The Atlanta
industrial market is on the mend, and to get the skinny on the recovery, we
turned to Kent Mason. As a vice president at Prologis, an owner and developer
of industrial properties across the globe, Mason oversees the firm’s 15.5 million-square-foot
portfolio in the metro area. In today’s Four on Friday, he gives us detailed
insight into the pace of leasing in Atlanta, the strengths of the city and the
profound changes in industrial real estate over the past quarter century.
Many thanks
to Kent for his time!
HS: How would
you describe the overall pace of industrial leasing in metro Atlanta, and how
much of an improvement is that pace from one year ago?
Activity in Atlanta in the form of showings and RFPs is up twofold over
2012, and the number of new lease executions is up 50 to 75 percent. We are
seeing tenants shift their mindset toward longer-term leases, reflecting
optimism for the future. We also are enjoying a phenomenon we have not
experienced for four or five years: Our existing customers are expanding!
Overall, we have a positive outlook for the remainder of 2013 and all of 2014.
HS: Looking
forward, what does Atlanta's industrial market have going for it, and what are
some of the challenges the sector may face in the city?
While Atlanta has been outpaced by the Dallas, Southern California,
Houston and Florida markets in occupancy and rent growth, Prologis is a firm
believer in the city. We’re bullish on Atlanta for many reasons: the population
density, the key transportation infrastructure in place (three interstates, three
intermodal yards, Hartsfield-Jackson and proximity to the Port of Savannah),
the outstanding colleges and universities in the region, the high quality of
life, the relatively low cost of living and the entrepreneurial DNA that exists
in the city.
The biggest challenge will be the same one that any other major
logistics hub faces: traffic congestion. Also, after this summer, not many
people are talking about water shortages, but we’ll need to deal with this key
issue in the coming years.
HS: You've
worked in industrial real estate for 25 years. What's the biggest change you've
seen in the industry during that time?
Technology is clearly the biggest game changer in the commercial real
estate industry. In my early years, it was pay phones, fax machines,
photographs that had to be developed at Fotomat, aerials that could only be
obtained by flying a plane, and dBase contact management or index cards. Mobile
phones, iPads, PDF documents, digital photography and video, Google Earth
aerials, and powerful cloud-based CRM have made the industry more efficient,
fluid and have lowered the barriers to entry.
I haven’t used a fax or pay phone this past decade!
HS: You were a
panelist at Bisnow's recent Atlanta Industrial Summit, where a decent chunk of
the conversation focused on Savannah. What's your take on how strong of an
industrial market that city is set to be in the coming years?
Prologis owns 250 acres and 350,000 square feet in Savannah, and the
city has experienced an even more dramatic industrial recovery than Atlanta over
the past 12 months. Our expectation is that Savannah will benefit greatly from
the tightness in the Los Angeles Basin industrial markets, as rates there push
ever higher and Savannah becomes economically enticing for major importers
looking to balance inventory between the coasts and save big on occupancy
costs, taxes and labor.
Related Reading:
• Four on Friday: Bisnow's Atlanta Industrial Real Estate Summit
• Four on Friday: Larry Callahan of Pattillo Industrial Real Estate
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