Atlanta has been one of the Sunbelt’s biggest boomtowns, where the population and job market are growing fast. But you would never know that from its slumping office market, the Wall Street Journal reported. Vacancy rates are soaring and companies are competing to unload space in the sublease market. Office values and rents are falling. Developers are delaying new office projects, while office defaults are mounting. Atlanta’s commercial-property turmoil shows that even Sunbelt cities with thriving economies can’t escape the office-sector meltdown. Strong job growth hasn’t made up for the city’s anemic return-to-office rate, a glut of new office supply in the years leading up to the pandemic and companies shedding space as leases expire. It offers an ominous warning to other cities that are hoping their office towers will fill up again when more robust economic growth returns. “In the past, you could take the job numbers and see a one-to-one-relationship to how much office space we’re going to add,” said Madelyn Shields, associate director of real-estate-data firm CoStar Group. Today, she said, “there’s a total disconnect.” Now, the jump in interest rates that began in 2022 is pushing many property owners over the edge. Miami-based Banyan Street Capital gave up six office towers and an underground mall inside Atlanta’s downtown Peachtree Center in a foreclosure auction last year. More recently, Starwood Capital Group defaulted on an office-building mortgage that it was unable to refinance, according to loan documents.
