4Q 2011 | Atlanta Buckhead Office | Market Report

Page 1

Q4 2011 | BUCKHEAD

ATLANTA

SUBMARKET REPORT

TRENDS & HIGHLIGHTS NEW SUPPLY, ABSORPTION AND VACANCY RATES 350,000 300,000

Square Feet

250,000 200,000 150,000 100,000 50,000 0 (50,000)

4Q10

1Q11

2Q11

3Q11

4Q11

24% 23% 22% 21% 20% 19% 18% 17% 16% 15% 14%

Total SF

20,538,847

Vacancy Rate

19.2%

YTD Net Absorption YTD Deliveries

0

Under Construction

0

Avg. Class A Rate Absorption

Deliveries

706,903

$25.09

Source: CoStar Property, Colliers Research

Vacancy

MARKET INDICATORS Projected

Q4 2011

UPDATE Recent Transactions in the Market

Q1 2012

SALES ACTIVITY VACANCY PROPERTY ADDRESS

NET ABSORPTION CONSTRUCTION RENTAL RATE

— —

SALE PRICE

SIZE SF

PRICE / SF

BUYER

3344 Peachtree Rd.

$167,300,000

483,726

$345.86

Parkway Properties

3314 Peachtree Rd./Land

$9,000,000

9,187

$979.65

Kurkin Forehand Brandes

3330 Peachtree Rd.

$5,500,000

62,499

$88

Pope & Land

Buckhead

LEASING ACTIVITY

www.colliers.com/atlanta

TENANT

PROPERTY ADDRESS

SIZE SF

TYPE

Capgemini

Prominence

24,816

Class A Lease

Prudential

Tower Place 200

16,045

Class A Lease

AloStar

3630 Peachtree

14,340

Class A Lease

Carat USA

Atlanta Plaza One

13,116

Class A Lease

As expected, Buckhead led all Atlanta office submarkets in 2011 accounting for almost all of the positive absorption in the year. Just over 80% of the space absorbed was in first generation space.

Overall office vacancy in Buckhead dropped 3.4% for the year. Since the deliveries of 3630 Peachtree and Phipps Tower (the last of new construction in the submarket), the vacancy rate has dropped 5%.

The flight to quality trend was most prominent in Buckhead which saw almost half of all Class A office absorption in 2011. Tenants relocating to the submarket for higher quality space include Ridgeworth Capital, Aldridge Connors and Windham Brannon.

Leasing activity for Buckhead office space is expected to remain strong in the coming year. The submarket will, however, face increased competition from neighboring submarkets as concession packages from Buckhead landlords have moderated somewhat.


MARKET REPORT | Q4 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

436,275 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

98.5%

61.2%

51.1%

90.8%

86.7%

12,475 SF

254,810 SF

84,795 SF

17,401 SF

15,775 SF

$32.00-$35.00

$26.50

$32.60-$34.10

$30.72-$36.22

$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 | Q4 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

98.6%

92.9%

18.4%

81.5%

95.6%

13,974 SF

24,800 SF

200,904 SF

20,838 SF

11,247 SF

$34.03-$35.28

$34.60-$35.85

$34.00

$26.00-$28.00

$26.50

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 | Q4 2011 | ATLANTA OFFICE | BUCKHEAD

IN THE NEWS

512 offices in 61 countries on 6 continents

• Lenders

take back two Buckhead office buildings: Following failed negotiations to restructure debt, two office buildings with different owners were recently foreclosed upon. Securities Centre, which was purchased back in 2006 when the investment sales market was at its peak, was placed into special servicing and subsequently foreclosed on November 1st by Bank of America. The previous owner of the property was a tenant in common (TIC) and could not work out a solution to the debt it had on the building. In a similar situation, Behringer Harvard lost ownership of Resurgens Plaza in December when it too could not come to an agreement with its lender CWCapital Asset Management. The foreclosure sale marked a 35 percent decline from the original loan value. plans new software center, bringing 250 jobs to Buckhead: Nashville-based Asurion Insurance Services is planning to open a new software development center in Buckhead, bringing up to 250 high-paying jobs to Atlanta. Sources say the company is scouting Piedmont Center for 20,000 to 100,000 square feet. This office will be new to Atlanta which will qualify Asurion for incentives from the city and state. The target date for opening the new center is mid-year 2012.

United States: 125 Canada: 38 Latin America: 18 Asia Pacific: 214 EMEA: 117

• Asurion

• Streets

of Buckhead ‘restart’ delayed: OliverMcMillan, the new owner of the former Streets of Buckhead site, has delayed construction of the project’s redo to the end of the first quarter of 2012. Development of the restructured project, now named Buckhead Atlanta, was expected to begin late 2011. Fall 2013 is the new targeted opening date for the overhaul.

AT A GLANCE | Buckhead Atlanta •

New owner Oliver McMillan will redevelop project formerly known as ‘Streets of Buckhead’

Purchased for $400 million; plans to invest an additional $300 million.

Urban village concept to include 311,500 SF of retail and restaurants; 51,000 SF of boutique offices; and two 20-story apartment complexes.

COLLIERS INTERNATIONAL | ATLANTA OFFICE | BUCKHEAD LISTINGS

Work on the project to resume around the spring of 2012, with a target opening in 2013.

$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

Lee Evans

Craig Mendel

Deming Fish

Scott O’Halloran

Huston Green

Hugh Pafford

Tim Huffman

Jodi Selvey

Russ Jobson

Fred Sheats

Jeff Kelley

Pete Shelton

Drew Lavine

Hayes Swann

Michael Lipton

Andrew Walker

Nicole Littleton

Bob Ward

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


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