1Q 2012 | Atlanta Downtown Office | Market Report

Page 1

Q1 2012 | DOWNTOWN

ATLANTA

SUBMARKET REPORT

TRENDS & HIGHLIGHTS

Square Feet

NEW SUPPLY, ABSORPTION AND VACANCY RATES 50,000

18%

0

17%

(50,000)

1Q11

2Q11

3Q11

4Q11

1Q12

16%

(100,000) 15% (150,000) 14%

(200,000) (250,000)

13%

(300,000)

12% Absorption

Deliveries

Total SF

27,720,826

Vacancy Rate

16.9%

YTD Net Absorption

(87,585)

YTD Deliveries

0

Under Construction

0

Avg. Class A Rate

$19.67

Source: CoStar Property, Colliers Research

Vacancy

MARKET INDICATORS Projected

Q1 2012

UPDATE Recent Transactions in the Market

Q2 2012

SALES ACTIVITY VACANCY NET ABSORPTION CONSTRUCTION

RENTAL RATE

PROPERTY ADDRESS

SALE PRICE

SIZE SF

PRICE / SF

BUYER

180 Peachtree St. (Office)

$94,750,000

338,000

$280.33

Carter Validus REIT

One Georgia Center

$48,600,000

375,000

$129.60

Govt. Properties Trust

Hurt Plaza

$17,500,000

436,340

$40.11

Boxer Property

44 Broad Street

$3,800,000

128,502

$29.57

Williams-Russell & John.

Downtown

LEASING ACTIVITY

www.colliers.com/atlanta

TENANT

PROPERTY ADDRESS

SIZE SF

TYPE

Georgia Chamber of Commerce

270 Peachtree

27,848

Class A Lease

Sherry Bryant LLC

139 Ralph McGill Blvd.

20,451

Class C Lease

Lutheran Services of GA

100 Edgewood Ave.

18,268

Class B Lease

GCH Technology Group

270 Peachtree

8,218

Class A Lease

Office occupancy in Downtown decreased for the sixth time in seven quarters. Over this stretch of time the submarket’s vacancy rate has increased by almost 2%; which amounts to 520,000 square feet of vacant space added.

Downtown continues to lag when compared to Atlanta’s other office submarkets. Significant leasing transactions have been few and far between in the CBD. The inactivity is a product of the sluggish recovery. Also, the submarket continues to lose out to neighboring submarkets such as Midtown and Buckhead because companies want to locate in areas where they can recruit young talent.

Not much is expected to change for the submarket through the end of this year. Leasing will likely remain weak at least until the overall office market in Atlanta has fully recovered.


MARKET REPORT | Q1 2012 | ATLANTA OFFICE | DOWNTOWN

SKYLINE REVIEW Space Available Direct Sublet

60 55 50 45 40

Floors

35 30 25 20 15 10 5

Bank of America Plaza

SunTrust Plaza

Georgia-Pacific Center

191 Peachtree

Centennial Tower

1,287,997 SF

1,249,022 SF

1,133,840 SF

1,209,721 SF

638,731 SF

TYPICAL FLOOR SIZE

22,791 SF

25,000 SF

20,000 SF

24,220 SF

18,105 SF

% LEASED

62.3%

94.6%

88.4%

83.8%

78.9%

233,060 SF

25,005 SF

91,067 SF

102,045 SF

60,638 SF

$26.60-$27.60

$32.75-$34.75

$21.00-$22.00

$28.00

$17.00-$22.00

1

2

3

4

5

BUILDING RBA

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 2012 | 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 Delivering Spring 2013

2

100 Peachtree

Marquis One

North Tower

270 Peachtree

55 Park Place

622,301 SF

460,437 SF

302,951 SF

325,000 SF

553,018 SF

19,600 SF

18,101 SF

14,121 SF

13,816 SF

29,130 SF

35.3%

83.1%

64.9%

95.7%

74.2%

193,550 SF

18,413 SF

62,470 SF

27,848 SF

278,716 SF

$17.50-$20.50

$20.50-$21.50

$18.50-$19.50

$18.00-$19.00

$18.00

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 Proposed Land acquired Spring 2012 New Owner: Regent Partners

COLLIERS INTERNATIONAL |

P. 3


MARKET REPORT | Q1 2012 | ATLANTA OFFICE | DOWNTOWN

IN THE NEWS • Downtown

522 offices in 62 countries on 6 continents

• Atlanta

United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118

project nixed: A leasing transaction announced at the end of 2011 which would have consolidated 500 Georgia Department of Labor employees to the vacant 250 Piedmont office tower has fallen through according to a recent news article. The lease would have been Downtown’s largest in some time. Governor Deal’s proposal to streamline several state agencies is said to be a reason for the lease not getting completed. For now the 362,300 SF office tower remains vacant. Life selling downtown headquarters to Georgia State: Atlanta Life Financial Group is set to sell its longtime downtown headquarters to Georgia State in the next few weeks. The 105,323 SF office building located at 100 Auburn Ave. has been owned by Atlanta Life since 1980. Georgia State plans to acquire the building as part of its ongoing campus expansion. The building is envisioned to become the new of home of GSU’s Honors College. Once the sale is complete, Atlanta Life will move to another location within the submarket; leasing rather than owning its new office.

• Regent

Partners buys 50 Allen Plaza: Regent Partners recently purchased the land site for 50 Allen Plaza paying $4.5 million for the 1.23-acre parcel. The site was part of Barry Development’s nine block Allen Plaza project, but fell into foreclosure following the economic downturn. Regent is in a joint venture with Worthington Hyde Partners to develop the site but has no immediate plans to do so.

• Cousins

remakes ACS building as data center: Cousins Properties is doubling its data center footprint at the American Cancer Society building. The company plans to invest at least $200 million to convert 170,000 SF of office space into data center space. This will result in almost a third of the 1-million square foot building being equipped to handle data center users. Cousins’ strategy is to take advantage of demand in the Atlanta market for this type of space. The building’s 100,000 SF floor plates and 27 fiber network providers make it an attractive option for data users. AT A GLANCE | Bank of America Plaza Forecloses

1.3 million square foot Class A office tower foreclosed February 2012; tallest building in the U.S. to be foreclosed on since the financial markets froze in 2007.

$1.8 billion in annual revenue

• Over 2.5 billion square feet under

management • Over 12,000 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

Title secured by credit bid of $235 million by LNR Partners on behalf of the debt holder JP Morgan Chase.

Jill Bomar

Craig Mendel

Lee Evans

Scott O’Halloran

Deming Fish

Hugh Pafford

Property auctioned at a 46% discount of what former owner BentleyForbes Group paid in ‘06.

Huston Green

Jodi Selvey

Tim Huffman

Fred Sheats

Repositioning of the 1,023-foot skyscraper will likely begin second quarter 2012.

Russ Jobson

Pete Shelton

Jeff Kelley

Hayes Swann

The office building is currently 62.8% leased.

Drew Lavine

Will Tyler

Michael Lipton

Andrew Walker

Nicole Littleton

Bob Ward

COLLIERS INTERNATIONAL | ATLANTA OFFICE | DOWNTOWN LISTINGS 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 520 offices throughout 62 countries worldwide.

HERNDON PLAZA

151 SPRING ST.

105,323 SF Sale Pete Shelton

19,000 SF Sale Jodi Selvey / Michael Lipton

Accelerating success.

www.colliers.com/atlanta


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