Q2 of 2020 was the most interesting and uncertain time in the majority of our lives. During this quarter, governments around the world took measures with policy to fight the spread of COVID-19, and these measures slowed the global economy to a crawl. Office buildings across the city are eerily vacant as the vast majority of office employees work from home. It is certainly not all gloom and doom, however. Landlord’s report that 95% of office tenants still paid rent as it was due, and unemployment dropped from 14.3% to 11.1% from May to June. How much of that was due to federal PPP money? We will see. COVID-19 has also triggered somewhat of a remote-work awakening as companies were forced into the most extreme implementation of “WFH” and are coming to understand whether this model works for their business.
Atlanta gained an additional 519,000 SF of sublease space this quarter (a 14% increase). Most real estate professionals are predicting an even larger increase in sublease space as companies decide that the COVID-19 changes are going to last longer in society than originally thought and PPP support ends. This could provide many businesses looking to reduce costs and/or footprint with an opportunity to lease high-quality office space at a significant discount.
Q2 was undoubtedly highlighted by the announcement that Microsoft will occupy the entire 523,000 SF “Atlantic Yards” project at Atlantic Station. The new Microsoft campus will add 1,500 jobs and was highly motivated by its proximity to top talent from Georgia Tech and Georgia State. Microsoft comprised over one-third of metro Atlanta’s 1.42 million SF of office leasing activity in Q2 (a 15% decrease from Q1). Atlanta still has a healthy and exciting 6.3 million SF of office space under construction that was able to operate relatively un-phased by COVID-19.