2Q 2012 | Atlanta Downtown Office | Market Report

Q2 2012 | DOWNTOWN

ATLANTA

SUBMARKET REPORT

TRENDS & HIGHLIGHTS

Square Feet

NEW SUPPLY, ABSORPTION AND VACANCY RATES 60,000 40,000 20,000 0 (20,000) (40,000) (60,000) (80,000) (100,000) (120,000) (140,000)

18% 17% 16% 2Q11

3Q11

4Q11

1Q12

Total SF

27,806,804

Vacancy Rate

17.2%

YTD Net Absorption

(220,234)

2Q12

15% 14%

YTD Deliveries

0

Under Construction

0

13% 12% Absorption

Deliveries

Avg. Class A Rate

Vacancy

$19.88

Source: CoStar Property, Colliers Research

MARKET INDICATORS Projected

Q2 2012

UPDATE Recent Transactions in the Market

Q3 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

180 Spring St.

$30,000,000

90,688

$331

Govt. Properties Trust

Hurt Plaza

$17,500,000

436,340

$40.11

Boxer Property

100 Auburn Ave.

pending

105,323

pending

pending

Downtown

LEASING ACTIVITY

www.colliers.com/atlanta

TENANT

PROPERTY ADDRESS

SIZE SF

TYPE

Georgia Chamber of Commerce

270 Peachtree

48,000

Class A Lease

Atlanta Life Financial

191 Peachtree

25,533

Class A Lease

Invest Atlanta

Georgia-Pacific Center

18,701

Class A Lease

Stephen Freeman Law Firm

Harris Tower-P’tree Center

6,919

Class A Sublease

•

Downtown’s office vacancy continued its upwards trend in the second quarter, increasing for the third consecutive period. The submarket saw over 100,000 SF of vacant space added in the past three months. Compared to this time last year, Downtown’s vacancy rate has increased 0.6%.

•

The largest move-out contributing to the negative absorption this quarter was SunTrust Robinson Humphrey out of SunTrust Plaza. The company relocated and expanded their current space in Buckhead.

•

The submarket is still waiting for the economy as a whole to improve. Given that most tenants in Downtown are financial institutions, law firms and other service related companies, it could be a while before solid occupancy gains return. These industries have yet to see sustained job growth.

MARKET REPORT | Q2 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%

91.9%

90.4%

83.8%

78.7%

233,060 SF

25,005 SF

69,910 SF

102,045 SF

60,638 SF

$26.60-$27.60

$32.75-$34.75

$21.00-$22.00

$28.50

$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 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

38.5%

83.1%

64.9%

95.1%

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 | Q2 2012 | ATLANTA OFFICE | DOWNTOWN

IN THE NEWS

522 offices in 62 countries on 6 continents

• Three

options for the ‘Gulch’: Three conceptual drawings by Forest City Enterprises, Cousins Properties and The Integral Group have been unveiled that show possible designs for the area known as the ‘Gulch’ in Downtown. All three designs visualize how to turn the sunken tangle of parking spaces, vacant lots and rail lines into a centralized terminal for multi-modal passenger transportation.

The public will weigh in on the three proposals over the coming months and a preferred plan, which will likely be a combination of elements from the three designs, could be picked in October. Construction could begin as soon as late 2013. could spark downtown development: The construction of Atlanta’s street car connecting the King Center and Sweet Auburn District to Centennial Olympic Park is spurring developer interest on its path. Central Atlanta Progress is working with a number of developers touring sites along the route for possible mixed-use projects. Investment in the area is seen as a key to Downtown’s revitalization.

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

• Streetcar

• Atlanta

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. UPDATE: Atlanta Life recently signed a full-floor lease at 191 Peachtree where it will move in November of this year.

• 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.

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.

151 SPRING ST.

INTL. TOWER

19,000 SF Sale Jodi Selvey / Michael Lipton

2,284 SF Sublease Craig Mendel / Drew Lavine

Accelerating success.

www.colliers.com/atlanta