Atlanta’s Office Rebound: Leasing Hits Five-Quarter High in Q1 2026

Q2 2025 IN REVIEW

Metro Atlanta’s retail market remained inventory-constrained in Q2 2026 with an overall vacancy rate of 4.7%. However, that represented a 30-bps increase year-over-year (YOY) as the region recorded 279,708 square feet (sf) of occupancy loss in Q2. The decline in net absorption was concentrated in the Airport submarket (-229,438 sf), driven by a wave of move-outs in vintage product, notably in Stockbridge, College Park, and Jonesboro. DeKalb further restricted occupancy, posting 103,079 sf of negative net absorption, its second-largest quarterly drop in nearly six years. Occupancy loss was not widespread, however, as seven submarkets posted positive net absorption in Q2, including Northeast (65,988 sf), Downtown/Midtown (64,116 sf), and Peachtree Corners (48,185 sf).

Leasing activity totaled 1.2 million square feet (msf) in Q2 2026, down from 1.7 msf one year earlier, as tenants remained hard-pressed to find available options in the region’s highly competitive market. Central Perimeter (-76.5%), Downtown/Midtown (-71.7%), and North Fulton (-56.8%) registered significant pullbacks, while Peachtree Corners (+88.2%) and I-20 East (+86.5%) were among the submarkets that posted annual gains. With demand still outstripping available supply in the market’s most sought-after corridors, landlords continued to push pricing: the overall average NNN asking rent climbed 4.2% YOY in Q2 to $20.40 per square foot (psf). There were six submarkets that documented YOY rent growth of more than 5.0% in Q2.

New deliveries totaled 337,566 sf, up 59.9% from Q2 2025, though the pace remained below the five-year average (Q3 2021-Q2 2026) of 458,468 sf. The development pipeline continued to thin, with 1.4 msf under construction at quarter’s end, down from 1.6 msf underway a year earlier. With the construction pipeline subdued, landlords are expected to retain pricing leverage through the remainder of 2026, even as inventory constraints temper leasing activity.

SUPPLY & DEMAND

KEY MARKET INDICATORS

MARKET OVERVIEW

ATLANTA ECONOMIC UPDATE

The Metro Atlanta unemployment rate held firm at 3.2% YOY in May, below both the Georgia rate (3.4%) and the national rate (4.3%). During the same period, the region added just 1,000 jobs, a slowdown from the 0.4%–0.5% annual growth posted in March and April. Hiring was weighed down by contractions in manufacturing (-1.7%), construction (-1.4%), and trade, transportation, and utilities (-0.7%). Education and health services remained a bright spot, however, expanding by a robust 3.8% YOY in May. Hiring in healthcare and social assistance is expected to remain resilient as demographic trends, including an aging population, continue to support demand for medical and caregiving services. Leisure and hospitality also remained on a positive trajectory, with employment increasing by 0.3% from one year earlier. Metro Atlanta’s low unemployment rate and resilient labor market are expected to continue supporting stable consumer spending, providing a favorable backdrop for retailer expansion and demand for well-located retail space.

LIMITED AVAILABILITY RESTRICTED LEASING ACTIVITY
While demand remained robust amid healthy population growth, year-to-date (YTD) leasing activity declined by 24.1% YOY to 2.7 million sf as supply challenges restricted the pace of leasing. Inventory-constrained submarkets posted some of the market’s steepest leasing declines, including North Fulton (-35.0%), Buckhead (-26.8%), and Northwest (-25.7%). Airport/South Atlanta led all submarkets in YTD leasing activity at 628,102 sf, followed by Northeast (419,676 sf) and East Cobb (331,502 sf), yet all three posted YOY declines. However, several submarkets boasted a surge in YTD lease transactions, including West Atlanta (+39.9%) and I-20 East (+61.9%), both submarkets that offer some of the metro’s most affordable rates, indicating that tenants priced out of Atlanta’s tightest, highest-rent corridors are chasing space in outlying areas. The quarter’s largest transactions included the 50,325-sf Publix lease at the under-construction Candler Crossing in Decatur and the 49,319-sf Bob’s Discount Furniture deal at Turner Hill Marketplace in Lithonia.

OCCUPANCY LOSSES TRIGGERED INCREASE IN VACANCY
Metro Atlanta’s retail market posted negative net absorption of 369,814 sf through the first half of 2026, a reversal from the 434,366 sf of occupancy gains recorded during the preceding six months. This year’s performance marked a rare downturn for a market that averaged 587,852 sf of net absorption quarterly from 2021-2025. Most submarkets documented occupancy loss, with the largest declines documented in DeKalb (-147,067 sf) and Airport/South Atlanta (-80,712 sf). However, Downtown/Midtown was a bright spot as the submarket recorded 204,625 sf of occupancy gains YTD. Metro-wide occupancy loss contributed to a 30-bps YOY increase in overall vacancy to 4.7%.While vacancies have risen steadily since holding at a historic low of 3.5% from Q3 2023 throughQ1 2024, the market remained undersupplied inQ2, particularly in desirable submarkets such as Cumberland/Galleria, Buckhead, and North Fulton. All three submarkets boasted a vacancy rate under 4.0%.

DEVELOPMENT ACTIVITY CONTINUED TO MODERATE
New deliveries totaled 490,980 sf through the first half of 2026, down 5.9% from the 521,936 sf completed over the same period in 2025. Downtown/Midtown (143,073 sf), Airport/South Atlanta (91,432 sf), and Northwest (86,861 sf) accounted for nearly two-thirds of all new product delivered YTD. An additional 1.4 msf was underway at quarter’s end with Northeast (419,574 sf) and DeKalb (370,325 sf) accounting for more than half of the under-construction pipeline in the region. DeKalb is home to the largest project being built in the Atlanta market as 320,000 sf of restaurant and retail space is taking shape at the 78-acre North DeKalb Mall redevelopment called Lulah Hills, which has recently signed tenants, including Honeysuckle Gelato, Les Mains Nail Bar, LaserAway, Anthropologie, Design Within Reach, Herman Miller, Solidcore, and Firepit Pizza Tavern.

INVESTMENT SALES
Retail investment volume strengthened during the second quarter, increasing by 33.2% YOY to $568.7 million. The second quarter performance propelled the YTD total to $955.7 million, up 9.5% from the same period in 2025. The uptick in transaction volume was accompanied by an increase in pricing, with the average sale price psf accelerating 16.1% YOY to a new high of $260.18 psf. The largest transaction during the second quarter was the sale of the 54,214-sf Tuxedo Festival to Curbline Properties Corp., which purchased the Buckhead retail asset from EDENS for $46 million, or $844.81 psf. The property was 97.0% leased at the time of sale.

For More Information, Contact:

Alex Kaplan
SVP of Research
tel 404 850 0667
[email protected]