DIRT-e

According to a recent article in the Atlanta Business Chronicle, metro Atlanta’s industrial market just posted its worst quarter in five years – another sign that the influence of the housing crisis is spreading into traditionally strong areas of the local economy. Atlanta saw 1.4 million square feet of negative net absorption during the first quarter, according to research from industrial real estate firm King Realty Inc. Eight of Atlanta’s 12 core industrial submarkets recorded negative net absorption. The I-85 North industrial submarket saw almost 1 million square feet being vacated. “If you look at what’s happening, I think it’s a pretty good guess most of this is tied to residential,” said Sim Doughtie, a vice president and broker with King. “You’re not only seeing a slowdown in the number of deals, but you’re also seeing those deals get smaller.” Brokers like Doughtie say Atlanta’s industrial market was due for a slowdown after a year and a half of positive absorption. But, the market’s first-quarter drop was particularly steep. “We had 17 straight quarters of positive net absorption, so it’s not like we’re falling off the map. We’ll have to see if this first quarter was a sign of things to come or just an aberration.”

There was some positive news for the industrial sector, however. According to another recent Atlanta Business Chronicle article, one of the largest – and most covert – industrial deals in recent months just wrapped up. Walgreen Co. recently closed on a 518,400-square-foot lease at Raco’s Jackson 85 Distribution Center, located near the I-85/S.R. 82 interchange in Jackson County. The project was originally known in industrial real estate circles by its code name, Project Cowboy, a reference to The Staubach Co., the brokerage house that worked on the deal. Walgreen signed a 10-year lease in the nearly 1 million-square-foot Raco building, which should help the pharmaceutical chain meet demand for distribution space. Its main Southeast distribution center in Anderson, S.C., is over capacity, the company said.