If Amazon Picks Atlanta, It'll Face Booming Costs to Build
(Bloomberg) -- Popularity carries a price.
Atlanta is one of 20 locations on Amazon.com Inc.’s list for a second headquarters and increasingly a draw for other high-profile companies. It’s now the second fastest-growing construction job market among large U.S. cities, according to a new report from CBRE Inc., a commercial real-estate firm. That means costs to build -- and rent -- are soaring.
“If you’re a business owner, your costs just keep going up and up," said Dan Wagner, an Atlanta-based director of research and analysis for CBRE.
In the past six years, average Atlanta rents increased 30 percent to about $30 per square foot, according to the report. But some of the most sought-after office space in the city is commanding rents closer to $50 a square foot.
The number of people employed in Atlanta construction grew by 42 percent in the past five years, outpaced only by Miami, which expanded by 51 percent, according to CBRE. Pay for the Atlanta workers surged 24 percent in the past five years to more than $21 an hour in 2018. On top of that, Atlanta’s average tenant-improvement expenses jumped 57 percent since 2012, CBRE says.
Wagner, for one, doesn’t think rising real estate costs will deter companies looking at the Atlanta market. “When you look at the talent we have and what it costs to hire that talent,” he said, “the Atlantas, Dallases and Houstons of the world are ruling the roost right now."
Indeed, Bloomberg reported last week that BlackRock Inc. plans to put a technology hub in Atlanta that will employ 1,000 people.
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