1Q 2011 | Atlanta Downtown Office | Market Report

Q1 2011 | DOWNTOWN

ATLANTA

SUBMARKET REPORT

TRENDS & HIGHLIGHTS

Square Feet

NEW SUPPLY, ABSORPTION AND VACANCY RATES 300,000

18%

200,000

17%

100,000

16%

0 (100,000)

15% 1Q10

2Q10

3Q10

4Q10

1Q11

14%

(200,000)

13%

(300,000)

12% Absorption

Deliveries

Total SF

26,502,635

Vacancy Rate

16.1%

YTD Net Absorption

(192,509)

YTD Deliveries

0

Under Construction

0

Avg. Class A Rate

$19.80

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

—

—

PROPERTY ADDRESS

SALE PRICE

SIZE SF

PRICE / SF

BUYER

55 Allen Plaza

$57,000,000

348,658

$163.48

Teachers Retirment of Ill.

353-363 Parkway Dr. (‘10)

$1,000,000

9,000

$111.11

Metro Atlanta Ob/Gyn

RENTAL RATE

Downtown

LEASING ACTIVITY

www.colliers.com/atlanta

TENANT

PROPERTY ADDRESS

SIZE SF

TYPE

McKenna Long & Aldrige

SunTrust Plaza

163,000

Class A Renewal

Turner Broadcasting Co.

Centennial Tower

115,000

Class A Renewal & Exp.

Habitat for Humanity

270 Peachtree

55,264

Class A Renewal & Exp.

CoreNet Global

Georgia-Pacific Center

18,579

Class A Lease

•

The first quarter of 2011 was Downtown’s worst in a year. Over the three month period, occupancy in the submarket dropped by (192,509) SF. Just over half of this amount came from SunTrust’s relocation to Peachtree Center’s Marquis Two tower. The bank vacated 358,155 SF at a nearby Class B office building. The downsizing resulted in over 100,000 SF of vacant space added.

•

The office vacancy rate in Downtown increased 0.7% from last quarter due to the negative absorption. Nevertheless, the rate is still down from this time a year ago; and is expected to continue its downward trend next quarter.

•

Positive absorption should return to Downtown next quarter. Nothing suggests the submarket will experience any further leasing setbacks.

MARKET REPORT | Q1 2011 | ATLANTA OFFICE | DOWNTOWN

SKYLINE REVIEW Space Available Direct Sublet

60 55 50 45 40

Floors

35 30 25 20 15 10 5

BUILDING RBA

Bank of America Plaza

SunTrust Plaza

Georgia-Pacific Center

191 Peachtree

Centennial Tower

1,253,499 SF

1,249,022 SF

1,133,840 SF

1,209,721 SF

638,731 SF

79.7%

95%

90%

81.6%

90.4%

203,068 SF

23,545 SF

91,442 SF

102,045 SF

37,600 SF

$30.00-$31.00

$26.00-$28.00

$21.00-$22.00

$26.00

$17.00-$22.00

1

2

3

4

5

% LEASED LARGEST SPACE AVAIL. RENTAL RATE PER SF (Gross)

12 11

8

1 9

2

7

8 4 3 10 9 6 3 5

10

2 7 6

5 1 3

P. 2

| COLLIERS INTERNATIONAL

4

2

1

13 15 14

16

MARKET REPORT | Q1 2011 | ATLANTA OFFICE | DOWNTOWN

NOTABLE PROJECTS Source: CoStar Property

1

E Q U I TA B L E

COLLEGE FOOTBALL HALL OF FAME 50,000 SF Delviering Spring 2013

2

100 Peachtree

Marquis One

North Tower

270 Peachtree

55 Park Place

625,000 SF

460,437 SF

302,951 SF

325,000 SF

553,018 SF

47.7%

72.2%

65.9%

77.9%

74.2%

181,634 SF

36,164 SF

126,213 SF

41,772 SF

278,716 SF

$17.50-$19.50

$20.50-$21.50

$18.50-$19.50

$15.75-$19.00

$18.50

6

7

8

9

10

AERIAL LEGEND

POINTS OF INTEREST 1 Georgia Dome

100,000 SF $125 million project Construction pending

3

9 The Varsity

2 Philips Arena

10 Georgia Tech

World 3 Georgia Congress Center

11 Atlanta Civic Center

4 CNN Center

Sweet Auburn 12 Curb Market

MARTA Rail Line

5 Centennial Olympic Park

13 Georgia State University

New Construction

6 Georgia Aquarium 14 Underground Atlanta

Buildings by Number (see opposite page)

CIVIL RIGHTS MUSEUM

7 World of Coke

15 State Capital

8 The Fox Theater

16 Turner Field

50 ALLEN PLAZA 870,914 SF Developer: Barry Real Estate Proposed

COLLIERS INTERNATIONAL |

P. 3

MARKET REPORT | Q1 2011 | ATLANTA OFFICE | DOWNTOWN

IN THE NEWS

480 offices in 61 countries on 6 continents

• 55

Allen Plaza bought by Lincoln Property for pension fund: The most recent distress sale to hit the Atlanta office market was 55 Allen Plaza being sold on the Fulton County Courthouse steps in April for a 31% discount of it’s original loan amount. The 350,000 sq. ft. Class A tower was part of a larger vision by local developer Hal Barry to transform a section of Downtown into a thriving business center.

While some success was gained through the developments of 30 and 55 Allen Plaza, the recent hard times in the economy but a quick stop to momentum. The 55 Allen Plaza building eventually ended up in foreclosure and is now back in the hands of the pension fund which acquired the original debt.

Teachers Retirement System of the State of Illinois (on behalf of Lincoln Property Co.) was the only bidder at the courthouse auction and acquired the tower for a substantial discount, paying $57 million for the property.

• Cousins

leads team picked for Gulch: The Georgia Department of Transportation has chosen Cousins Properties to lead the team to build a transit hub at the site of “The Gulch” property adjacent to CNN Center and Philips Arena. The prominent Atlanta developer competed against other local firms including Jacoby Development and H.J. Russell to land the project. Cousins’ team will consist of The Integral Group, Forest City Enterprises, FC Asset Services, Cooper Carry, Urban College, FXFOWLE, KimleyHorn & Associates and Parsons Brinckerhoff. Together, these firms will work to develop the long awaited mixed-use project with a multi-modal terminal as the key piece. As the master developer, Cousins will coordinate all of the stakeholders and property owners involved. The process is likely to span over many years with multiple processes to be completed before development can begin.

AT A GLANCE | Streetcar gets funding

•

U.S. Department of Transportation agrees to grant $47 million to the city’s proposed $70 million streetcar project.

•

First phase of project will run 2.6 miles from the King Center site to Centennial Olympic Park, featuring a dozen stops and direct connection to MARTA.

•

•

•

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

Expected to provide 2,600 trips a weekday in its first year of operation.

Lee Evans

Craig Mendel

Deming Fish

Scott O’Halloran

Critics argue the streetcar will do nothing to ease metro Atlanta’s biggest transportation problems.

Huston Green

Hugh Pafford

Tim Hoffman

Jodi Selvey

Construction begins in 2012 with a completion date targeted for 2013.

Russ Jobson

Fred Sheats

Nicole Kamen

Pete Shelton

COLLIERS INTERNATIONAL | ATLANTA OFFICE | DOWNTOWN 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.

135 ANDREW YOUNG INTL. BLVD. 11,000 SF Sale Jodi Selvey / Pete Shelton

www.colliers.com/atlanta

HERNDON PLAZA 105,323 SF Sale Pete Shelton

Accelerating success.