Atlanta's Industrial Landscape: Ownership and Tenancy - Balancing the Scales
Recent studies show that there are ten property owners that control more than 20% of all the industrial/warehouse buildings for lease in metro Atlanta. In fact, four owners currently hold more than 10,000,000 square feet each, and soon there will likely be one that owns over 23,000,000 SF. To give you an idea of how much space that is: The average industrial building in the Atlanta MSA is just over 43,000 SF; to own ten million square feet of that size building, one would have to own 232 different properties.
What does that have to do with tenants? It means that anybody looking for industrial space to lease in the Atlanta area is likely to tour one or more of those properties. Therefore these owners stand a better chance of landing a new tenant than a smaller scale or individual facility owner.
This can also create a disadvantage for those looking to lease a property, by effectively “creating” more demand from a smaller pool of supply. Even though there may be the same amount of space available at any given time, those that own significant properties have a considerable influence on the rate at which these properties are leased, thereby tending to drive the lease rates higher.
By the same token, building owners are interested in raising the occupancy of their portfolios, and they’d like to fill vacant space with paying tenants. For those with good credit worthiness and with the right strategy used in negotiating a lease, a tenant can secure space with favorable terms even from a large industrial owner.
Here’s the upshot: Owners want space filled by strong companies at the highest possible rents, while tenants want the best possible space at the lowest rent. For those looking to lease industrial space, anyone considering several different properties all controlled by the same owner would definitely want to know that, so that their position might be strengthened.
It’s important to balance the scales in your favor in a space search and lease negotiation by having access to the same market knowledge that owners have.
Tenants should utilize the services of an industrial real estate specialist in their interactions with owners. Whether it’s time to consider a lease renewal, expansion, contraction, or relocation, you benefit from having someone on your side of the table with detailed knowledge of market dynamics, who also understands the position of the owner across the table.