Downtown Atlanta Office Vacancy Hits 30% as Residents Rise 45%

A neighborhood filling with people and emptying of workers

At this week's Downtown Day gathering, Atlanta's business and civic leaders described two trends moving in opposite directions. Roughly 30% of downtown office space is vacant. Over the same stretch, the number of people living downtown has grown 45% since 2010.21 A.J. Robinson, president of Downtown Atlanta Inc., called it a "rebalancing" of where people are concentrated in the city's oldest neighborhood. He also pointed out that downtown office rents are about half of what tenants pay in Midtown or along the Beltline.21 Georgia State University, one of downtown's biggest occupants, reports its largest enrollment ever at 54,000 students.21

Robinson's "rebalancing" is a fair description of downtown as a place to live. For landlords, lenders and real estate investment trusts, the 30% figure points to something harder. Atlanta's office market is splitting in two. The newest, best-located buildings are leasing at record rents. Much of the older stock, which makes up a large share of downtown, is stuck with debt that its current income cannot support.

The 30% figure holds up

Research from several brokerages lands near the number downtown leaders cited. One brokerage put downtown vacancy at 30.2% in the third quarter of 2026, with average asking rents of $31.73 per square foot.29 Newmark's first-quarter figure for downtown was higher, at 32.9%, across about 14.9 million square feet.13 Partners Real Estate measured the wider Central Business District, which includes Midtown and Buckhead, at 30.4% in the first quarter and 30.8% in the second.1112

The metro-wide numbers vary more, mostly because firms measure differently. Cushman & Wakefield had overall vacancy at 24.9% in the second quarter, its lowest in eight quarters.14 CBRE reported 25.9%.16 Partners Real Estate reported 26.4%.12 NAI's third-quarter review came in lowest, at 22.0%.20 Whatever the method, every source shows the same pattern: the urban core trails the suburbs. Partners put suburban vacancy at 23.3% in the second quarter, its lowest in nearly three years.12 Cushman's suburban figure was 20.9%.14

One of Robinson's claims fits the data less well. The figures do not show downtown rents at half of Midtown's. Newmark's average direct asking rent was $31.88 per square foot downtown and $46.33 in Midtown.13 Another firm's numbers were $31.73 and $43.30.29 That makes downtown about 25% to 30% cheaper on average. The "half" comparison probably holds against Midtown's newest buildings, where Class A space has been quoted near $50.79.13 Even so, a discount of that size has not been enough to fill downtown's empty floors.

Demand exists, but it goes to newer buildings

Atlanta's office market has improved through 2026. Partners counted three straight quarters of net absorption above 275,000 square feet, with 896,147 square feet absorbed in the first half.12 No new office building has opened in the metro for three consecutive quarters, the longest gap since 2016.12 Asking rents have reached record levels: Newmark put them at $33.58 per square foot in the first quarter, and Partners at $33.52 in the second.1312

Little of that improvement has reached downtown. Partners reported that the suburbs drove most of the second-quarter absorption, with Central Perimeter and the Northwest submarket leading.12 Within the CBD, Midtown captured most of the leasing. Its 504,232 square feet in the second quarter included Pinnacle Financial Partners' 160,000-square-foot headquarters lease.12 Downtown did see some gains. Cushman credited it with one of the largest quarterly vacancy drops, 88 basis points, after several tenants took 20,000 square feet or more.14 Those are small steps compared with the amount of empty space.

The pull toward quality explains most of this. Class A buildings accounted for about 73% of leasing activity, while Class B buildings have higher vacancy and flat absorption.29 Newmark measured the gap between Class A and Class B rents at $8.38 per square foot.13 CBRE said demand is concentrating in Buckhead and the best suburban corridors, and that prime vacancy fell 500 basis points from a year earlier.16

Public REITs are on the winning side

Cousins Properties shows how far apart the two halves of the market have grown. The Atlanta-based REIT owns only Class A buildings, all in the Sun Belt. It was 92.8% leased at the end of the second quarter, its highest level since early 2020. Its Atlanta portfolio of 8.3 million square feet was 91.6% leased.31 Cousins signed 404,000 square feet of Atlanta leases in the quarter, and cash rents on Atlanta renewals rose 14.3%.33 It raised its full-year FFO guidance to a midpoint of $2.95 per share.31 In a September investor presentation, it projected 9.7% annual FFO-per-share growth from 2024 to 2026, compared with an average decline of 8.5% for the office peers it listed.37

CEO Colin Connolly said demand is rising while supply is falling, and predicted a growing shortage of premium "lifestyle" office space that will favor landlords.36 Piedmont Realty Trust also named Atlanta as one of its busiest leasing markets earlier this year.34

Cousins' financing is the main reason it is doing well. It has $3.9 billion of debt, 85% of it at fixed rates averaging 4.90%, and it recently closed a new $1.2 billion unsecured credit line.31 The empty downtown towers mostly sit outside this kind of balance sheet. Cousins' Atlanta holdings are concentrated in Buckhead and Midtown, including Terminus, Buckhead Plaza and Spring & 8th.31 Investors who read Cousins' results as a sign of Atlanta office health overall should keep that in mind.

Loans on older buildings are the weak point

Commercial real estate lending is where the downtown vacancy turns into financial losses. In early 2025, Trepp data reported by the Atlanta Journal-Constitution showed nearly 23% of metro Atlanta's securitized office debt was delinquent, more than $2 billion. On CMBS office loans alone, the rate was close to 27%, about four times the level of two years earlier.6 Lenders often granted extensions instead of foreclosing, a practice the industry calls "extend and pretend," because taking a building back means admitting it is worth less than the loan.36

Nationally, that waiting period appears to be running out. Trepp reported the national office CMBS delinquency rate at 12.2% in September 2026, the second-highest reading on record and 1.5 percentage points above the worst of the financial crisis.10 Atlanta has already seen foreclosures. Six towers and the mall at Peachtree Center returned to the lender in 2022, the city's largest foreclosure sale since the Great Recession.6 Arbor Realty Trust foreclosed on 41 Marietta St., a 13-story downtown tower that had been planned as 120 apartments.7 In the suburbs, a $350 million CMBS loan tied to Adventus ended in foreclosure on about 1.2 million square feet. Appraised values had fallen roughly 24% since 2021.1

Sales have not set reliable prices for the market. CBRE says office investment remains historically low, and no stabilized office property has closed since August 2025.16 Partners counted 13 office sales totaling $115.9 million in the first quarter.11 Without a healthy debt market, prices for older downtown buildings will stay hard to pin down. A CBRE executive made a similar point last year, saying investment does not work well until lending recovers.6

Conversions have not delivered

Turning surplus offices into housing was supposed to bring the two downtown trends together. The results in 2026 have been weak. In September, Georgia-Pacific dropped its plan to convert part of its 51-story headquarters into about 400 apartments, citing higher construction costs and "broader market headwinds."4643 The AJC's survey of conversion projects found most stalled, with rising construction and labor costs, flat apartment rents and expected rate hikes all making the numbers hard to work.41 Industry estimates put conversion costs at $150 to $400 or more per square foot, which usually requires public subsidy.46

A few projects are moving ahead. Invest Atlanta says it is still committed to 2 Peachtree, with at least 200 affordable units planned.46 Lalani Ventures is paying for a $40 million effort to add 150 apartments at 34 Peachtree.41 A city-backed nonprofit and Aramar Investments have taken over 41 Marietta.47 Across the metro, Colliers reports that conversions and redevelopments removed more than 1.3 million square feet of office space from Central Perimeter over the past year.19 That shows taking buildings out of the office supply can work where the land is worth more for other uses.

What comes next

The most likely outcome is that downtown's recovery comes from residents and students, not office tenants. The 45% population increase and Georgia State's record enrollment suggest downtown is becoming more of a place to live.21 Meanwhile, Atlanta's office demand will keep going to newer buildings in Midtown, Buckhead and the suburbs. Partners expects the lack of new construction to keep helping vacancy improve through at least 2027.12 Downtown will benefit only if its older towers are re-leased at lower prices, converted with public help, or torn down.

That makes debt the issue to watch. Older buildings with high vacancy and loans coming due will need to be recapitalized, and the national CMBS data suggest lenders are less willing to keep extending.10 Well-financed REITs focused on Class A space, like Cousins, are likely to keep posting strong results.31 For downtown's older office stock, the 30% vacancy rate means more owners will probably have to sell at a loss or hand buildings back to lenders before the space can be put to new use.