as “Building Operations & Experience (BOE)”. See Patrick Braswell‘s analysis here:
https://lnkd.in/evCBPMBM

At the end of 2024, just a couple of weeks ago, the following stats were published by Commercial Edge (link: https://lnkd.in/e-MFUJjz)

* Six out of the 25 top U.S. office markets have seen their vacancy rates increase by more than 500 basis points in the last year, with Austin leading with a 650-basis-point surge
* During 2024, 39.7 million square feet of office space was delivered, while only 9.1 million square feet broke ground
* Office properties have sold at an average of $179 per square foot, down 9% from the 2023 average sale price
* The average U.S. office listing rate stood at $32.85 per square foot, up 3.7% year-over-year
* After a slow start this year, Manhattan is once again the most sought-after market for office investment, logging $3.8 billion in transactions

Also, commercial mortgage rates ranged from 5.34% to 7.27% depending on the type of loan and lender.

What’s are the trends here, now that we’re into 2025 and about to inaugurate a new administration in Washington?

Here’s what I see as a relative newcomer to this space:
* Lots of empty office space means good deals on subleases and long term leases
* WFH as a top line “perk” for employees means employers can lease less space than they would have needed 5 years ago for the same number of employees
* Building technology has improved dramatically in the last 5 years, the very least of which is the near ubiquitous availability of fiber, and the most used of which is video conferencing technology, which is near Jetsons-like.
* CBRE has kicked down the door of Co-Working & Shared Office Space being a separate entity from CRE management companies. It’s now part of the mix.
* To level the playing field between WFH and RTO, building managers – not just their leased employers – are upping the game to make “the office” someplace you actually want to spend time.
* More CRE was delivered than started (broke ground) means more space on the market now but less on the way.

What’s all this mean? Movement. Activity. Opportunity. All of which is good for the marketplace and providers within the marketplace.

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