2Q 2011 | Atlanta Downtown Office | Market Report

Q2 2011 | DOWNTOWN

ATLANTA

SUBMARKET REPORT

TRENDS & HIGHLIGHTS

Square Feet

NEW SUPPLY, ABSORPTION AND VACANCY RATES

Total SF

26,717,992

300,000

17%

Vacancy Rate

200,000

16%

YTD Net Absorption

100,000 15% 0 (100,000)

2Q10

3Q10

4Q10

1Q11

2Q11

13%

(300,000)

12% Deliveries

(182,482)

YTD Deliveries

0

Under Construction

0

14%

(200,000)

Absorption

16.1%

Avg. Class A Rate

$19.82

Source: CoStar Property, Colliers Research

Vacancy

MARKET INDICATORS Projected

Q2 2011 VACANCY

UPDATE Recent Transactions in the Market

Q3 2011

SALES ACTIVITY

—

PROPERTY ADDRESS

NET ABSORPTION CONSTRUCTION

—

—

RENTAL RATE

SALE PRICE

SIZE SF

PRICE / SF

BUYER

55 Allen Plaza

$57,000,000

348,658

$163.48

Teachers Retirment of Ill.

100 Peachtree Street

$27,500,000

622,301

$44.19

America’s Capital Prtnrs.

40 Marietta Street

$6,000,000

123,370

$48.63

Nakash Holdings

9,889

$126.40

MK Marlow Company

400 W. Peachtree St.-Unit 200 $1,250,000

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

•

Downtown office absorption and leasing activity stalled in the second quarter of 2011. The most significant move-in during the three month period was Turner Broadcasting which expanded by 36,236 SF in Centennial Tower. This was a lateral move, however, as the media company moved out of almost the same amount of space at 250 Williams St.; resulting in net absorption being only minimal.

•

Because of subdued market conditions, the modest number of intown transactions occurring in urban Atlanta are in the more desirable submarkets of Midtown and Buckhead, where concessions remain abundant. Despite this, Downtown continues to offer the most affordable rental rates for Class A space in the urban corridor.

•

Not much will change in the second half of 2011 in Downtown. Absorption and leasing will remain tepid.

MARKET REPORT | Q2 2011 | 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

1,253,499 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

79%

95%

88%

82%

89%

203,068 SF

23,545 SF

91,442 SF

102,045 SF

95,177 SF

$29.00-$30.00

$28.00-$30.00

$21.00-$22.00

$26.00

$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 | Q2 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

622,301 SF

460,437 SF

302,951 SF

325,000 SF

553,018 SF

18,845 SF

18,101 SF

14,121 SF

13,816 SF

29,130 SF

48%

80.1%

65.9%

77.9%

74.2%

181,634 SF

18,413 SF

131,396 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 | Q2 2011 | ATLANTA OFFICE | DOWNTOWN

IN THE NEWS

512 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: 125 Canada: 38 Latin America: 18 Asia Pacific: 214 EMEA: 117 •

$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

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

Jeff Kelley

Hayes Swann

Brett Kingman

Andrew Walker

Drew Levine

Bob Ward

Michael Lipton

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 512 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

550 PEACTHREE

105,323 SF Sale Pete Shelton

5,700-12,000 SF Sublease Craig Mendel / Michael Lipton

Accelerating success.