On April 6, 2020 Moody's published an update to its analysis of North American industry exposure to the effects of the COVID-19 pandemic. This followed a previous report Moody's published in mid-March. Their analysis shows more than 60% of rated North American non-financial companies are now highly or moderately exposed to the effects of the coronavirus pandemic, which is up from 45% in their March heatmap.
Using Moody's findings, Colliers | Atlanta focused our analysis on the past three years of bulk transaction activity of 200,000 square foot and up, including both user sales and leasing activity. From this data, we were able to categorize just over 59 MSF of transactions according to Moody's industry sector classifications, with a couple of divergences.
Our findings illustrate that 25% of recent occupier activity in our bulk market would be highly impacted by COVID-19. This figure increases to 59% when including moderately exposed industries.
Only three industry sectors fall in the low impact category:
- Logistics Services
Most affected by the pandemic's impact are:
- Automotive & Auto Suppliers
- Consumer Durables
These industry sectors account for 18% of the transaction activity in Atlanta's bulk market since 2017 and will be the tenants of most concern looking forward. Even so, we expect the growth of e-commerce to offset these losses should the occur given this sector's increasing appetite for industrial space in the Atlanta market.
- 41% of recent transaction volume is attributed to low-exposure industries.
- Exposure to high-risk industries by submarket was somewhat mixed with the South Atlanta submarket least exposed. Northeast Atlanta is the most exposed submarket with 45% of recent bulk activity in industries that are highly impacted.
- I-20 West/Fulton industrial's exposure is similar to the overall Atlanta market.
- Although I-75 South/Henry County is the least exposed with 58%, the Airport/85 South submarket is the best positioned as it has the highest amount of bulk space leased since 2017, and is only 16% highly exposed. Growth in logistics and e-commerce activity here is the reason for this.
- Food & Beverage occupiers accounted for 9% of all transactions in Atlanta. The highest percentage share of this sector took place in I-75 South/Henry County and I-20 West/Fulton Ind.
- As mentioned, Northeast Atlanta is most exposed to the pandemic's impact. Only 16% of total deal volume here is the low-exposure category. Industry sectors of concern include Consumer Durables, Automotive & Auto Suppliers, and Non-Food Retail.
- The continued demand for space related to e-commerce requirements will help all Atlanta's bulk industrial submarkets. Those areas with the largest availabilities stand to benefit the greatest.