Q1 2011 | BUCKHEAD
ATLANTA
SUBMARKET REPORT
TRENDS & HIGHLIGHTS
Total SF
1,000,000
26%
Vacancy Rate
800,000
24%
600,000
22%
400,000
20%
200,000
18%
0
16%
Square Feet
NEW SUPPLY, ABSORPTION AND VACANCY RATES
(200,000)
1Q10
2Q10
Absorption
3Q10
4Q10
Deliveries
1Q11
14%
22,057,656 21.8%
YTD Net Absorption
217,151
YTD Deliveries
0
Under Construction
0
Avg. Class A Rate
$25.06
Source: CoStar Property, Colliers Research
Vacancy
MARKET INDICATORS Projected
Q1 2011
UPDATE Recent Transactions in the Market
Q2 2011
SALES ACTIVITY VACANCY NET ABSORPTION CONSTRUCTION
—
RENTAL RATE
PROPERTY ADDRESS
SALE PRICE
SIZE SF
PRICE / SF
BUYER
3344 Peachtree Rd.
$167,300,000
482,699
$346.59
Parkway Properties
— —
Buckhead
LEASING ACTIVITY
www.colliers.com/atlanta
TENANT
PROPERTY ADDRESS
SIZE SF
TYPE
Baker, Donelson, Bearman...
Monarch Plaza
43,537
Class A Renewal
Windham Brannon
3630 Peachtree
35,000
Class A Lease
Novelis
Two Alliance Center
25,030
Class A Expansion
Barnes & Thornburg
Prominence I
23,827
Class A Lease
•
Positive activity in Buckhead continues to carry over into the new year. After leading all office submarkets in absorption last year, Buckhead posted Atlanta’s second highest occupancy increase in First Quarter 2011 with 217,151 square feet filled.
•
Buckhead still has a large amount of vacant space available; and the highest office vacancy rate in Atlanta. Despite this, large contiguous blocks of space are in short supply. For prospects in the market seeking contiguous space over 75,000 square feet, only three options are currently available.
•
Nothing suggests Buckhead leasing activity will stray from its current path. As landlords begin tightening up on their incentive packages, however, other submarkets may now be able to compete against Buckhead for tenants.
MARKET REPORT | Q1 2011 | ATLANTA OFFICE | BUCKHEAD
SKYLINE REVIEW Space Available Direct Sublet 50 45 40
Floors
35 30 25 20 15 10 5
BUILDING RBA % LEASED LARGEST SPACE AVAIL. RENTAL RATE PER SF (Gross)
3344 Peachtree
Atlanta Plaza
3630 Peachtree
Two Alliance Center
Tower Place 100
483,726 SF
650,827 SF
436,585 SF
493,201 SF
609,936 SF
95.3%
72.6%
40.4%
89.4%
85.6%
12,475 SF
292,702 SF
260,056 SF
14,493 SF
23,135 SF
$32.00-$35.00
$26.50
$32.00-$34.00
$32.00-$34.00
$23.50-$24.50
1
2
3
4
5
3 2
8 4 10
5 5 1 4 9 7 10 6
6 12
P. 2
| COLLIERS INTERNATIONAL
8
3 7
1
2
9 11
MARKET REPORT | Q1 2011 | ATLANTA OFFICE | BUCKHEAD
RECENT DELIVERIES 3 Source: CoStar Property
3630 PEACHTREE 436,585 SF Delivered January 2010 Developer: Pope & Land
4
TWO ALLIANCE CENTER Terminus 100
Terminus 200
Phipps Tower
The Lenox Bldg.
Prominence in Buckhead
581,874 SF
564,850 SF
472,267 SF
348,152 SF
424,309 SF
100%
68%
18.4%
76.3%
79.5%
13,974 SF
97,225 SF
200,904 SF
32,611 SF
70,210 SF
$31.75-$33.00
$31.75-$33.00
$34.50
$26.00-$28.00
$25.25
6
7
8
9
10
AERIAL LEGEND
Buildings by Number (see opposite page)
493,201 SF Delivered September 2009 Developer: Tishman Speyer
7
TERMINUS 200
POINTS OF INTEREST
564,850 SF Delivered September 2009 Developer: Cousins Properties
1 Lenox Mall
7
UGA Terry College of Business Campus
2 Phipps Plaza
8
Ritz Carlton
3 Market Place
9
Intercontinental Hotel
4 Tower Walk
10
Grand Hyatt
5 Buckhead Station
11
JW Marriott
PHIPPS TOWER
Buckhead Village
479,041 SF Delivered March 2010 Developer: Crescent Resources
Lenox
8
MARTA Rail Line New Construction
Atlanta History
6 Center
12
COLLIERS INTERNATIONAL |
P. 3
MARKET REPORT | Q1 2011 | ATLANTA OFFICE | BUCKHEAD
IN THE NEWS
480 offices in 61 countries on 6 continents
• Big
changes set for Streets of Buckhead: New owners have been announced for the Streets of Buckhead project which has been in limbo since the economy went sour. San Diego developer OliverMcMillan will now take over the development with plans closely similar to those of Ben Carter Properties, which envisioned a “Rodeo Drive of the South” for the property. The biggest difference will be the focus of the project shifting more towards an urban village concept rather than a luxury development. Preliminary plans from the new owners include 300,000 SF of retail and restaurants, 40,000 SF of boutique offices and two 20-story luxury apartment buildings. OliverMcMillan wants to incorporate an urban grid system within the development in order to promote a pedestrian friendly atmosphere. In addition, it is hoped the state’s first international hub will be created in the project. Construction is expected to start back up later this year and is estimated to be completed in 2013.
• Buckhead’s
largest undeveloped tract up for sale: The largest undeveloped tract in Buckhead is expected to go on the market soon for $25 million, at the least. The property is bounded by Roxboro and East Paces Ferry roads, and consists of roughly 16-acres. Previously, The Related Group coined the parcel as CityPlace and had plans for six condo towers including a total of 3,800 units. As with a host of other properties affected by the economic recession, the lender took the property back. Wells Fargo is now looking to unload the site from its portfolio. Multi-family developers will be the bank’s first targets.
AT A GLANCE | 3344 Peachtree •
50-story, mixed-use tower consisting of 482,699 SF of Class A office and retail, with 82 high-end condos atop.
•
Delivered Second Quarter 2008.
•
Office building currently 95.3% leased.
•
Sold for $167.3 million in January 2011 (office and retail portion only)
•
•
•
Purchased by Parkway Properties, a real estate investment firm located in Jackson, Mississippi. Seller was Regent Partners which developed the property.
United States: 135 Canada: 39 Latin America: 17 Asia Pacific: 194 EMEA: 95 •
$2 billion in annual revenue
• Over 2 billion square feet under
management • Over 15,000 professionals
UNITED STATES: Colliers International Two Midtown Plaza | Suite 1100 1349 West Peachtree Street, NE Atlanta, Georgia, 30309 TEL +1 404 888 9000 FAX +1 404 870 2845
COLLIERS INTERNATIONAL ATLANTA OFFICE SPECIALISTS: Bob Allen
Bob Mathews
Lee Evans
Craig Mendel
Highest price paid for an Atlanta office tower since 2008. Highest price ever paid for a Buckhead office building.
Deming Fish
Scott O’Halloran
Huston Green
Hugh Pafford
Tim Hoffman
Jodi Selvey
Largest tenants in building include: Jones Lang LaSalle; Weinberg, Wheeler, Hudgins, Gunn & Dial; Littler Mendelson PC; Hodges Ward Elliot and Fifth Third Bank.
Russ Jobson
Fred Sheats
Nicole Kamen
Pete Shelton
COLLIERS INTERNATIONAL | ATLANTA OFFICE | BUCKHEAD LISTINGS
Jeff Kelley
Hayes Swann
Brett Kingman
Andrew Walker
Drew Levine
Bob Ward
Michael Lipton
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 480 offices throughout more than 61 countries worldwide.
PEACHTREE PALISADES 1,417 - 47,647 SF Lease Lee Evans / Scott O’Halloran
Accelerating success.
www.colliers.com/atlanta