The trade war instigated by President Donald Trump is casting a shadow over Atlanta’s office market, prompting uncertainty among tenants who are hesitating to make leasing decisions.
After a robust 2024, where Atlanta landlords secured leases totaling 10 million square feet — the highest in five years — activity appears to have receded as the new year unfolds.
Brokers are expressing concerns that the tariffs and economic unpredictability could derail the positive leasing momentum that was previously gathering steam late last year.
CBRE Senior Vice President David Todd, a prominent Atlanta leasing broker, noted, “Several of my clients have hit the pause button.
There’s a long-term impact if the tariffs get in place, but I think people will hit the pause button for the next 30 days.”
Data from Colliers indicates a significant decline in leasing activity during the first quarter, showing a 30% year-over-year decrease, while absorption recorded negative numbers, with more than 330,000 square feet vacated compared to leased space.
Kirk Rich, principal at Avison Young, remarked on the anxiety felt by corporate decision-makers in recent weeks due to Trump’s tariff conflict, worried that this might lead to further freezes in office leasing as the year progresses.
He expressed his concerns, stating, “I’m concerned because, over the last 60 days, the volatility of the entire world stymied CEOs to make decisions.
I don’t think there’s any way it doesn’t negatively affect everything if it’s prolonged.”
Recently, Trump enforced a 10% tariff on nearly all imports into the U.S., which includes a steep 145% levy on Chinese goods.
Although Trump suspended reciprocal tariffs on countries like Japan, South Korea, and the European Union until July while negotiating potential trade deals, the announcement on April 2, labeled “Liberation Day,” sent shockwaves through Wall Street.
Economists warned that these actions could thrust the economy into a recession, leading the International Monetary Fund to downgrade its global economic growth projection from 3.3% last year to 2.8% for this year, citing the trade war as a contributing factor.
While brokers report that deals have yet to collapse directly due to the prevailing economic turmoil, there is a pervasive sense of caution.
Many industry professionals believe that the reaction time for commercial real estate lags behind real-time economic events, indicating that a downturn in market activity is merely a matter of time.
Heather Lamb, senior vice president and market leader for Highwoods Properties, the largest office landlord in Atlanta, stated, “I suspect there are tenant-level conversations being had about potential impacts, and there might be some slowing in the future, but we’re not seeing it yet.”
Interestingly, the leases signed in the last quarter have been larger compared to recent trends, with tenants concluding 14 significant deals exceeding 40,000 square feet, more than doubling the six notable deals from a year prior.
Significant leases during this period included Vensure’s 90,000 square foot acquisition at Sugarloaf I in Gwinnett County, the largest office lease of the quarter, as well as Duracell’s 56,000 square foot deal at Science Square and Unum Group’s 57,000 square foot expansion into sublease space at The Terraces in Dunwoody.
Additionally, firms such as StubHub, Veritiv Operating Co., Compass Group, and SR-400 Constructors also secured leases of 50,000 square feet or more during this timeframe, according to a CBRE report.
Jessica Doyle, a Senior Vice President at CBRE, highlighted a notable immediate impact stemming from Trump’s tariff policy.
She mentioned that she has encountered challenges in quoting competent tenant improvement packages to prospective clients, with many general contractors only honoring quoted prices for 15 days, whereas leasing negotiations often extend over a more extended period.
Doyle remarked, “My pipeline is still robust; things still seem to be stable.
I just don’t see how the tariffs won’t impact.”
James Pitts, the founder of Greenwood Commercial Real Estate Group, pointed out that the trade war is already influencing commercial real estate construction in the office sector, making it difficult to maintain stable underwriting assumptions due to fluctuating prices.
Reflecting on the current situation, Pitts added, “When you think about it, Liberation Day happened in April.
It’s not even been a month. People don’t even know how to react right now.
It’s going to have a cascading effect.”
Rich anticipated that the ramifications of the trade conflict would fully manifest in the office market within the next six months.
He remarked, “We’re in incredibly uncharted waters.
I don’t think anybody can predict where we are.
Either the tariffs are well understood, or volatility and confusion are the new norm, and that will not be well received by the business community.”
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