Q2 2011 | BUCKHEAD
ATLANTA
SUBMARKET REPORT
TRENDS & HIGHLIGHTS NEW SUPPLY, ABSORPTION AND VACANCY RATES
Total SF
20,611,322
350,000
24%
Vacancy Rate
22%
YTD Net Absorption
20.6%
300,000
Square Feet
250,000 200,000
20%
150,000
340,684
YTD Deliveries
0
Under Construction
0
18%
100,000 50,000
16%
0 (50,000)
2Q10
3Q10
Absorption
4Q10
1Q11
Deliveries
2Q11
14%
Avg. Class A Rate
$25.02
Source: CoStar Property, Colliers Research
Vacancy
MARKET INDICATORS Projected
Q2 2011
UPDATE Recent Transactions in the Market
Q3 2011
SALES ACTIVITY VACANCY PROPERTY ADDRESS
NET ABSORPTION CONSTRUCTION
—
—
RENTAL RATE
SALE PRICE
SIZE SF
PRICE / SF
BUYER
3344 Peachtree Rd. (‘10)
$167,300,000
482,699
$346.59
Parkway Properties
The Medici
$13,200,000
152,000
$86.84
Piedmont Office Realty
3330 Peachtree Rd.
$5,500,000
62,499
$88
Pope & Land
Buckhead
LEASING ACTIVITY
www.colliers.com/atlanta
TENANT
PROPERTY ADDRESS
SIZE SF
TYPE
Morris Manning Martin
Atlanta Financial Center
124,000
Class A Renewal & Expansion
State Bank
Lenox Building
73,000
Class A Expansion
North Highland Co.
Terminus 200
69,922
Class A Lease
Kaiser Permanente
Piedmont Ctr. 10
23,000
Class A Lease
•
Buckhead office absorption topped 130,000 square feet for the second straight quarter. For the year, Buckhead has seen the second highest amount of office space absorbed in the Atlanta market.
•
The continued increase in Buckhead’s office occupancy is due to activity from tenants moving into the newest office towers in the submarket. The leasing activity from a year ago is now paying off in the form of positive absorption.
•
As a result of Buckhead’s positive activity over the past year, the submarket no longer has the highest vacancy rate in the market. Going forward, this is expected to continue. Tenants such as Greenberg Traurig, The Reznick Group and Windham Brannon are scheduled to move into large blocks of space in the second half of the year.
MARKET REPORT | Q2 2011 | ATLANTA OFFICE | BUCKHEAD
SKYLINE REVIEW Space Available Direct Sublet 50 45 40
Floors
35 30 25 20 15 10 5
BUILDING
3344 Peachtree
Atlanta Plaza
3630 Peachtree
Two Alliance Center
Tower Place 100
RBA
483,726 SF
650,827 SF
425,000 SF
493,201 SF
609,936 SF
TYPICAL FLOOR SIZE
25,358 SF
24,070 SF
28,877 SF
25,000 SF
21,000 SF
% LEASED
95%
68%
41%
89%
87%
12,475 SF
254,810 SF
86,649 SF
14,493 SF
15,775 SF
$32.00-$35.00
$26.50
$32.70
$32.00-$34.00
$23.50-$24.50
1
2
3
4
5
LARGEST SPACE AVAIL. RENTAL RATE PER SF (Gross)
3 2
8 4 10
5
8
3 7 5
5 1 4 2 9 7 10 6 6 3
12
4 1 P. 2
| COLLIERS INTERNATIONAL
1
2
9 11
MARKET REPORT | Q2 2011 | ATLANTA OFFICE | BUCKHEAD
ACTIVE PROJECTS 1 Source: CoStar Property
BUCKHEAD ATLANTA $700M Mixed-Use Project 51,000 SF Boutique Office 311,500 SF Retail 370 Luxury Apartment Units Delivering 2013 Developer: Oliver McMillan
2
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
23,529 SF
24,400 SF
25,000 SF
18,154 SF
22,332 SF
100%
91.8%
18.4%
78.1%
79.7%
13,974 SF
24,800 SF
200,904 SF
30,312 SF
70,210 SF
$31.75-$33.00
$31.75-$33.00
$32.50
$26.00-$28.00
$25.25
6
7
8
9
10
AERIAL LEGEND
POINTS OF INTEREST 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
3330 PEACHTREE Mixed-Use Project 100,000-200,000 SF Office Hotel/Restaurant/Multi-Family Developers: Regent Partners/ Pope & Land
3 PRESERVE PROP. SITE Proposed Luxury Apartments 2.5-acres Up to 250 units Developer: Preserve Properties
4 JLB PARTNERS SITE
Buildings by Number (see opposite page)
Lenox
Proposed Luxury Apartments 6.5-acres Approximately $60M Project Developer: JLB Partners LP
MARTA Rail Line New Construction
5 CITYPLACE
5 Buckhead Station Atlanta History
6 Center
11
JW Marriott
12
Buckhead Village
Proposed Condo Development 16-acre Tract Foreclosed by Wells Fargo 2009 Currently For Sale
COLLIERS INTERNATIONAL |
P. 3
MARKET REPORT | Q2 2011 | ATLANTA OFFICE | BUCKHEAD
IN THE NEWS
512 offices in 61 countries on 6 continents
• Morris
Manning & Martin cancels move to Midtown: After a breakdown in negotiations, one of the largest prospects in the market has decided to renew its 114,000 SF at Atlanta Financial Center and expand by another 10,000 SF. Morris, Manning and Martin had previously been mentioned as anchoring John Dewberry’s Campanile office building in Midtown, however as the process of getting a lease signed dragged on, ultimately “the terms significantly and materially changed during the course of finalizing our Campanile negotiations,” as managing partner Louise M. Wells stated to the Atlanta Journal-Constitution. Dewberry states its lender was not approving of the financial concessions package required by the law firm and this killed the deal.
Bank raising its flag in Buckhead: Looking to raise it’s visibility and profile in Buckhead, State Bank will be expanding its space in the Lenox Building to a total of 87,000 SF. The bank will get signage as part of the deal. Currently, the bank’s finance and special asset groups are in 14,000 SF in the building. The expansion will house corporate functions of the bank and allow for future growth.
United States: 125 Canada: 38 Latin America: 18 Asia Pacific: 214 EMEA: 117
• State
• Regent,
Pope & Land team up on new Buckhead project: The partnership of Regent Partners and Pope & Land recently closed on its acquisition of 3330 Peachtree, paying $5.7 million or $88/sq. ft. for the office building. The new owners are looking at two approaches for redevelopment of the building. One includes gutting and renovating the building, inside and out. The more likely scenario involves scrapping the structure all together and redeveloping the parcel into a mixed-use project to include a combination of office, hospitality, retail and restaurant space. Regent and Pope & Land view the new project as getting a head start on the next development cycle and hope to begin construction next spring. AT A GLANCE | Buckhead Atlanta •
•
•
•
COLLIERS INTERNATIONAL | ATLANTA OFFICE | BUCKHEAD LISTINGS
New owner Oliver McMillan to redevelop project formerly known as ‘Streets of Buckhead’ Purchased for $400 million; plans to invest an additional $300 million.
•
$1.5 billion in annual revenue
• Over 2.2 billion square feet under
management • Over 13,000 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
Urban village concept to include 311,500 SF of retail and restaurants; 51,000 SF of boutique offices; and two 20-story apartment complexes.
Lee Evans
Craig Mendel
Work on the project to resume around the end of 2011, with a target opening in 2013.
Deming Fish
Scott O’Halloran
Huston Green
Hugh Pafford
Tim Hoffman
Jodi Selvey
Russ Jobson
Fred Sheats
Nicole Kamen
Pete Shelton
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 512 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