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
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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.
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