1Q 2012 SDM Partners Real Estate Market INSIGHTS

1Q

STEVEN D. MARTIN

April 30, 2012

Managing Principal Two Midtown Plaza, Suite 1100 1349 West Peachtree Street, N.E. Atlanta, Georgia 30309-2956 Tel: 404-877-9296 Fax: 404-870-2845 E-mail: sdm@sdmpartners.com www.sdmpartners.com

SDM Partners Real Estate Market INSIGHTS

Well?!

At the end of April in both 2010 and 2011, we found ourselves pretty much at the same place – 4

months of mostly positive news/results and the hope that things were finally back on track. However, the past two years, post-April, an economic retreat has occurred. To that end, March 2012’s job numbers disappointed and the late April GDP growth rate was only 2.2%. What to do?! Is it BRAKE time again or finally time to put the GAS pedal to the floor? Damn – this stuff is hard!

Deal-wise, I feel like I am back in high school and one of the wild and cool kids is trying to get this very straight kid – and I was – to smoke some weed. Come on Dude, take a hit off this – only now the doobie is interest rates – Columbian-LIBOR or sinsemilla-T-bills! Hear me when I tell you, there is a BIG ass-whoopin’ coming for those who shortsightedly grossly overpay due to cheap short-term debt. And OH YEAH, our government is the biggest “stoner” of all! INSIGHTS addresses this later in the letter and the attached articles.

Today’s low rates are VERY harmful. They are pushing capital to take more risk in search of yield all the while punishing savers and rewarding borrowers. NOT FAIR! Where are the FAIRNESS Police when you need them?

Obama!! (Note: FAIR is sarcastic here and throughout INSIGHTS.) YES, 1Q INSIGHTS, like past letters, is written as a “stream of consciousness” with comments on the many factors affecting business, CRE and our country, with the occasional data point, random fact or hokie saying. You

get what you pay for!

In short, the Beta (for you un-Bschooled, a measure of volatility) out “there” is still pretty high with the economic roller coaster ride continuing. And given the lack of “adult supervision” in Washington and the pending election(s), I do not see much changing. Let’s just hope and pray that November brings a clearer picture, true leadership and a mandate to make the hard and painful decisions necessary so our country and economy can move forward. However, buckle your chin straps, the next 200 or so days will get very ugly politically. The single issue and social issue types from BOTH sides will dominate – never mind that NONE of this STUFF really has anything to do with running our country! And if that were not enough, BOTH sides will try to bluff their way into office by taking advantage of the ignorance of many, playing on the fears of most and promising things only a child would believe – Santa Claus, Big Foot or Keynesian Economics.

I feel better now and enjoy the 1Q INSIGHTS.

SDM Partners Real Estate Market INSIGHTS INSIGHTS is a quarterly letter written to keep the SDM Partners’ name/brand out in the commercial real estate (CRE) marketplace. The letter’s focus is office/industrial market fundamentals and investment observations primarily in Atlanta and the Southeast. Articles from various periodicals in the previous quarter are attached to help frame/support the letter’s right-leaning “editorial opinions.”

Some thoughts/observations from the 1st quarter: Yield vs. Price: Brokers today primarily present/describe deals in terms of YIELD (vs. price). This plays to those yield chasing buyers who pay the higher prices – which is what they should do. These BUYERS (they are not investors) are in the money business with CRE just the vehicle to deploy money. Those in the real estate business (like SDM) focus on CRE fundamentals, often to their detriment, like price per SF, replacement cost, CapX, un-levered yield and return OF (not just ON) – idiots! As THE KING of income sales (you know who you are) told me once, “yield trumps per foot.”

Core Lenders: CORE BUYERS get a lot of ink, but it occurs to me that there are also CORE LENDERS. These are the lenders who compete to place debt (if they have any) on CORE deals. The good news (maybe) for these lenders is that by definition this means an LTV of 60% or less. BUT, there is a point where the perceived safety of physical quality, location and credit sought by these BUYERS/LENDERS is offset by over payment/valuation. This is caused by too much money chasing a limited number of deals. The belief is low return equaling low risk, but what it really means is you OVERPAID! Hence, that 60% LTV could in reality be 85% plus on the “real value”. The ultimate question for BUYER or LENDER is, “Are you getting paid for the risk?” – there is always risk. Remember and realize, big/pretty/credit does not necessarily mean risk-free return but sometimes “return-free risk” (FT).

Dependence vs. Independence:

This is where the TRUE fight/conflict is today! Individuals’ and businesses’ current weakened condition has brought about too much dependence on government.

Weakness (non-risk taker)

Dependence (captive)

Power (government)

Leverage (government)

Strength (risk taker)

Independence (freedom)

Power (people)

Leverage (people)

Some of IT is sought, and some is imposed. Over time what has been created is a “dependency mindset” which the government fosters because it allows the “beast” to grow. No matter how many rules are made, how many laws are passed or how many agencies are created, the risks of life and business will NOT go away and it is NOT the government’s job to remove them… manage and soften them, yes. But more importantly, the politicians should neither play to nor create fears to grow government or gain/keep power.

However, the Left and Right both do it.

Leadership: A great leader does not find consensus but MOLDS it – he or she leads, takes risk, does the right thing for the right reasons – regardless of popularity or pain. Makes a damn decision! What a novel concept.

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SDM Partners Real Estate Market INSIGHTS Adversity: Think of it like a question. Who are you? Adversity builds and reveals character.

Spend half of your time minding your own business and the other half leaving others’ business alone.

(Woodward Academy College counselor).

College: Mentioning the college counselor hits home for me since our son is a junior in high school. It is an important year for a young person and it is filled with pressure. Several thoughts and observations come to mind: 1). It is not about where you start but where (and how) you finish that matters. 2). If your greatest achievement in life is a 1600 on the SAT, you are a failure. A good start but 1600 is NOT the goal – one data point. My wife has a great saying, “Prepare the child for the road – not the road for the child.” Regardless, they have to Want IT and GO Get IT – even then, it is a tough road. And NO, most of it will not be FAIR. This

stuff is hard!

February NAIOP: Early February always brings the annual NAIOP Legislative Retreat and the first board meeting of the year. Here are a few interesting takeaways: o

o o

Senator Mike Lee (R) Utah spoke at one of the breakfast meetings. He talked about the growing power of the 4th Branch of Government. If you remember your high school U.S. Government class, the founding fathers only set up 3: Legislative, Executive and Judicial! What has evolved with the 4th Branch (EPA, SEC, TSA, etc.) are very powerful agencies that have no elected people. Think about the broad power of the EPA and who can argue with “clean air.”

POTUS is all about healthcare and the environment.

The 2012 presidential election is basically a referendum on Obama.

Austerity: Okay, how many of you had ever even heard of this? Europe (especially Germany) is living it but the US “kicks the can.” Definition: A policy of deficit-cutting, lower spending and a reduction in the amount of benefits and public services provided. Individually and collectively, we all have/will/are going through it.

A very painful process at many levels but we all (or most of us) got a “bit big for our britches”, as my mom used to say. Now, a price has to be paid. Everyone wants it “fixed” or something done, however, it always involves everyone else paying and having the pain! It is not FAIR! There is that word again.

Just remember, government spending has historically been 18-20% of GDP – closer to 24% the past 3 years. Growing the government to grow the economy is NOT the right idea/goal.

Like: Age changes (or allows) perspective and creates options – think attending a large meeting and what might concern you:

o o

20-40 years of age – “will they LIKE me?”

50 or older – “will I LIKE them?”

Good words from the senior pastor at our church – who also asks a great question, “Are you driven or called?”

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SDM Partners Real Estate Market INSIGHTS Potential ’12 Atlanta Wins: 1). July 31st Transportation vote (VOTE YES). 2). Savannah Port deepening.

3). Presidential election. Of course, they could go the wrong way, too!

The Masters: Bubba Watson’s win early in April was fun to watch – what a shot to get on the green on #10! It was a big payday for Bubba but that has not always been the case at Augusta.

Bubba Watson Tiger Woods Fred Couples Jack Nicklaus Arnold Palmer Sam Snead

2012 1997 1992 1972 1962 1954

$1.44 million $486,000 (1st green jacket) $270,000 $25,000 (4th green jacket) $20,000 $5,000 ($42,000 in 2012 $’s)

I have always liked my label for bad real estate as “land encumbered by a building” but at the recent NAIOP School Challenge, the UGA team used a good one: “under-demolished.” NICE.

Experience: This is what you get when you do NOT get what you want! You have to be able to tell the difference between the NOISE and the NEWS!

1 World Trade Center: This is the centerpiece to the 16 acre Ground Zero site from 9-11. Now this is a building: - 1,776 Ft. tall - 105 stories - Cost $3.8 billion - 2.6 million SF

- started in 2006 - to be completed in 2013 - $1,461/SF - Conde’ Nast taking 1mm SF

If you play with some simple math, the NNN rental rate needs to be north of $100/SF to make sense. But given that the Port Authority of New York and New Jersey own it and the symbolization attached to it, economics is not necessarily the only driver.

A Few Good Thoughts (mostly from Dr. Ken Boa): o o o o o

A lot of the “courses” God assigns us in life are “electives” we would not choose to take on our own.

Any “dead fish” can float downstream but it takes a LIVE one to swim upstream against the current!

Be content and thankful – however, do NOT be complacent.

What is the difference between you and God? He doesn’t think He is you!

Sometimes you have to crawl AFTER you walk! (country song)

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SDM Partners Real Estate Market INSIGHTS Dr. Paul Thompson/Tribute: Who is he? Well, he is the answer to a question many ask, “How the hell did he (me) get into Wharton?” Dr. Thompson was the college professor at JSU who pointed me in the direction of getting an MBA – advice that changed my life. I didn’t even know Wharton was part of PENN or that it was in Philadelphia! My naiveté was probably an asset since I did not realize how improbable my matriculation there was. I still talk to Dr. Thompson… even after 32 years.

There is a second person in this story, David Bloom. He was the Director of Admissions at Wharton. I met and got to know Bloom once enrolled in the fall of 1981. After a few months, I got up the nerve to ask David, “Why am I here?” He laughed because he knew exactly what and why I asked such a question. I will never forget the answer, “Steve, you are part of my Zoo!” He went on to explain that each class of 650 had 600 people with pedigrees that read like a Who’s Who – Harvard, Yale, 800 GMAT, etc. The other 50, the Zoo, were “different.” Now, you know. And as Stuart Scott on ESPN would say, “Boo-yah!” The puck does get past the goalie every now and then – and I thank the good Lord every day for it!

ATLANTA MARKET The good news is that both the office and industrial markets moved forward. Never mind that the movement was small and both markets still have a marathon to run, especially office. Given the past 3+ years, it is a victory to stay positive.

The basic CoStar data for Office and Industrial is provided below with more detail in the attachments via the link at the end of this letter. Also in the attachments are Colliers International’s Market Reports for Atlanta’s Office and Industrial markets.

OFFICE

YTD Vacant Absorption (000’s)

1Q’12 19.4% 213

1Q’11 20.0% (414)

1Q’10 20.1% (142)

1Q’09 17.0% 15

1Q’08 16.5% (367)

1Q 2012 YTD Vacant Class A Class B Class C Total

Absorption (000’s)

20.4% 19.0% 15.8% 19.4%

(163) 263 114 214

Overall the office market has basically been 19% vacant for the past four years. And for 2001 to 2008, it averaged almost 17% vacant. The saving grace going forward will be that the 3.8 million SF of deliveries Atlanta averaged in 2001-2010 was all but zero the past few years and should be nil for at least 2 or 3 years.

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SDM Partners Real Estate Market INSIGHTS Office Sales 1Q Property Atlanta Tech Center

SF 200,000

Price/SF $103

Comments I don’t think so.

Lenox Building

348,000

$170

Buckhead, aggressive, okay.

1200 Ashwood

184,000

$53

Like it, we’ll see.

Westside BP

135,000

$77

Good R/E, big roll in 3 years.

Hurt Plaza

436,000

$40

Equitable Building with character.

A few thoughts/observations about the Atlanta Office Market: (000’s) “Big 5” Buckhead C. Perimeter Midtown North Fulton Northwest Total

Class “A” Vacant SF %’age 3,065 20.9% 3,820 19.2% 3,096 21.6% 2,685 18.8% 2,723 17.3% 15,394 19.5%

Class “B” Vacant SF %’age 816 18.3% 2,470 30.2% 916 17.3% 1,607 17.3% 3,461 22.9% 9,270 21.9%

Total A & B Vacant SF %’age 3,881 20.3% 6,290 22.4% 4,012 20.4% 4,292 18.2% 6,189 20.1% 24,664 20.3%

The “Big 5” represents 63% of the Atlanta Office Market.

Class “A” absorption was (164m SF) overall. This was primarily due to Downtown’s (225m SF) and Northlake’s (113m SF). Class “B” absorption was 263m SF, which was driven by North Fulton’s 145m SF. The “Big 5”, collectively (A & B), has almost 25 million SF vacant which represents a vacancy of 20.3% for the 121,262,000 SF. Yes, the market is improving, but any way one cuts it, there are at least two very strong or three normal leasing years necessary to get to something anyone would call healthy – or tight - by Atlanta standards.

Two things stand out for me in the “Big 5” chart above: 1.) The Central Perimeter’s Class “B” vacancy at 30.2% and 2.) Class “B” in the Northwest having a vacancy of 22.9% or 3,461,000 SF. At 20% vacant, it will be at least a year or more until we see any real rental rate growth in the “Big 5”.

However, I am starting to hear about landlords holding rates, backing off free rent and/or providing less TI – not widespread, but happening. Consistent with this are the stories of tenants losing out on a particular block of desirable space – again rare, but happening. These are all signs of recovery and improvement.

Regent’s purchase of an office site downtown. Greenstone’s partnering with North American for the future office development at Avalon. Being told by a New York City investor that an Atlanta developer was just in to discuss funding for a to-be-developed Buckhead office tower. Short of a build-to-suit, I do not see any of these getting started in the next 12 months but, they are additional positive signs of a recovery. Also realize, this is Atlanta, and office development has more to do with the availability of capital vs. market fundamentals.

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SDM Partners Real Estate Market INSIGHTS Investor vs. Buyer: These are VERY different concepts. Investors (in real estate business) are looking to identify value or create wealth. Buyers (in the money business) on the other hand are going to buy at whatever it takes to win the bidding. Buyers are driven by the pursuit of yield. In the past 60-90 days, a fair number of office buildings have come to market. How they price and if they trade will tell us a lot.

Monetary Pressure Premium: A year ago in INSIGHTS, I coined this term to describe the premium paid above what the Argus model shows. It is still very much there and a necessary element to win any bidding.

Do you have the “stones” to cut off the computer and bet? Retrospectively, The Dew’s purchase of Campanile fits. Purchased at $82/SF, SunTrust signed, Cap-X spent and Promenade II selling for $175/SF, there is $30-$40/SF in profit to be made. There is still some upside left for the next guy and lots of Buyers with money to spend. Sell it, John!

Empty Building Analysis: Someone asked after the last INSIGHTS for me to comment on valuing an empty office building. Here is a simple analysis of a suburban deal: Budget Purchase Price TI & Commissions Carry Cap-X Other Total / All-In

/SF $ 50 40 10 7 3 $110/SF

Really a “plug number” Depends on condition and term Debt and operating Systems/common area/roof Due Diligence/Closing/Contingency vs. Replacement $180-$190/SF

An empty building is really a development deal without vertical construction risk – yield-on-cost type of analysis.

Proforma Market Rental Rate 8% Vacancy Op Exp NOI 9.07% yield-on-cost

/SF $19.00 (1.52) $17.48 (7.50) $9.98 ($9.98/$110)

If one assumes an exit cap of 8% (107 bp spread), just like magic we have made $14.75/SF. If you are slow, that is $9.98/8% = $124.75 less $110/SF. We could debate any of the assumptions but at its core, this is the math. If you wanted to generalize, an urban office building would probably have a per foot all-in number of $200ish and yields 100bp lower.

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SDM Partners Real Estate Market INSIGHTS INDUSTRIAL

YTD Vacant Absorption (000’s) Leasing (000’s)

1Q’12 13.0% 1,110 5,011

1Q’11 13.7% 2,713 3,953

1Q’10 13.3% (1,757) 2,994

1Q’09 12.4% (1,596) 5,568

1Q’08 11.4% 1,171 3,699

1Q 2012 YTD Vacant Flex Shallow Bay Warehouse Total

Absorption

18.1% 11.7% 12.7% 13.0%

(49) 214 945 1,110

% of Market 9% 17% 74% 100%

Industrial Sales 1Q

Property Brickton

SF 257,000

Price/SF $45

Liberty

183,000

$30

Chastain

430,000

$42

Comments

Nothing exciting. Pretty basic.

A few thoughts/observations about the Atlanta Industrial Market: It will be interesting to see how many new industrial developments are started – spec and BTS – by yearend 2012.

I do not really have many thoughts on the Industrial Market – bulk and distribution. In my mind, this market has become a pricing exercise based on a Buyer’s return criteria and cost of capital. Yes, I know this is always the case but my point is that the players know the market and most deals are stable, so the question is will they pay a 6.5% cap or not.

We will start seeing more Flex deals come to market since more of this product type has started going back to lenders. This is a tough and risky product type. However, if it is well-located and properly underwritten, I like it. The challenge will be educating the lender/owners to what the real value is. Values got so out of whack that the delta is huge.

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SDM Partners Real Estate Market INSIGHTS

TIMING / CONCERNS

Timing: INSIGHTS’ metaphor of using an NFL season to track market position continues. The past two quarters had the market stuck in Game 4. Although more time has run off the clock and we are in the second half, it is STILL Game 4. Until there are more closings, the market will remain in Game 4. A lot going forward will depend on whether there is a 2Q backup like the past two years. It also occurs to me that this metaphor totally applies to the Office Sales Market but, the Industrial Market is in mid-season form.

Bail Out: We all want the economy to improve sooner vs. later. However, if this happens, my concern is that it lets the politicians off the hook – Bails them Out – and government is not forced to make the necessary structural changes to the tax code, entitlement spending and deficit reduction. Never mind the “bail out” effect it would undoubtedly have on the presidential race.

Bond Bubble/Governmental Finances: Metaphors help me visualize and understand things. Hence, think of the U.S. Government as an office building that sold in 2007 and was funded with 100% debt, floating LIBOR pricing and a short term maturity. Well, the government’s $11.58 trillion debt has an average rate of 2.24% and 52% matures in under 3 years (WSJ 3/12/12). The big difference here is the government can print money to save themselves but the building owner cannot. INSIGHTS has pointed this out repeatedly. It is simple, the government is (and has been and will continue) playing the short end of the yield curve to save on “carry” and exposing the country to considerable interest rate risk in the future as the economy improves and interest rates rise. There is more! The T-bills, the government bought (61% of T-bills issued in 2011 bought by Fed, artificial demand) to keep rates low, will go down in value – double whammy! Oh NO!!

The low rates of the past few years have allowed the government to significantly increase their borrowings all the while with the “carry” declining. On the go forward, budget projections resemble an office building OM filled with unrealistic assumptions – continued low rates and inflated revenue (taxes) growth. The logic used is NOT consistent! If revenue is increasing, the economy is improving and rates will rise. You cannot have it both ways. Finally, in the month of March alone (WSJ 4/12/12), our government spent a whopping $369.4 billion or about $1,190 per American. However, the average American only pays about $550 per month… a problem! Oh the fairness!

Unwed Mothers: A 2/18/12 New York Times article phrased it this way, “What was once called illegitimacy is now called normal.” Why? – 53% of births to American women under 30 occur outside of marriage. The good news is that when all women are included, it is “only” 41%. Marriage has become a “luxury good” per the article. The social and economic costs/issues related to fatherless children is well documented. A recent book, “Coming Apart” by Charles Murray spoke to some of this. Over the past few months the WSJ and New York Times had numerous articles about “Coming Apart.” The New York Times “loved it” as you would imagine. (See 3/17/12 WSJ attached). I am sure somewhere in all of this there is a ton of unfairness.

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SDM Partners Real Estate Market INSIGHTS High School Dropouts: This will cheer you up! Approximately 30% of today’s 9th graders will NOT get a high school diploma… 20% for Asians and whites, 45% for blacks and Hispanics. More good news, only 21 states require students to attend high school until they graduate or turn 18. How about this? NO diploma or GED then NO driver’s license (as I tell my 17 year old, driving is a privilege, not a right) and NO government payments (entitlements) for you! The attached 1/26/12 New York Times article goes on to say, “educated workers are the basis of economic growth.” Duh! More unfairness. See the Fairness Quiz article attached from 2/7/12.

I know – I am on a roll and have probably upset a few.

Social Contract: One more “social” topic and I will get off my soapbox. What about the Individual Responsibility that should go along with this “contract?” It should be a “two-way” street with both sides having a responsibility to the other – vs. a one-way street. How about this, if one chooses not to abide by the two-way “contract” as demonstrated by being hard working, voting, semi-educated and a semi-decent law abiding citizen, then society owes you NOTHING! Harsh? Not really. To the extent there is a “safety net,” it should be for those who have made the effort to “play by the rules.” Even then, there should not be a perpetual “net.” Are there situations and people that should be helped? Absolutely! Those people are not the issue and you know it. It is those “special people” that make the conscious choice to NOT fulfill their part of the social contract. No soup for you! The ever expanding role of entitlements enables, tolerates and encourages non-accretive behavior. It has to stop. It is NOT the government’s job/role to remove ALL the risks of life for the citizenry.

I had a few more that I was going to tackle – Income Inequality, Fairness (one of my favorites), Single Issue Voters, Buffett Rule, Social Darwinism – maybe next quarter.

There are few true “blowouts” in life. Failures are usually the byproduct of a number of “slow leaks.”

Volcker Rule/Banks: With all that has been written of late in the national press about this rule, I am “sure” that ALL have been anxiously waiting to hear INSIGHTS’ views. ☺ Once Ben and Tim read this, it will be clear to them, too. Background: ex-Federal Reserve Chairman Paul Volcker proposed the rule as part of the Dodd-Frank financial reform law to prevent banks from trading for their own account (aka proprietary trading). The law will go into effect in July 2012 with all trading stopped by 2014. The Left and New York Times support the Volcker Rule and as much as it pains me to agree with them – dammit – I do. It is simple.

Proprietary trading is (or can be) very risky and, it should not have the U.S. government’s credit backstopping it. The banks want it but don’t need it – kind of like beer for a college student. The banks oppose the rule which probably gives one the answer right there. Repeal of Glass-Steggall in 1999 started the problem. If the banks want to trade, have at it but NOT as a bank. Goldman Sachs and Morgan Stanley can go back to being investment banks. JP Morgan has already been accused of trying to skirt the rule. At the end of the day, the banks will probably get their way because they have too much money, too many lobbyists and too much power/clout.

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SDM Partners Real Estate Market INSIGHTS Banks are a bit analogous to a financial post office – a systematic vehicle to facilitate commerce. They want to think we are here for them vs. banking being here to serve us. Kind of reminds me of the government!

Gas Prices: Newt promised $2.50-a-gallon gasoline. It might happen, but it will not be because he or anyone else says they will make it so. Two primary things determine the price – supply/demand and politics.

In February 2001, the average price of gasoline in the U.S. was $1.45; today, it is about $4.00. OPEC, which controls about 80% of the global oil reserves, yet only produces 36% of the global supply, has a huge say in pricing. The EPA (4th Branch of government), with their clean air rules, limits/challenges to domestic exploration/production and general hatred of carbon production, does their best to be difficult. In fact, Obama’s Energy Secretary, Steven Chu, is on record stating he hopes gas prices get to $8-10 per gallon.

The price of gas not only has a big economic effect on our economy but a psychological one as well. People want to blame the President or the oil companies. Both react to the price more than control it.

Unfortunately, the U.S. is dependent on oil/gas – period – and, it is not going to change anytime soon. If I had to guess, long term, prices will only increase as world demand rises due to the continuing westernization of China and India.

Deleveraging: A 4/20/12 New York Times article, “In a Shift, Debt Levels are Falling” by Floyd Norris, states, “the process (deleveraging) is working far faster in the US… contributing to an economic recovery…”.

In the fall of 2007 debt payments of households made up 14% of disposable income; in 1Q ’11, it was 10.9% lowest since 1994. This is good news as it frees up household income to be spent on other items.

Household total debt is down $600 billion from 2008. The interesting thing here is that two-thirds of this reduction came due to cancellation of debt via write-offs or foreclosures. Hence, the system is clearing some on the consumer side but we still have a way to go in CRE… “kick that can!”

Déjà vu?: Both 2010 and 2011 saw the US economy head into spring with what SEEMED to be better times to only fall back into a rut. Hence, what do the next 8 months have in store? Europe, unemployment, home sales, construction and gas prices – to name a few things – seem bound and determined to remain volatile.

Don’t put your umbrella up just yet!

Jobs: This is the driver! Without J-O-B-S – more of them – there will be NO meaningful recovery, much less demand/absorption of office space. At the national level the US added 600,000+ jobs in 1Q ’12 – January and February both at or above 240,000 and March at only 120,000. What should be read into March’s drop – if anything. Time will tell.

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SDM Partners Real Estate Market INSIGHTS At the local Atlanta level, all of the “ATL Haters” had to eat a little crow when the revised jobs numbers came out. Atlanta added 34,300 jobs in 2011, 3.1% growth. The initial numbers had Atlanta at (17,600)! Atlanta lost 126,000 jobs in the downturn. Wells Fargo went on to state that the pace of January 2012 equates to 68,400 jobs for 2012. Tempered a bit, 50,000 is probably a good number – solid! An Arizona State University study puts Atlanta’s 12 month January-over-January job growth (3.1%) as the 2nd strongest in the US trailing only Houston’s 3.7%. The Top 10 were: 1.)

2.)

3.)

4.)

5.)

Houston Atlanta Denver Dallas Seattle

6.)

7.)

8.)

9.)

10.)

Cincinnati Phoenix Riverside, CA Tampa Pittsburgh (tie)

According to the Bureau of Labor Statistics (BLS) at March 2012, the US’ official unemployment was 8.2% (U-3). Atlanta was north of 9%. Definitionally, I have always found it interesting that U-3 or the “official” number did not count those who are no longer looking for a job. Duh!! Looking or not – no job is no job! U6, which includes the “non-lookers”, stood at 14.5% for March 2012.

While job recovery is showing signs of moving in the right direction, a major concern is the amount of time a high percentage of people are remaining unemployed. Two points from a WSJ article from 3/20/12: 1.) In February 2012 3.5% of the US workforce had been unemployed for more than 6 months. 2.) The average unemployed worker has been jobless for 40 weeks. Compare this to the early ‘80s when US unemployment got up to 11%, the average length of unemployment at its worst was 21 weeks.

Supreme Court: The next president may have the opportunity to appoint three new Justices. By the end of 2016, Ginsburg will be 83, Scalia and Kennedy will turn 80 and Breyer will be 78. This could be huge.

Other Concerns: Other topics the attached articles bring to light – interest rates, pension fund yields and fees and the risks Big Banks pose to the “system” – were other things I considered writing about but it is TIME TO STOP. What is the TAKE AWAY? Or what is THE ANSWER? The problem(s) or challenge(s) is/are easy to identify but not easily or quickly resolved. COMPROMISE will be the key and until the “system” allows or forces this, nothing will change. There has to be some level of predictability and certainty in the “system” – along with meaningful structural changes to the tax system, spending and the deficit – so businesses will feel the level of confidence necessary to invest capital. INVESTMENT is what causes growth, jobs and movement forward.

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SDM Partners Real Estate Market INSIGHTS

SDM PARTNERS How would I describe 1Q ’12 for SDM – bid, bid, bid – lose, lose, maybe – the “maybe” is a wait and see deal. You have to “kiss a lot of frogs” to find the right one. Deal flow is pretty good and, the underwriting and bidding will continue.

Suwanee Gateway’s activity (our 142m SF, empty office building) has picked up considerably. There are 3 or 4 large prospects. Hopefully, one of them has SG1’s name on it! Activity in the park has also picked up with Stratford having sold 3 sites. Davis has begun site work for a 325 unit multifamily project.

Final note, the first INSIGHTS was “published” in June 2009. This edition is the 12th letter. For those who have read all 12 – God help you! I appreciate all of the feedback, good and bad, on INSIGHTS. It has a following that, quite frankly, baffles me.

SDM Partners is an Atlanta-based commercial real estate investor actively seeking value-add office and industrial acquisitions in Atlanta and the Southeast. Visit our website at www.sdmpartners.com. Please feel free to pass INSIGHTS on to any others whom you feel might find it of interest. Questions or comments are also encouraged.

Best Regards,

Steve Martin Managing Principal SDM Partners

If you would like to be added to our distribution list, please email Sutton Henderson with your contact information at (sutton.henderson@colliers.com).

-13-

First Quarter 2012

Atlanta Office Market FIGURES AT A GLANCE BY MARKET

Class A Market Statistics

First Quarter 2012

Existing Inventory Market

# Blds

Total RBA

Vacancy Direct SF

Total SF

Vac %

YTD Net

YTD

Under

Quoted

Absorption

Deliveries

Const SF

Rates

Buckhead

48

14,685,272

2,878,032

3,064,749

20.9%

74,978

0

0

$24.38

Central Perimeter

77

19,876,589

3,629,548

3,819,911

19.2%

103,928

0

300,000

$21.78

Downtown Atlanta

26

13,720,911

2,946,869

3,264,026

23.8%

(225,522)

0

0

$19.24

Midtown Atlanta

33

14,325,520

2,914,384

3,095,508

21.6%

101,787

0

0

$25.84

102

14,284,696

2,439,205

2,685,403

18.8%

(39,780)

24,000

72,310

$19.76

Northeast Atlanta

66

6,725,631

1,496,881

1,589,364

23.6%

(20,802)

67,500

344,476

$19.95

Northlake

22

2,971,096

486,321

491,986

16.6%

(112,861)

0

290,000

$20.19

Northwest Atlanta

77

15,741,583

2,604,157

2,727,731

17.3%

(51,586)

0

0

$20.95

South Atlanta

20

1,393,033

391,772

421,048

30.2%

6,464

0

0

$20.72

West Atlanta

1

71,500

0

0

0.0%

0

0

0

$0.00

North Fulton

Totals

472

103,795,831

19,787,169

21,159,726

20.4%

(163,394)

91,500

1,006,786

$21.62

YTD Net

YTD

Under

Quoted

Absorption

Deliveries

Const SF

Rates

Source: CoStar Property速

Class B Market Statistics

First Quarter 2012

Existing Inventory Market Buckhead

# Blds

Total RBA

Vacancy Direct SF

Total SF

Vac %

43

4,466,292

788,723

815,916

18.3%

12,060

0

0

$18.69

138

8,187,129

2,355,128

2,469,532

30.2%

68,594

16,000

0

$18.10

Downtown Atlanta

77

9,614,956

1,230,209

1,231,519

12.8%

(19,247)

0

0

$15.67

Midtown Atlanta

82

5,306,032

899,307

916,075

17.3%

59,757

0

450,000

$17.61

North Fulton

209

9,284,350

1,573,484

1,606,726

17.3%

145,499

0

0

$14.72

Northeast Atlanta

354

13,637,555

3,208,005

3,261,100

23.9%

(57,111)

0

20,000

$14.74

Northlake

279

13,918,757

1,722,495

1,787,017

12.8%

(45,537)

0

0

$17.37

Northwest Atlanta

326

15,104,518

3,352,404

3,460,841

22.9%

(22,089)

0

16,650

$15.62

South Atlanta

204

8,108,452

1,177,546

1,233,852

15.2%

91,505

0

0

$16.78

West Atlanta

41

1,479,914

149,138

149,138

10.1%

29,420

0

0

$16.48

19.0%

262,851

Central Perimeter

Totals

1,753

89,107,955

16,456,439

16,931,716

16,000

486,650

$16.22

First Quarter 2012

Atlanta Office Market FIGURES AT A GLANCE BY MARKET

Class C Market Statistics

First Quarter 2012

Existing Inventory Market

# Blds

Total RBA

Vacancy Direct SF

Total SF

Vac %

YTD Net

YTD

Under

Quoted

Absorption

Deliveries

Const SF

Rates

Buckhead

23

558,098

51,115

51,115

9.2%

1,441

0

0

$18.33

Central Perimeter

54

1,362,061

334,408

334,408

24.6%

5,109

0

0

$13.45

Downtown Atlanta

58

3,171,469

452,123

452,123

14.3%

24,591

0

0

$15.29

Midtown Atlanta

20

604,701

79,796

91,220

15.1%

(7,271)

0

0

$14.10

North Fulton

27

744,274

66,694

66,694

9.0%

(2,301)

0

0

$13.63

Northeast Atlanta

51

1,607,783

157,584

161,179

10.0%

(2,583)

0

0

$13.48

Northlake

93

3,056,719

240,536

240,536

7.9%

42,791

0

0

$13.62

Northwest Atlanta

66

2,304,895

203,744

205,769

8.9%

35,435

0

0

$15.86

South Atlanta

74

2,140,194

368,895

368,895

17.2%

20,376

0

0

$13.08

West Atlanta

22

1,604,935

736,930

736,930

45.9%

(3,903)

0

0

$11.49

15.8%

113,685

Totals

488

17,155,129

2,691,825

2,708,869

0

0

$14.06

Source: CoStar Property速

Total Office Market Statistics Existing Inventory Market

# Blds

Total RBA

First Quarter 2012 Vacancy

Direct SF

Total SF

Vac %

YTD Net

YTD

Under

Quoted

Absorption

Deliveries

Const SF

Rates

Buckhead

114

19,709,662

3,717,870

3,931,780

19.9%

88,479

0

0

$23.06

Central Perimeter

269

29,425,779

6,319,084

6,623,851

22.5%

177,631

16,000

300,000

$20.17

Downtown Atlanta

161

26,507,336

4,629,201

4,947,668

18.7%

(220,178)

0

0

$18.10

Midtown Atlanta

135

20,236,253

3,893,487

4,102,803

20.3%

154,273

0

450,000

$23.86

North Fulton

338

24,313,320

4,079,383

4,358,823

17.9%

103,418

24,000

72,310

$17.94

Northeast Atlanta

471

21,970,969

4,862,470

5,011,643

22.8%

(80,496)

67,500

364,476

$16.65

Northlake

394

19,946,572

2,449,352

2,519,539

12.6%

(115,607)

0

290,000

$17.32

Northwest Atlanta

469

33,150,996

6,160,305

6,394,341

19.3%

(38,240)

0

16,650

$18.12

South Atlanta

298

11,641,679

1,938,213

2,023,795

17.4%

118,345

0

0

$17.19

West Atlanta

64

3,156,349

886,068

886,068

28.1%

25,517

0

0

$14.03

19.4%

213,142

Totals

2,713

210,058,915

38,935,433

40,800,311

107,500

1,493,436

$19.08

First Quarter 2012

Atlanta Office Market HISTORICAL FIGURES AT A GLANCE

Class A Market Statistics Existing Inventory Period

# Blds

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

472 470 469 461 451 429 414 404 397 392 382 371 335 304 282 250

Total RBA 103,795,831 103,704,331 103,393,331 101,375,423 99,204,081 96,342,685 93,875,047 92,773,009 91,357,552 90,647,852 88,519,984 85,449,726 78,414,682 73,153,689 69,022,745 63,631,625

First Quarter 2012 Vacancy

Direct SF 19,787,169 19,564,243 20,412,632 18,560,498 15,484,107 13,888,953 14,585,129 14,801,965 15,454,510 17,000,770 15,006,822 10,639,150 5,751,864 5,867,407 7,020,325 7,248,772

Net

Deliveries

Total SF

Vac %

Absorption

# Blds

21,159,726 20,904,832 22,216,236 20,827,450 17,837,544 15,352,269 15,949,478 16,599,797 17,661,617 20,264,791 19,332,625 14,299,465 7,425,875 7,712,870 7,020,325 7,248,772

20.4% 20.2% 21.5% 20.5% 18.0% 15.9% 17.0% 17.9% 19.3% 22.4% 21.8% 16.7% 9.5% 10.5% 10.2% 11.4%

(163,394) 1,622,404 629,122 (818,564) 376,121 3,064,847 1,752,357 2,477,277 3,312,874 1,195,702 (1,962,902) 161,454 5,547,988 3,438,399 5,619,567 3,233,116

2 1 8 10 22 15 10 7 5 10 11 36 31 22 32 29

Total RBA 91,500 311,000 2,017,908 2,171,342 2,861,396 2,467,638 1,102,038 1,415,457 709,700 2,127,868 3,070,258 7,035,044 5,260,993 4,130,944 5,391,120 4,605,483

UC Inventory # Blds 4 6 2 8 14 25 18 16 8 5 11 16 41 33 20 35

Total RBA 1,006,786 1,098,286 611,000 2,296,408 4,038,454 5,520,456 3,561,774 2,929,557 1,592,402 1,336,571 2,165,732 4,385,261 9,319,109 6,144,854 4,056,158 6,231,352

Quoted Rates $21.62 $21.59 $21.61 $21.92 $23.16 $23.08 $21.44 $20.96 $20.69 $20.64 $21.41 $22.75 $23.21 $22.16 $22.31 $21.00

Source: CoStar Property速

Class B Market Statistics Existing Inventory Period

# Blds

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

1,753 1,752 1,750 1,745 1,726 1,693 1,622 1,570 1,516 1,484 1,457 1,430 1,380 1,313 1,230 1,171

Total RBA 89,107,955 89,091,955 89,032,778 88,891,674 88,659,138 87,712,414 85,887,823 84,389,918 82,893,463 81,907,564 81,049,407 80,053,379 77,934,055 75,191,713 71,360,620 68,432,160

First Quarter 2012 Vacancy

Direct SF 16,456,439 16,663,078 15,297,363 14,495,302 12,708,999 11,673,234 10,833,571 11,471,349 11,803,969 11,560,105 10,094,857 10,364,466 8,059,447 7,797,158 7,287,680 7,035,313

Net

Deliveries

Total SF

Vac %

Absorption

# Blds

16,931,716 17,178,567 15,873,761 15,241,088 13,317,570 12,431,902 11,343,225 12,319,938 12,975,584 12,901,449 11,593,627 12,011,122 9,105,464 8,751,477 7,287,680 7,035,313

19.0% 19.3% 17.8% 17.1% 15.0% 14.2% 13.2% 14.6% 15.7% 15.8% 14.3% 15.0% 11.7% 11.6% 10.2% 10.3%

262,851 (1,245,629) (491,569) (1,690,982) 61,056 735,914 2,474,618 2,152,101 911,764 (449,665) 1,413,523 (786,334) 2,388,355 2,367,296 2,676,093 1,988,824

1 2 5 20 33 78 53 57 32 28 27 54 69 83 59 38

Total RBA 16,000 59,177 141,104 400,536 946,724 2,178,182 1,636,180 1,780,089 985,899 886,728 996,028 2,244,978 2,790,342 3,831,093 2,928,460 1,771,492

UC Inventory # Blds 3 4 3 4 18 31 64 44 46 26 25 28 51 60 65 44

Total RBA 486,650 502,650 75,827 95,350 358,589 885,820 1,773,192 1,372,688 1,595,945 787,204 739,760 961,028 2,067,742 2,356,719 2,937,203 2,464,254

Quoted Rates $16.22 $16.67 $16.97 $16.96 $17.62 $17.35 $16.50 $16.12 $15.94 $15.75 $16.58 $17.50 $17.39 $17.11 $16.63 $15.48

Source: CoStar Property速

Total Office Market Statistics Existing Inventory Period 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

# Blds 2,713 2,710 2,708 2,695 2,666 2,619 2,534 2,468 2,408 2,367 2,328 2,285 2,194 2,092 1,984 1,886

Total RBA 210,058,915 209,951,415 209,617,852 207,458,840 205,054,962 201,383,160 197,159,931 194,414,871 191,535,569 190,028,229 187,009,678 182,818,888 173,561,433 165,488,928 157,480,937 148,914,001

First Quarter 2012

Vacancy Direct SF 38,935,433 39,034,856 38,337,703 35,820,048 30,774,422 28,209,653 27,682,204 28,325,309 29,348,467 31,049,687 27,970,318 23,589,683 14,978,795 14,934,994 16,215,263 16,330,158

Net

Deliveries

Total SF

Vac %

Absorption

# Blds

40,800,311 40,905,953 40,730,959 38,848,860 33,741,130 30,435,869 29,565,532 31,000,356 32,831,349 35,798,452 33,918,808 29,073,294 17,761,727 17,797,479 16,215,263 16,330,158

19.4% 19.5% 19.4% 18.7% 16.5% 15.1% 15.0% 15.9% 17.1% 18.8% 18.1% 15.9% 10.2% 10.8% 10.3% 11.0%

213,142 158,569 276,913 (2,703,852) 366,541 3,352,892 4,179,884 4,710,295 4,474,443 1,138,907 (654,724) (2,054,112) 8,108,257 6,425,775 8,681,831 5,702,320

3 3 13 30 55 93 67 66 42 40 44 95 104 111 98 70

Total RBA 107,500 370,177 2,159,012 2,571,878 3,808,120 4,645,820 2,883,335 3,231,546 1,843,340 3,047,122 4,207,790 9,383,109 8,120,505 8,118,083 8,566,936 6,439,894

UC Inventory # Blds 7 10 5 12 32 56 82 64 56 35 39 49 98 99 90 87

Total RBA 1,493,436 1,600,936 686,827 2,391,758 4,397,043 6,406,276 5,334,966 4,447,362 3,224,347 2,246,401 2,956,018 5,449,805 11,514,925 8,613,730 7,124,358 8,960,962

Quoted Rates $19.08 $19.32 $19.60 $19.79 $20.84 $20.77 $19.15 $18.65 $18.22 $18.35 $19.36 $20.37 $20.29 $19.37 $19.16 $18.40

Q1 2012 | OFFICE

ATLANTA

MARKET REPORT

Atlanta Office Absorption Continues its Positive Trend

MARKET INDICATORS Q1 2012

Projected

Q2 2012

VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE

—

CAP RATES

—

Carrying over the positive occupancy gains experienced in 2011, Atlanta’s office market began 2012 with absorption totaling just over 625,000 square feet; an amount equal to almost all of last year’s total. First quarter’s occupancy gains can be attributed to factors such as prior leasing activity which has now moved to the occupancy phase, expansions of existing tenants in the Atlanta market and continued small business growth. Transactions signed during the past couple of years and now taking occupancy were some of the largest move-ins in first quarter. Examples include Kids II which moved into 102,818 square feet in Buckhead, Ventyx which relocated to 55,257 square feet in Central Perimeter and Internap which relocated office functions to 59,000 square feet also in Central Perimeter. Of note, all of these moves were expansions of the companies’ previous office footprints. Other tenant expansions in the market contributing to first quarter’s positive absorption were Delta Dental which moved into an additional 21,352 square feet at its office in North Fulton, Lockheed moving into another 20,711 square feet in its Northlake office building and Robert Half taking another 19,253 square feet at its Buckhead office. In addition to the positive effects of these expansions, small businesses continued to provide incremental growth to occupancy in the office market. Hiring from small businesses averaged 0.6% growth over the past quarter. This is down from the 3.2% growth in hiring in fourth quarter 2011, but still above the national average.

Atlanta’s office market recovery continues to show signs of strengthening. The first quarter of the year exemplified this best with yet another solid period of space absorption. Heading into second quarter, much of the same is expected. Like first quarter, there are a number of scheduled move-ins from prior leasing activity set to take place. Examples include Greenberg Traurig which is relocating from 47,683 square feet at The Forum in Northwest Atlanta to 93,466 square feet at Terminus 200 in Buckhead, and PricewaterhouseCoopers continued on page 2

ATLANTA OFFICE

NEW SUPPLY, ABSORPTION AND VACANCY RATES

UPDATE Atlanta Rental Rates

6,000,000

Overall Market & Class A (per sq. ft.) $25.00 $25.00

25%

5,000,000

$24.00 $24.00

4,000,000

$23.00 $23.00

20%

3,000,000

Class A

Market AVG

1,000,000 10% 2012

2011

2010

2009

2008

(2,000,000)

2007

$17.00 $17.00

2006

(1,000,000)

2005

0

$18.00 $18.00

2012

2011 2011

2010 2010

2009 2009

$19.00 $19.00

15%

2004

$20.00 $20.00

2,000,000

2003

$21.00 $21.00

Square Feet

$22.00 $22.00

5%

(3,000,000) 0%

(4,000,000) Absorption

Deliveries

Vacancy %

Occupancy in Atlanta’s office market increased for the fourth consecutive quarter.

Absorption totaled 627,818 SF in the first quarter.

This brought the overall vacancy rate down to 17.6%. Only one building of 16,000 SF delivered during the period.

Though Class A rental rates are close to bottoming, the overall average for the market has yet to show any upwards movement.

MARKET REPORT | Q1 2012 | OFFICE | ATLANTA

VACANCY & AVAILABILITY

All three property types saw a drop in vacancy in the first quarter.

•

Central Perimeter and Midtown saw a 1% drop in vacancy. These submarkets are expected to see vacancy rates drop even further in the year.

•

Move-out activity in the past three months was less than previous quarters. This limited the amount of available space added to the market.

Deliveries-Buildings

Q1 2012 | Vacant Space By Type

•

Submarkets experiencing the largest occupancy gains were Midtown, Central Perimeter and North Fulton. By year’s end, these submarkets will see the most office space absorbed in the Atlanta market.

•

Office leasing remained steady in the first quarter but was a little off from this time last year.

Q1 2012 | Net Absorption by Submarket 350,000

footage that is committed to and signed for under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity for buildings under construction or planned.

250,000

CLASS A 19,285,660 SF VCY RATE = 17.8%

Build-to-Suit-A term describing property that

CLASS B 15,888,022 SF VCY RATE = 17.6%

CLASS C 3,571,073 SF VCY RATE = 16.8%

was developed specifically for a certain tenant to occupy. Can be either leased or owned by the tenant.

200,000 150,000 100,000 50,000 0

NORTHEAST

300,000

DOWNTOWN

Leasing Activity-The volume of square

The biggest factor contributing to positive absorption this quarter was expansions.

NORTHLAKE

that complete construction during a specified period of time.

A certificate of occupancy must have been issued for the property for it to be considered delivered.

•

WEST ATLANTA

leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation.

•

First quarter office absorption in Atlanta was just shy of 2011’s total.

NORTHWEST

Sublease Space-Space that has been

Atlanta’s office vacancy declined for the fourth consecutive quarter. It now stands at 17.6% which is back to 2009 levels.

•

BUCKHEAD

occupied by a tenant, regardless of any lease obligation on the space.

ABSORPTION & LEASING ACTIVITY

•

SOUTH ATLANTA

Vacant Space-Space that is not currently

NORTH FULTON

Vacancy Rate-A percentage of the total amount of physically vacant space divided by the total amount of existing inventory.

MIDTOWN

occupied space over a given period of time, calculated by summing all the positive changes in occupancy and subtracting all the negative changes in occupancy.

CENTRAL PERIMETER

Absorption (Net)-The net change in

which is moving up the street from its current office space of 145,000 square feet at 10 10th Street to 140,000 square feet at 1075 Peachtree in Midtown. On the whole, Atlanta’s office market will likely see less absorption next quarter thanks to a number of consolidations set to occur; yet still remain in positive territory. There are encouraging indicators pointing to office activity maintaining a positive course. A recent data revision by the Bureau of Labor Statistics shows the metro Atlanta area adding 34,300 jobs rather than losing jobs in 2011. Comparing year-over-year in January 2012, metro Atlanta’s employment growth showed its strongest expansion since 2007. The industry sector leading the growth was professional and business services; a segment which includes technology companies. This industry has had the most influence on the office market’s occupancy gains over the past year, and is expected to be the demand driver through the remainder of the year.

Square Feet

DEFINITIONS

(50,000)

Class A

Class B

Class C

(100,000) (150,000)

UPDATE Recent Transactions in the Market SALES ACTIVITY PROPERTY

SUBMARKET

SALES DATE

SALE PRICE

SIZE SF

PRICE / SF

BUYER

180 Peachtree St. (port.)

Downtown

1/3/2012

$94,750,000

338,000

$280.33

Carter Validus REIT

3399 Peachtree Rd.

Buckhead

3/6/2012

$59,300,000

348,152

$170.33

Parmenter Realty

201 17th Street

Midtown

12/21/2011

$48,825,000

349,402

$139.74

CBRE Global Investors

50 Hurt Plaza

Downtown

2/15/2012

$17,500,000

436,340

$40.11

Boxer Property

LEASING ACTIVITY PROPERTY

SUBMARKET

TENANT

LANDLORD

SIZE SF

TYPE

760 Doug Davis Dr.

South Atlanta

Delta Airlines

Digital Realty Trust

167,000

Class B Leaseback

Concourse Corp. Ctr. II

Central Perimeter

Dell Secureworks

TIAA-CREF

115,000

Class A Lease

Concourse Corp. Ctr. I

Central Perimeter

Elavon

TIAA-CREF

112,000

Class A Renewal & Expansion

RiverEdge Summit

Northwest Atlanta

Graphic Packaging

iStar Financial

109,556

Class A Lease

MARKET REPORT | Q1 2012 | OFFICE | ATLANTA

UPDATE

Market Comparisons

VACANCY

TOTAL SF

DIRECT VCY SF

DIRECT VCY %

SUB VCY SF

SUB VCY %

URBAN DOWNTOWN A 28 B 87 C 79 Total 194

14,770,027 9,326,982 3,623,817 27,720,826

2,516,877 1,164,775 739,172 4,420,824

17.0% 12.5% 20.4% 15.9%

264,422 1,310 265,732

1.8% 0.0% 1.0%

MIDTOWN A B C Total

38 101 38 177

15,223,520 6,117,051 884,951 22,225,522

2,837,755 960,431 92,048 3,890,234

18.6% 15.7% 10.4% 17.5%

160,903 16,768 11,424 189,095

BUCKHEAD A 49 B 52 C 43 Total 144

15,045,272 4,445,020 1,060,897 20,551,189

2,764,923 748,464 70,384 3,583,771

18.4% 16.8% 6.6% 17.4%

URBAN TOTAL A 115 B 240 C 160 Total 515

45,038,819 19,889,053 5,569,665 70,497,537

8,119,555 2,873,670 901,604 11,894,829

SUBURBAN CENTRAL PERIMETER A 67 18,997,289 B 144 7,708,444 C 99 1,832,745 Total 310 28,538,478 NORTH FULTON A 100 B 322 C 60 Total 482

CLASS

BLDGS

EXISTING PROPERTIES

ABSORPTION

DELIVERIES

NEW NEW NET NET ABSORP ABSORP SUPPLY SUPPLY CURR SF YTD SF CURR SF YTD SF

U/C

RENT

UNDER AVG CONSTR RENT RATE SF

VCY CURR %

VCY PRIOR %

2,781,299 1,166,085 739,172 4,686,556

18.8% 12.5% 20.4% 16.9%

18.2% 12.3% 21.1% 16.6%

(94,625) (17,551) 24,591 (87,585)

(94,625) (17,551) 24,591 (87,585)

-

-

1.1% 0.3% 1.3% 0.9%

2,998,658 977,199 103,472 4,079,329

19.7% 16.0% 11.7% 18.4%

20.9% 17.2% 10.5% 19.4%

178,400 73,548 (10,421) 241,527

178,400 73,548 (10,421) 241,527

-

-

168,340 18,503 186,843

1.1% 0.4% 0.9%

2,933,263 766,967 70,384 3,770,614

19.5% 17.3% 6.6% 18.3%

20.1% 17.3% 7.6% 18.9%

90,546 4,018 9,781 104,345

90,546 4,018 9,781 104,345

-

-

18.0% 14.4% 16.2% 16.9%

593,665 36,581 11,424 641,670

1.3% 0.2% 0.2% 0.9%

8,713,220 2,910,251 913,028 12,536,499

19.3% 14.6% 16.4% 17.8%

19.7% 14.9% 16.8% 18.1%

174,321 60,015 23,951 258,287

174,321 60,015 23,951 258,287

-

-

450,000 450,000

$23.78 $17.38 $15.58 $22.05

3,335,877 2,095,938 347,507 5,779,322

17.6% 27.2% 19.0% 20.3%

147,030 84,993 232,023

0.8% 1.1% 0.8%

3,482,907 2,180,931 347,507 6,011,345

18.3% 28.3% 19.0% 21.1%

19.4% 29.2% 20.2% 22.1%

201,825 77,845 22,596 302,266

201,825 77,845 22,596 302,266

16,000 16,000

16,000 16,000

600,000 600,000

$21.83 $17.81 $13.30 $20.07

15,473,490 11,258,888 1,062,317 27,794,695

2,020,453 1,686,188 97,597 3,804,238

13.1% 15.0% 9.2% 13.7%

246,198 33,242 279,440

1.6% 0.3% 1.0%

2,266,651 1,719,430 97,597 4,083,678

14.6% 15.3% 9.2% 14.7%

15.0% 16.4% 9.7% 15.3%

49,599 122,211 5,835 177,645

49,599 122,211 5,835 177,645

-

-

NORTHEAST ATLANTA A 59 7,476,192 B 416 13,648,993 C 118 2,283,907 Total 593 23,409,092

1,302,089 2,945,648 238,949 4,486,686

17.4% 21.6% 10.5% 19.2%

88,868 63,767 3,595 156,230

1.2% 0.5% 0.2% 0.7%

1,390,957 3,009,415 242,544 4,642,916

18.6% 22.0% 10.6% 19.8%

18.6% 21.5% 10.4% 19.5%

(3,963) (77,008) (6,074) (87,045)

(3,963) (77,008) (6,074) (87,045)

-

-

344,476 344,476

$19.56 $13.87 $12.89 $15.72

NORTHLAKE A 20 B 330 C 166 Total 516

2,830,738 12,244,933 3,542,245 18,617,916

464,321 1,664,391 472,403 2,601,115

16.4% 13.6% 13.3% 14.0%

5,665 59,522 65,187

0.2% 0.5% 0.4%

469,986 1,723,913 472,403 2,666,302

16.6% 14.1% 13.3% 14.3%

12.6% 14.0% 14.5% 13.9%

(112,861) (12,764) 41,867 (83,758)

(112,861) (12,764) 41,867 (83,758)

-

-

290,000 290,000

$20.34 $16.95 $13.49 $16.86

NORTHWEST ATLANTA A 77 B 422 C 147 Total 646

17,497,120 15,883,599 2,624,282 36,005,001

2,480,868 2,982,427 330,530 5,793,825

14.2% 18.8% 12.6% 16.1%

123,574 113,437 2,025 239,036

0.7% 0.7% 0.1% 0.7%

2,604,442 3,095,864 332,555 6,032,861

14.9% 19.5% 12.7% 16.8%

14.4% 19.6% 14.1% 16.7%

(76,123) 10,552 38,290 (27,281)

(76,123) 10,552 38,290 (27,281)

-

-

16,650 16,650

$21.26 $15.00 $14.25 $17.78

SOUTH ATLANTA A 17 B 234 C 129 Total 380

1,302,124 8,430,914 2,614,476 12,347,514

343,221 1,079,721 401,317 1,824,259

26.4% 12.8% 15.3% 14.8%

14,276 52,345 66,621

1.1% 0.6% 0.5%

357,497 1,132,066 401,317 1,890,880

27.5% 13.4% 15.3% 15.3%

27.8% 13.9% 16.2% 15.9%

4,164 43,330 23,073 70,567

4,164 43,330 23,073 70,567

-

-

-

$21.29 $15.85 $12.72 $16.52

WEST ATLANTA A B 58 C 35 Total 93

1,439,601 1,738,518 3,178,119

116,152 764,122 880,274

8.1% 44.0% 27.7%

-

116,152 764,122 880,274

8.1% 44.0% 27.7%

9.6% 43.7% 28.2%

21,940 (4,803) 17,137

21,940 (4,803) 17,137

-

-

-

$15.80 $11.30 $13.22

9,946,829 12,570,465 2,652,425 25,169,719

15.6% 17.8% 16.9% 16.8%

625,611 407,306 5,620 1,038,537

1.0% 18.4% 16.9% 0.7%

10,572,440 12,977,771 2,658,045 26,208,256

16.6% 18.4% 16.9% 17.5%

16.7% 18.6% 17.7% 17.7%

62,641 186,106 120,784 369,531

62,641 186,106 120,784 369,531

16,000 16,000

16,000 16,000

1,234,476 16,650 1,251,126

$20.73 $15.66 $13.01 $16.84

18,066,384 15,444,135 3,554,029 37,064,548

16.6% 17.1% 16.7% 16.8%

1,219,276 443,887 17,044 1,680,207

1.1% 0.5% 0.1% 0.8%

19,285,660 15,888,022 3,571,073 38,744,755

17.8% 17.6% 16.8% 17.6%

18.0% 17.8% 17.5% 17.9%

236,962 246,121 144,735 627,818

236,962 246,121 144,735 627,818

16,000 16,000

16,000 16,000

1,234,476 466,650 1,701,126

$21.97 $15.67 $13.55 $18.85

1,680,207 1,665,006 1,730,663 1,918,745 2,051,814

0.8% 0.8% 0.8% 0.9% 0.9%

38,744,755 39,356,573 39,720,865 40,002,733 40,089,849

17.6% 17.9% 18.0% 18.2% 18.2%

17.9% 18.0% 18.2% 18.2% 18.1%

627,818 364,292 281,868 398,116 (321,010)

627,818 723,266 358,974 77,106 (321,010)

16,000 311,000 19,015

16,000 330,015 330,015 330,015 19,015

1,701,126 1,717,126 632,650 632,650 927,650

$18.85 $18.90 $18.90 $19.05 $19.26

SUBURBAN TOTAL A 340 B 1,926 C 754 Total 3,020

63,576,953 70,615,372 15,698,490 149,890,815

ATLANTA MARKET GRAND TOTAL A 455 108,615,772 B 2,166 90,504,425 C 914 21,268,155 Total 3,535 220,388,352

-

TOTAL VCY SF

-

450,000 450,000

-

-

$19.67 $15.52 $14.74 $18.34

$27.00 $17.82 $13.64 $24.52

$24.66 $18.81 $18.37 $23.29

$20.08 $14.33 $13.15 $17.68

QUARTERLY COMPARISONS AND TOTALS QUARTERLY COMPARISON AND TOTALS Q1-12 Q4-11 Q3-11 Q2-11 Q1-11

3,535 3,534 3,534 3,534 3,533

220,388,352 220,372,352 220,372,352 220,372,352 220,061,352

37,064,548 37,691,567 37,990,202 38,083,988 38,038,035

16.8% 17.1% 17.2% 17.3% 17.3%

NOTE: STATISTICAL SET CONSISTS OF OFFICE PROPERTIES 10,000 SF AND UP, INCLUDING OWNER-OCCUPIED PROPERTIES; AND EXCLUDING MEDICAL OFFICE AND PROPERTIES WHERE THE GOVERNMENT IS 100% OWNER AND OCCUPIER. WHILE COSTAR ATTEMPTS TO PROVIDE THE MOST ACCURATE DATA AT THE END OF EVERY QUARTER, REVISIONS ARE MADE THROUGHOUT THE YEAR ACCOUNTING FOR DISCREPANCIES IN PAST REPORTING.

SOURCE: COSTAR PROPERTY, COLLIERS RESEARCH

MARKET REPORT | Q1 2012 | OFFICE | ATLANTA

CONSTRUCTION

RENTAL RATES & CONCESSIONS

•

Only one small office building of 16,000 SF delivered in first quarter.

•

Atlanta’s average rental rate has yet to hit bottom, posting yet another decline in first quarter.

•

The majority of office space under construction continues to be build-to-suits. Cox Enterprises’ first phase office building of 300,000 SF is expected to deliver in second quarter.

•

•

No new office projects are on the horizon, though construction could possibly begin on an office building in the North Fulton submarket by the end of the year.

There are some pockets in the market where rental rates appear to have bottomed. These areas include Northeast Atlanta and Central Perimeter. North Fulton is the only submarket where rents have started trending upwards.

522 offices in 62 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118

INVESTMENT & SALES ACTIVITY •

Investment sales volume in first quarter is on par with this time last year at $200 million.

•

$1.8 billion in annual revenue

• Over 2.5 billion square feet under

CONSTRUCTION ACTIVITY (100,000 SF+)

management • Over 12,000 professionals

PROPERTY ADDRESS

SUBMARKET

SIZE (SF)

DELIVERY DATE

675 Ponce De Leon Ave.

Midtown

450,000

First Quarter 2014

Primerica - 3100 Breckinridge Blvd

Northeast Atlanta

344,476

Third Quarter 2012

UNITED STATES:

Cox: 6205 P’tree Dunwoody Rd. - 1

Central Perimeter

300,000

Second Quarter 2012

Cox: 6205 P’tree Dunwoody Rd. - 2

Central Perimeter

300,000

Fourth Quarter 2012

CDC - 4770 Buford Hwy.

Northlake

290,000

Second Quarter 2013

Atlanta Caldwell Zimmerman Executive VP | Colliers Manager Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309

Canton GAINESVILLE Cumming

CHEROKEE CO.

Allatona Lake Woodstock

BARTOW CO.

Sugar Hill

FO RS FU

Mountain Park

N

CO .

CO .

NORTHEAST ATLANTA

e hooch e tac

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PAULDING CO. COBB CO.

Alpharetta Roswell

NORTHWEST ATLANTA

Bras

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CHEROKEE CO.

Acworth

OFFICE SUBMARKETS

Buford

HA GW INN LL CO .

ETT CO .

NORTH FULTON Rive r

Emerson

Lake Lanier

FULTON CO. FUL L FORSYTH CO. FOR R

BARTOW CO.

CHEROKEE CO.

Cartersville

Duluth

316

CO BB FU LT CO O .

N CO .

MARIETTA

CENTRAL PERIMETER

Lawrenceville

DORAVILLE Norcross

CHAMBLEE SMYRNA

NORTHLAKEG

W IN DE NE KA TT LB C CO O. .

BUCKHEAD Austell COBB CO.

Clarkston

WEST ATLANTA

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Douglasville

ATLANTA

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Avondale Estates Estate

DOWNTOWN

o

W AL TO N

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MIDTOWN DECATUR DE ECA ATUR

CO .

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Snellville

Stone Mountain G W IN NE TT

DOUGLAS CO.

e

PAULDING CO.

DEKALB CO. C FULTON CO. C

Powder Springs

Ch

DEKALB HENRY

Hartsfield-Jackson International Airport

FULTON CO. COWETA CO.

Palmetto

FOREST PARK

SOUTH ATLANTA Riverdale Riverda

Fairburn

Conyers Covington RO C NE KDA WT LE ON CO CO . .

CLAYTON LAYT L A ON CO.

Union City

CO. CO.

675

DE KALB RO CO CK .

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Lithonia EAST POINT COLLEGE PARK HAPEVILLE

Stockbridge

The Atlanta office market consists of ten submarkets.

They include the urban markets of Downtown, Midtown and Buckhead, and the suburban markets of Central Perimeter, North Fulton, Northwest Atlanta, Northeast Atlanta, Northlake, South Atlanta and West Atlanta.

The major interstates in the region include: I-75, I-85, I-285, I-575, I-985, I-675 and I-20.

Georgia 400 and US 316 also play important roles to Atlanta’s transportation system.

TEL +1 404 888 9000 FAX +1 404 870 2845

RESEARCHER: Atlanta Scott Amoson Vice President | Director of Research Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 877 9286 FAX +1 404 870 2845

.

ON CO FULT CO. TTE FAYE

Jonesboro

McDonough BU TT S

CO .

HENRY CO. CLAYTON CO.

Fayetteville

Newnan Peachtree City

This market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International-Atlanta, Inc., and certain of its subsidiaries, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 520 offices throughout 62 countries worldwide.

Accelerating success.

First Quarter 2012

Atlanta Industrial Market FIGURES AT A GLANCE BY MARKET

Flex Market Statistics

First Quarter 2012

Existing Inventory Market Central Atlanta Ind Chattahoochee Ind I-20 W/Fulton Ind North Central Atlanta Ind Northeast Atlanta Ind Northwest Atlanta Ind Snapfinger/I-20 East Ind South Atlanta Ind Stone Mountain Ind Totals

# Blds

Total RBA

Vacancy Direct SF

Total SF

Vac %

YTD Net

YTD

Under

Leasing

Absorption

Deliveries

Const SF

Activity

0 0 0 0 0 0 0 0 0

62 77 55 155 403 194 67 128 88

2,376,898 2,288,118 2,559,537 7,342,159 15,181,117 8,525,768 2,369,299 3,975,615 2,864,969

181,254 251,673 436,313 1,756,894 3,333,295 1,124,621 154,165 364,309 735,426

181,254 251,673 436,313 1,772,932 3,452,831 1,244,565 154,165 380,134 735,426

7.6% 11.0% 17.0% 24.1% 22.7% 14.6% 6.5% 9.6% 25.7%

57,449 (5,452) (36,573) (46,157) (13,470) 8,051 23,600 (20,613) (16,224)

0 0 0 0 27,500 0 0 0 0

1,229

47,483,480

8,337,950

8,609,293

18.1%

(49,389)

27,500

0

2,364 21,835 4,961 19,256 143,590 91,171 0 13,915 22,525 319,617

Source: CoStar Property速

Shallow-Bay Distribution Market Statistics Existing Inventory Market Central Atlanta Ind Chattahoochee Ind I-20 W/Fulton Ind North Central Atlanta Ind Northeast Atlanta Ind Northwest Atlanta Ind Snapfinger/I-20 East Ind South Atlanta Ind Stone Mountain Ind Totals

# Blds 50 29 251 100 532 208 107 258 178 1,713

Total RBA 2,176,748 1,125,858 16,742,145 5,165,404 27,949,823 11,068,215 6,195,293 21,800,383 7,997,475 100,221,344

Vacancy Direct SF

Total SF

122,090 142,870 1,782,410 350,560 3,444,510 1,378,224 641,133 2,544,869 1,160,009

122,090 142,870 1,790,410 399,304 3,510,788 1,378,224 641,133 2,544,869 1,160,009

11,566,675

11,689,697

First Quarter 2012 YTD Net

YTD

Under

Leasing

Absorption

Deliveries

Const SF

Activity

5.6% 12.7% 10.7% 7.7% 12.6% 12.5% 10.3% 11.7% 14.5%

(12,780) (30,000) 59,993 (29,667) (119) 13,732 22,010 227,590 (36,163)

0 0 0 0 215,000 0 0 0 0

0 0 0 0 0 0 0 0 0

11.7%

214,596

215,000

Vac %

0

0 0 104,016 60,673 350,662 99,519 129,973 101,276 172,789 1,018,908

Source: CoStar Property速

Warehouse Market Statistics Existing Inventory

First Quarter 2012 Vacancy

YTD Net

YTD

Under Const SF 0 0 0 0 0 0 0 900,640 0

Market Central Atlanta Ind Chattahoochee Ind I-20 W/Fulton Ind North Central Atlanta Ind Northeast Atlanta Ind Northwest Atlanta Ind Snapfinger/I-20 East Ind South Atlanta Ind Stone Mountain Ind

# Blds 174 303 614 248 1,112 580 340 879 202

Total RBA 10,387,196 16,604,997 71,799,576 12,888,371 108,736,018 39,262,936 33,569,302 119,926,425 13,903,317

Direct SF 853,396 1,509,383 11,130,700 1,425,457 11,186,917 5,355,049 4,614,824 13,674,265 1,655,186

Total SF 853,396 1,512,383 11,385,810 1,452,373 11,537,351 5,469,534 4,614,824 15,762,708 1,669,586

Vac % 8.2% 9.1% 15.9% 11.3% 10.6% 13.9% 13.7% 13.1% 12.0%

Absorption (83,060) (115,299) 50,086 (21,210) 434,427 211,723 100,968 354,157 13,369

Deliveries 0 0 0 0 0 0 0 0 0

Totals

4,452

427,078,138

51,405,177

54,257,965

12.7%

945,161

0

900,640

Leasing Activity 8,300 73,926 658,541 23,918 446,911 385,954 125,918 1,884,826 64,244 3,672,538

Source: CoStar Property速

Total Industrial Market Statistics Existing Inventory

First Quarter 2012

Vacancy Vac %

YTD Net

YTD

Under

Leasing

Absorption

Deliveries

Const SF

Activity

0 0 0 0 242,500 0 0 0 0

0 0 0 0 0 0 0 900,640 0

242,500

900,640

Market

# Blds

Total RBA

Direct SF

Total SF

Central Atlanta Ind Chattahoochee Ind I-20 W/Fulton Ind North Central Atlanta Ind Northeast Atlanta Ind Northwest Atlanta Ind Snapfinger/I-20 East Ind South Atlanta Ind Stone Mountain Ind

286 409 920 503 2,047 982 514 1,265 468

14,940,842 20,018,973 91,101,258 25,395,934 151,866,958 58,856,919 42,133,894 145,702,423 24,765,761

1,156,740 1,903,926 13,349,423 3,532,911 17,964,722 7,857,894 5,410,122 16,583,443 3,550,621

1,156,740 1,906,926 13,612,533 3,624,609 18,500,970 8,092,323 5,410,122 18,687,711 3,565,021

7.7% 9.5% 14.9% 14.3% 12.2% 13.7% 12.8% 12.8% 14.4%

(38,391) (150,751) 73,506 (97,034) 420,838 233,506 146,578 561,134 (39,018)

Totals

7,394

574,782,962

71,309,802

74,556,955

13.0%

1,110,368

10,664 95,761 767,518 103,847 941,163 576,644 255,891 2,000,017 259,558 5,011,063

First Quarter 2012

Atlanta Industrial Market HISTORICAL FIGURES AT A GLANCE

Flex Market Statistics Existing Inventory Period 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

# Blds 1,229 1,228 1,228 1,228 1,227 1,218 1,202 1,188 1,179 1,161 1,152 1,142 1,130 1,097 1,057 1,025

Total RBA 47,483,480 47,455,980 47,455,980 47,455,980 47,434,280 47,260,377 46,662,901 46,116,647 45,733,704 44,802,354 44,501,943 44,172,134 43,518,197 41,777,404 39,993,723 38,280,869

First Quarter 2012 Vacancy

Direct SF 8,337,950 8,297,707 7,586,391 7,330,243 6,258,690 6,117,357 5,724,114 5,598,620 6,109,425 6,130,722 5,221,187 5,254,348 3,948,348 3,865,086 3,719,267 3,448,237

Total SF 8,609,293 8,532,404 7,880,432 7,696,866 6,583,429 6,382,302 6,024,795 6,009,827 6,517,373 6,547,281 5,856,537 6,005,841 4,396,453 4,332,696 3,719,267 3,448,237

Net

Deliveries

Vac %

Absorption

# Blds

18.1% 18.0% 16.6% 16.2% 13.9% 13.5% 12.9% 13.0% 14.3% 14.6% 13.2% 13.6% 10.1% 10.4% 9.3% 9.0%

(49,389) (651,972) (183,566) (1,091,737) (27,224) 239,969 531,286 890,489 961,258 (390,333) 479,113 (955,451) 1,677,036 1,170,252 1,441,824 1,797,853

1 0 0 1 9 16 14 9 19 10 11 18 33 41 32 29

Total RBA 27,500 0 0 21,700 173,903 597,476 546,254 382,943 951,350 326,411 358,963 772,570 1,740,793 1,807,961 1,712,854 1,348,900

UC Inventory # Blds 0 1 0 0 0 5 13 9 6 17 5 7 12 26 28 24

Total RBA 0 27,500 0 0 0 86,810 531,901 521,706 232,106 927,546 149,143 226,221 553,220 1,470,405 1,355,483 1,275,999

Leasing Activity 319,617 1,296,732 1,406,900 1,459,836 1,277,508 1,316,278 1,896,611 2,136,812 3,179,337 3,277,145 3,981,150 3,769,194 7,703,201 4,893,919 3,287,345 3,010,059

Source: CoStar Property速

Shallow-Bay Distribution Market Statistics Existing Inventory Period 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

# Blds 1,713 1,712 1,711 1,710 1,709 1,697 1,687 1,678 1,670 1,677 1,673 1,665 1,655 1,634 1,601 1,552

Total RBA 100,221,344 100,006,344 99,597,338 98,617,338 98,523,358 96,793,891 95,197,779 93,466,349 92,655,055 92,725,225 92,602,664 92,224,736 91,569,012 89,671,618 87,392,708 84,080,955

Vacancy Direct SF 11,566,675 11,615,275 12,403,208 11,547,656 10,412,975 8,338,870 8,526,408 9,081,831 10,479,046 10,891,253 9,318,920 7,970,499 8,188,522 7,762,199 7,726,438 8,501,696

Net

First Quarter 2012 Deliveries

Total SF

Vac %

Absorption

# Blds

11,689,697 11,689,293 12,447,078 11,705,121 10,703,547 8,984,066 8,807,242 9,449,800 10,656,865 11,188,940 9,581,722 8,504,503 8,584,811 8,307,077 7,726,438 8,501,696

11.7% 11.7% 12.5% 11.9% 10.9% 9.3% 9.3% 10.1% 11.5% 12.1% 10.3% 9.2% 9.4% 9.3% 8.8% 10.1%

214,596 1,166,791 238,043 (907,594) 9,986 1,419,288 2,373,988 2,018,359 461,905 (1,484,657) (699,291) 736,032 1,619,660 1,698,271 4,087,011 2,157,312

1 1 1 2 13 11 11 8 10 6 9 17 23 36 50 38

Total RBA 215,000 409,006 980,000 129,680 1,889,467 1,614,862 1,843,290 811,294 672,183 244,633 402,928 992,281 1,937,394 2,492,694 3,339,092 2,078,423

UC Inventory # Blds 0 1 1 1 2 12 9 9 6 7 4 8 15 21 29 29

Total RBA 0 215,000 409,006 980,000 129,680 1,839,467 1,451,862 1,583,227 661,368 401,823 84,693 377,928 937,281 1,732,731 1,870,502 2,217,193

Leasing Activity 1,018,908 2,128,569 2,627,383 3,439,070 2,237,221 2,506,073 3,758,477 3,740,195 5,776,844 6,797,356 6,843,682 7,845,434 14,015,391 9,595,102 7,577,533 6,926,056

Source: CoStar Property速

Warehouse Market Statistics Existing Inventory Period 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

# Blds 4,452 4,452 4,450 4,447 4,432 4,377 4,300 4,208 4,157 4,099 4,054 3,988 3,845 3,734 3,621 3,504

Total RBA 427,078,138 427,078,138 426,182,324 424,433,264 424,897,825 419,601,097 412,040,941 393,062,476 385,212,367 378,498,247 374,647,344 366,529,580 348,672,141 333,142,424 316,614,817 304,418,276

First Quarter 2012

Vacancy Direct SF 51,405,177 52,317,016 59,343,354 54,720,141 51,071,988 44,036,350 45,048,311 36,080,991 38,355,129 45,356,624 42,488,628 34,854,715 22,383,868 22,257,917 23,073,123 25,188,992

Net

Deliveries

Total SF

Vac %

Absorption

# Blds

54,257,965 55,203,126 61,872,545 57,161,871 53,161,373 45,535,661 46,978,170 38,284,699 40,872,754 47,533,136 46,991,694 38,446,865 24,964,088 24,342,957 23,073,123 25,188,992

12.7% 12.9% 14.5% 13.5% 12.5% 10.9% 11.4% 9.7% 10.6% 12.6% 12.5% 10.5% 7.2% 7.3% 7.3% 8.3%

945,161 7,565,233 (2,961,614) (4,465,059) (2,328,984) 9,002,665 10,284,994 10,438,164 13,374,502 3,309,461 (427,065) 4,374,662 14,908,586 15,257,773 14,312,410 14,562,376

0 3 4 17 59 79 94 53 62 48 70 144 113 114 117 133

Total RBA 0 1,311,500 1,814,918 1,875,000 5,623,968 7,784,656 19,200,465 7,995,266 7,377,893 4,105,903 8,381,111 17,892,439 16,785,717 16,587,607 12,196,541 17,145,876

UC Inventory # Blds 1 1 2 4 16 40 60 76 42 43 45 56 109 88 90 82

Total RBA 900,640 900,640 1,211,000 2,946,168 1,860,000 3,834,836 6,892,736 15,688,171 7,041,576 5,526,287 4,020,711 7,296,815 14,026,922 11,171,630 13,956,432 8,775,568

Leasing Activity 3,672,538 9,842,833 8,655,836 11,342,681 10,125,852 12,841,020 12,715,162 13,936,866 19,824,249 22,857,130 25,425,968 21,895,277 44,204,889 33,881,371 18,526,218 18,605,855

First Quarter 2012

Atlanta Industrial Market HISTORICAL FIGURES AT A GLANCE

Total Industrial Market Statistics Existing Inventory Period 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

# Blds 7,394 7,392 7,389 7,385 7,368 7,292 7,189 7,074 7,006 6,937 6,879 6,795 6,630 6,465 6,279 6,081

Total RBA 574,782,962 574,540,462 573,235,642 570,506,582 570,855,463 563,655,365 553,901,621 532,645,472 523,601,126 516,025,826 511,751,951 502,926,450 483,759,350 464,591,446 444,001,248 426,780,100

Vacancy Direct SF 71,309,802 72,229,998 79,332,953 73,598,040 67,743,653 58,492,577 59,298,833 50,761,442 54,943,600 62,378,599 57,028,735 48,079,562 34,520,738 33,885,202 34,518,828 37,138,925

First Quarter 2012 Net

Deliveries

Total SF

Vac %

Absorption

# Blds

74,556,955 75,424,823 82,200,055 76,563,858 70,448,349 60,902,029 61,810,207 53,744,326 58,046,992 65,269,357 62,429,953 52,957,209 37,945,352 36,982,730 34,518,828 37,138,925

13.0% 13.1% 14.3% 13.4% 12.3% 10.8% 11.2% 10.1% 11.1% 12.6% 12.2% 10.5% 7.8% 8.0% 7.8% 8.7%

1,110,368 8,080,052 (2,907,137) (6,464,390) (2,346,222) 10,661,922 13,190,268 13,347,012 14,797,665 1,434,471 (647,243) 4,155,243 18,205,282 18,126,296 19,841,245 18,517,541

2 4 5 20 81 106 119 70 91 64 90 179 169 191 199 200

Total RBA 242,500 1,720,506 2,794,918 2,026,380 7,687,338 9,996,994 21,590,009 9,189,503 9,001,426 4,676,947 9,143,002 19,657,290 20,463,904 20,888,262 17,248,487 20,573,199

UC Inventory # Blds 1 3 3 5 18 57 82 94 54 67 54 71 136 135 147 135

Total RBA 900,640 1,143,140 1,620,006 3,926,168 1,989,680 5,761,113 8,876,499 17,793,104 7,935,050 6,855,656 4,254,547 7,900,964 15,517,423 14,374,766 17,182,417 12,268,760

Leasing Activity 5,011,063 13,268,134 12,690,119 16,241,587 13,640,581 16,663,371 18,370,250 19,813,873 28,780,430 32,931,631 36,250,800 33,509,905 65,923,481 48,370,392 29,391,096 28,541,970

Q1 2012 | INDUSTRIAL

ATLANTA

MARKET REPORT

Plenty of Positives for Atlanta’s Industrial Market in Q1 Industrial occupancy increased yet again for Atlanta, beginning the year where it left off in 2011. Though absorption fell short of the previous two quarters, it was positive nonetheless; by almost 1 million square feet. This pushed Atlanta’s overall industrial vacancy rate down to 13.4% which is the third consecutive period with at least some decrease in vacancy. The largest move-ins of the quarter were smaller-sized tenants below 500,000 square feet. These include Life Science Logistics moving into 255,100 square feet in South Atlanta, Pratt Industries taking 186,000 square feet also in South Atlanta and Boxercraft occupying 148,300 square feet in I-20 West/Fulton Industrial. Owens Corning was the largest occupier in the first quarter, moving into half of its 1 million-plus sq. ft. lease signed in South Atlanta.

This move-in, however, was offset by the building’s former tenant Unilever, which moved out of the same amount of space during the same period of time. The net result ends up being zero space absorbed.

MARKET INDICATORS Q1 2012 VACANCY

Projected

Q2 2012

—

NET ABSORPTION CONSTRUCTION RENTAL RATE

—

CAP RATES

—

First quarter’s industrial absorption was expected to be somewhat subdued compared to previous quarters simply because of the amount of move-in activity occurring in the latter half of 2011. Less than subtle, however, was the magnitude of leasing activity and announcements over the past three months impacting Atlanta’s industrial market. The biggest story lines of first quarter centered on large-sized transactions, including build-to-suits; and major manufacturing announcements. The Northeast Atlanta industrial submarket benefited most from these, specifically the Jackson County area. The submarket is beginning to see a lot of synergy and will be one of the most active regions in Atlanta this year. Most recently, Carter’s Inc. signed for a 1-million square feet lease to house an e-commerce distribution center at Park 85 at Braselton. Online business is booming for the company, prompting it to find space to accommodate expansion of its distribution capabilities. Also taking place were the announcements

by Toyota Industries and Caterpillar to build manufacturing facilities in the region. Toyota plans to build a $350 million automotive parts plant in Jackson County which is expected to create 320 jobs by 2013. Caterpillar’s announcement was the biggest economic win in Georgia since the Kia Motors continued on page 2

UPDATE

ATLANTA INDUSTRIAL

NEW SUPPLY, ABSORPTION AND VACANCY RATES

Atlanta Rental Rates Overall Market & Bulk Warehouse* (per sq. ft.) $4.25 $4.25 $4.00 $4.00

30,000,000

16%

25,000,000

14%

$3.75 $3.75

$3.25 $3.25 $3.00 $3.00

8%

10,000,000

6%

5,000,000

4% 2%

$2.50 $2.50

2012

2011

2010

2009

2008

2007

2006

(5,000,000)

2005

0 2004

2012 2012

2011 2011

Bulk Warehouse*

*Bulk warehouse defined as warehouse space in excess of 100,000 SF with dock loading and minimium ceiling heights of 24 ft.

10%

15,000,000

2003

Market AVG

2010 2010

2009 2009

$2.75 $2.75

12%

20,000,000 Square Feet

$3.50 $3.50

0% -2% -4%

(10,000,000) Absorption

Deliveries

Vacancy %

Atlanta’s industrial market started the year with 995,482 square feet absorbed; the third consecutive quarter with an increase in occupancy. As a result, overall industrial vacancy decreased slightly to 13.4%.

Only one building of 27,500 square feet delivered in the first quarter.

MARKET REPORT | Q1 2012 | INDUSTRIAL | ATLANTA

VACANCY & AVAILABILITY •

Not since the fourth quarter of 2009 has Atlanta’s industrial vacancy rate been this low.

•

All of Atlanta’s major industrial markets saw a drop in vacancy in the first quarter. Northwest Atlanta saw the largest percentage drop with a 0.5% decrease. This can be attributed to small-business growth in the submarket.

Shallow-Bay Distribution-A type of building designed to be used for the distribution of materials or as a medium-sized manufacturing facility. Typically has 10%-30% of office, ceiling heights of 18’-24’ and bay depths of 120’-190’.

Flex-A type of building designed to be versatile, which may be used in combination with office, R&D, quasi-retail sales and industrial warehouse and distribution uses.

Typically has at least 50% office and ceiling heights under 18’.

ABSORPTION & LEASING ACTIVITY •

Absorption was positive for the third straight quarter. First quarter’s occupancy gains were mostly in warehouse and distribution properties.

•

South Atlanta once again led the Atlanta market in space absorbed; though I-20 West/Fulton Industrial, Northeast Atlanta and Northwest Atlanta saw solid activity as well.

•

Since this time last year, vacant space available has decreased by almost 6.4 million square feet.

•

First quarter leasing activity was highlighted by large-sized transactions.

•

Atlanta’s industrial market is on track to see vacancy dip below 13% by the end of the year.

•

Absorption will likely be subdued again next quarter, but stronger in the second half of the year.

Q1 2012 | Vacant Space By Type

Q1 2012 | Net Absorption by Submarket 400,000

Build-To-Suit-A term describing property that

100,000

I-20W | FULTON IND

FLEX 9,637,134 SF VCY RATE = 16.9%

200,000

NORTHWEST ATL

SHALLOW-BAY 10,940,660 SF VCY RATE = 14%

NORTHEAST ATLANTA

WAREHOUSE 59,823,521 SF VCY RATE = 12.8%

SOUTH ATLANTA

300,000

Square Feet

Leasing Activity-The volume of square footage that is committed to and signed for under a lease obligation for a specific building or market in a given period of time. It includes direct leases, subleases and renewals of existing leases. It also includes any pre-leasing activity for buildings under construction or planned.

CHATTAHOOCHEE

Bulk Warehouse-A type of building designed to be used for bulk storage or materials, distribution or heavy manufacturing.

Typically has a small amount of office space, ceiling heights of 24’ and bay depths of over 190’.

NORTH CENTRAL

Vacancy Rate-A percentage of the total amount of physically vacant space divided by the total amount of existing inventory.

STONE MOUNTAIN

occupied space over a given period of time, calculated by summing all the positive changes in occupancy and subtracting all the negative changes in occupancy.

CENTRAL ATLANTA

Absorption (Net)-The net change in

plant in West Point, Georgia. The company plans to build a tractor and excavator plant on 900 acres in Athens, Georgia. Although not technically located in the Atlanta industrial market, the impact will be felt via parts suppliers and manufacturers locating facilities in the submarket to support Caterpillar’s operations. In addition to the activity taking place in Northeast Atlanta, the South Atlanta industrial submarket continues to see major transactions. Georgia-Pacific’s build-to-suit of 900,000 square feet in Henry County was one of the quarter’s largest transactions. The company will be using the distribution center for its consumer products business. Also, Home Depot recently moved a step closer to a 1-million square foot distribution center in the same area. All in all, activity in Atlanta’s industrial market remains in high gear. First quarter proved to be better than expected. Looking forward to the end of the year, leasing activity will continue to surprise while absorption will continue to show solid gains.

SNAPFINGER | I-20E

DEFINITIONS

0

was developed specifically for a certain tenant to occupy. Can be either leased or owned by tenant.

(100,000)

Warehouse

Shallow-Bay

Flex

(200,000)

UPDATE Recent Transactions in the Market SALES ACTIVITY PROPERTY

SUBMARKET

SALES DATE

SALE PRICE

SIZE SF

PRICE / SF

BUYER

Chastain Distr. Center

Northwest Atlanta Ind

1/25/2012

$18,125,000

357,600

$50.69

Cabot Industrial Properties

1950 Vaughn Rd.

Northwest Atlanta Ind

1/27/2012

$12,800,000

162,451

$78.79

Clarion Partners

Brickton I-IV

Northeast Atlanta Ind

3/15/2012

$11,500,000

257,890

$44.59

Cobalt Industrial REIT

1680-1700 Executive Dr.

Northeast Atlanta Ind

1/25/2012

$10,281,396

201,596

$51.00

Cabot Industrial Properties

LEASING ACTIVITY PROPERTY

SUBMARKET

TENANT

LANDLORD

SIZE SF

TYPE

Park 85 at Braselton

Northeast Atlanta Ind

Carter’s Inc.

Duke

1,061,663

Distribution Lease

8095 McLarin Rd.

South Atlanta Ind

Owens Corning

ProLogis

1,044,288

Warehouse Lease

493 Westridge Pky.

South Atlanta Ind

Georgia-Pacific

Panattoni

900,640

Build-To-Suit

5400 Fulton Industrial Blvd.

I-20 West/Fulton Ind

New Breed Logistics

Panattoni/CalSTRS

439,487

Warehouse Lease

MARKET REPORT | Q1 2012 | INDUSTRIAL | ATLANTA

UPDATE

Market Comparisons

VACANCY

BLDGS

EXISTING PROPERTIES

ABSORPTION

DELIVERIES NEW SUPPLY CURR SF

NEW SUPPLY YTD SF

U/C

RENT

UNDER CONSTR SF

AVG RENT (NNN)

VCY CURR %

VCY PRIOR %

NET ABSORP CURR SF

NET ABSORP YTD SF

213,654 107,090 889,396 1,210,140

7.9% 7.4% 7.5% 7.6%

10.0% 7.1% 6.8% 7.4%

57,449 (4,780) (83,060) (30,391)

57,449 (4,780) (83,060) (30,391)

-

-

-

$9.74 $2.71 $3.50 $3.93

0.0% 0.0%

281,073 142,870 1,480,992 1,904,935

10.5% 16.6% 8.4% 9.0%

10.1% 13.1% 7.8% 8.3%

(11,852) (30,000) (98,767) (140,619)

(11,852) (30,000) (98,767) (140,619)

-

-

-

$6.43 $3.85 $4.45 $4.62

16.5% 12.7% 14.5% 14.3%

0.1% 0.3% 0.3%

504,621 1,631,005 11,179,242 13,314,868

16.5% 12.7% 14.9% 14.6%

15.3% 13.4% 15.2% 14.9%

(36,585) 83,253 206,764 253,432

(36,585) 83,253 206,764 253,432

-

-

-

$6.48 $2.50 $2.92 $2.92

NORTH CENTRAL ATLANTA IND. Flex 251 8,476,299 Shallow-Bay 115 4,684,516 Warehouse 397 15,270,513 Total 763 28,431,328

22.0% 7.6% 10.3% 13.4%

0.2% 1.0% 0.2% 0.3%

1,883,555 403,264 1,606,496 3,893,315

22.2% 8.6% 10.5% 13.7%

21.7% 7.0% 10.4% 13.2%

(42,904) (73,227) (16,233) (132,364)

(42,904) (73,227) (16,233) (132,364)

-

-

-

$9.47 $6.75 $4.55 $6.41

NORTHEAST ATLANTA IND. Flex 634 18,517,727 Shallow-Bay 467 23,436,739 Warehouse 1,611 127,792,777 Total 2,712 169,747,243

20.1% 13.8% 12.8% 13.8%

0.7% 0.3% 0.3% 0.3%

3,848,600 3,308,611 16,779,304 23,936,515

20.8% 14.1% 13.1% 14.1%

20.6% 13.9% 13.4% 14.3%

(13,470) (45,072) 349,711 291,169

(13,470) (45,072) 349,711 291,169

27,500 27,500

27,500 27,500

NORTHWEST ATLANTA IND. Flex 302 9,806,416 Shallow-Bay 216 9,279,135 Warehouse 802 41,871,591 Total 1,320 60,957,142

12.9% 11.9% 12.9% 12.7%

1.4% 0.3% 0.4%

1,393,845 1,105,474 5,511,872 8,011,191

14.2% 11.9% 13.2% 13.1%

14.2% 12.1% 13.7% 13.6%

(5,294) 20,182 243,473 258,361

(5,294) 20,182 243,473 258,361

-

-

-

$7.54 $3.79 $3.75 $4.08

SNAPFINGER / I-20 EAST IND. Flex 119 3,002,413 Shallow-Bay 103 4,703,011 Warehouse 430 36,561,491 Total 652 44,266,915

7.4% 12.9% 10.5% 10.6%

223,177 605,360 3,851,471 4,680,008

7.4% 12.9% 10.5% 10.6%

8.0% 13.3% 10.8% 10.9%

16,488 22,010 115,418 153,916

16,488 22,010 115,418 153,916

-

-

-

$6.81 $2.76 $3.01 $3.07

SOUTH ATLANTA IND. Flex 229 Shallow-Bay 220 Warehouse 1,136 Total 1,585

5,198,359 13,621,342 125,211,270 144,030,971

9.0% 18.7% 11.8% 12.3%

0.3% 0.1% 1.7% 1.5%

481,619 2,561,977 16,834,904 19,878,500

9.3% 18.8% 13.4% 13.8%

8.8% 20.7% 13.5% 14.0%

(26,413) 251,990 114,839 340,416

(26,413) 251,990 114,839 340,416

-

-

STONE MOUNTAIN IND. Flex 135 Shallow-Bay 167 Warehouse 309 Total 611

3,415,846 7,091,207 15,947,134 26,454,187

23.6% 15.2% 10.5% 13.4%

0.1% 0.1%

806,990 1,075,009 1,689,844 3,571,843

23.6% 15.2% 10.6% 13.5%

22.6% 15.6% 10.7% 13.5%

(36,534) 28,837 9,259 1,562

(36,534) 28,837 9,259 1,562

-

-

ATLANTA MARKET GRAND TOTAL Flex 1,969 56,860,922 1,576 77,917,746 Shallow-Bay Warehouse 6,048 467,264,567 Total 9,593 602,043,235

16.4% 13.9% 12.2% 12.8%

0.5% 0.2% 0.6% 0.5%

9,637,134 10,940,660 59,823,521 80,401,315

16.9% 14.0% 12.8% 13.4%

16.7% 14.4% 13.0% 13.5%

(99,115) 253,193 841,404 995,482

(99,115) 253,193 841,404 995,482

27,500 27,500

27,500 27,500

1,664,297 1,664,297

$7.33 $3.46 $3.18 $3.43

0.5% 0.5% 0.5% 0.4% 0.4%

80,401,315 81,369,297 83,160,518 87,088,445 86,762,601

13.4% 13.5% 13.8% 14.5% 14.4%

13.5% 13.8% 14.5% 14.4% 14.6%

995,482 1,905,990 4,397,933 (325,844) 2,735,414

27,500 114,769 470,006 1,632,223

27,500 2,216,998 2,102,229 1,632,223 1,632,223

1,664,297 231,750 346,519 789,025 774,756

$3.43 $3.50 $3.46 $3.43 $3.45

TOTAL SF

DIRECT VCY %

SUB VCY %

CENTRAL ATLANTA IND. Flex 91 Shallow-Bay 43 Warehouse 239 Total 373

2,711,420 1,438,733 11,872,811 16,022,964

7.9% 7.4% 7.5% 7.6%

-

CHATTAHOOCHEE IND. Flex 111 Shallow-Bay 27 Warehouse 361 Total 499

2,677,524 862,949 17,610,367 21,150,840

10.5% 16.6% 8.4% 9.0%

I-20 W / FULTON IND. Flex 97 Shallow-Bay 218 Warehouse 763 Total 1,078

3,054,918 12,800,114 75,126,613 90,981,645

PROP TYPE

-

TOTAL VCY SF

763,657 763,657

900,640 900,640

-

$6.79 $3.85 $3.47 $3.74

$8.16 $3.26 $2.89 $2.96

$4.31 $3.28 $3.03 $3.22

QUARTERLY COMPARISONS AND TOTALS

QUARTERLY COMPARISON AND TOTALS Q1-12 9,593 602,043,235 Q4-11 9,592 602,015,735 Q3-11 9,590 601,900,966 Q2-11 9,588 601,430,960 Q1-11 9,588 601,430,960

12.8% 13.0% 13.3% 14.1% 14.0%

NOTE: STATISTICAL SET INCLUDES ALL INDUSTRIAL PROPERTIES 10,000 SF AND UP, EXCLUDING HEAVY MANUFACTURING PROPERTIES. WHILE COSTAR ATTEMPTS TO PROVIDE THE MOST ACCURATE DATA AT THE END OF EVERY QUARTER, REVISIONS ARE MADE THROUGHOUT THE YEAR ACCOUNTING FOR DISCREPANCIES IN PAST REPORTING.

995,482 8,713,493 6,807,503 2,409,570 2,735,414

SOURCE: COSTAR PROPERTY, COLLIERS RESEARCH

MARKET REPORT | Q1 2012 | INDUSTRIAL | ATLANTA

CONSTRUCTION

RENTAL RATES

•

Construction activity increased by 1.7 million square feet in the first quarter. Build-to-suits for Mitsubishi and Georgia-Pacific were the reason behind the increase.

•

Home Depot is close to finalizing a build-to-suit in South Atlanta for 1-million square feet. This will be the second major construction project for the I-75 South corridor this year.

SALES ACTIVITY •

Industrial Developments International (IDI) and Pattillo Construction are the only developers close to constructing speculative buildings in the market.

Investment sales volume was $118 million in the first quarter; slightly ahead of sales volume this time last year.

•

The largest transaction in Atlanta this quarter was RREEF’s $52 million portfolio sale to Cabot Industrial Properties.

•

•

Industrial rents have yet to show any sign of an upwards trend. Atlanta’s average industrial rent decreased to $3.43/sf this quarter.

•

Northwest Atlanta is the only submarket where rents are steadily increasing quarter-to-quarter.

522 offices in 61 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118 •

$1.8 billion in annual revenue

• Over 2.5 billion square feet under

management • Over 12,000 professionals

CONSTRUCTION ACTIVITY (100,000 SF+) PROPERTY ADDRESS

SUBMARKET

SIZE (SF)

DELIVERY DATE

GA Pacific BTS - 490 Westridge Pky

South Atlanta Ind

900,640

Fourth Quarter 2012

Mitsubishi BTS - 1340 Satellite Blvd

Northeast Atlanta Ind

559,407

Fourth Quarter 2012

FedEx BTS - 6271 Atlantic Blvd

Northeast Atlanta Ind

204,250

Third Quarter 2012

Canton GAINESVILLE Cumming

CHEROKEE CO.

Allatona Lake Woodstock

H YT O LT

CHEROKEE CO.

Acworth

FO RS FU

Mountain Park

OW CO.

N

Alpharetta

CO .

CO .

Brase

NORTHEAST ATLANTA

e hooch e tac

Cha t

PAULDING CO. COBB CO.

NORTHWEST ATLANTA

INDUSTRIAL SUBMARKETS

Buford

HA GW INN LL CO .

ETT CO .

Sugar Hill

NORTH CENTRAL ATLANTA

Rive r

son

Lake Lanier

F FULTON CO. F FORSYTH CO.

BARTOW CO.

CHEROKEE CO.

ersville

Roswell

Duluth

316

CO BB FU LT CO O .

N CO .

MARIETTA

Lawrenceville DORAVILLE Norcross

CHAMBLEE SMYRNA

CO .

ATLANTA

e

DECATUR Avondale Estates

o ho ac

EAST POINT COLLEGE PARK HAPEVILLE

DEKALB HENRY

Hartsfield-Jackson International Airport

Fairburn

FULTON CO.

Palmetto

.

ON CO FULT CO. TTE FAYE

CO .

Conyers Covington RO C NE KDA WT LE ON CO CO . .

CLAYTON CO.

Union City

CO. CO.

675

W AL TO N

Lithonia

DE KALB RO CO CK .

DA LE CO .

att

SNAPFINGER I-20 EAST

Ch

I-20 WEST / FULTON INDUSTRIAL

Snellville

.

STONE MOUNTAIN Stone Clarkston INDUSTRIAL Mountain

r

R iv

ch e

glasville

GW IN DE NE KA TT LB C CO O.

CENTRAL ATLANTA

G W IN NE TT

CHATTAHOOCHEE INDUSTRIAL

Austell COBB CO. DOUGLAS CO.

e

PAULDING CO.

DEKALB CO. FULTON CO.

Powder Springs

FOREST PARK Riverdale

RESEARCHER: Atlanta Scott Amoson Vice President | Director of Research Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 877 9286

Jonesboro

COWETA CO.

McDonough BU TT S

CO .

HENRY CO. CLAYTON CO.

Fayetteville

nan

Atlanta Caldwell Zimmerman Executive VP | Colliers Manager Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 888 9000 FAX +1 404 870 2845

FAX +1 404 870 2845

Stockbridge

SOUTH ATLANTA

The Atlanta industrial market consists of nine submarkets.

They include Central Atlanta, Chattahoochee Industrial, I-20 West/Fulton Industrial, North Central Atlanta, Northeast Atlanta, Northwest Atlanta, Snapfinger/I-20 East, South Atlanta and Stone Mountain Industrial. The major interstates in the region include: I-75, I-85, I-285, I-575, I-985, I-675 and I-20. Georgia 400 and US 316 also play important roles to Atlanta’s transportation system.

UNITED STATES:

This market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International-Atlanta, Inc., and certain of its subsidiaries, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 520 offices throughout 62 countries worldwide.

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