3Q 2011 | Atlanta Downtown Office | Market Report

Page 1

Q3 2011 | DOWNTOWN

ATLANTA

SUBMARKET REPORT

TRENDS & HIGHLIGHTS NEW SUPPLY, ABSORPTION AND VACANCY RATES 100,000

17%

Square Feet

50,000

16%

0 (50,000)

3Q10

4Q10

1Q11

2Q11

3Q11

(100,000)

Absorption

Deliveries

Vacancy Rate

16%

YTD Net Absorption

(160,271)

YTD Deliveries

0

13%

Under Construction

0

12%

Avg. Class A Rate

(150,000)

(250,000)

27,105,294

15% 14%

(200,000)

Total SF

$19.44

Vacancy

Source: CoStar Property, Colliers Research

MARKET INDICATORS Projected

Q3 2011

UPDATE Recent Transactions in the Market

Q3 2011

SALES ACTIVITY VACANCY NET ABSORPTION CONSTRUCTION

RENTAL RATE

PROPERTY ADDRESS

SALE PRICE

SIZE SF

PRICE / SF

BUYER

55 Allen Plaza

$57,000,000

348,658

$163.48

Teachers Retirement of Ill.

One Georgia Center

$48,600,000

375,000

$129.60

Govt. Properties Trust

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

Downtown

LEASING ACTIVITY

www.colliers.com/atlanta

TENANT

PROPERTY ADDRESS

SIZE SF

TYPE

Internap

250 Williams Street

31,000

Class A Expansion

SunTrust Banks

SunTrust Tower

23,545

Class A Expansion

Cardlytics

112 Krog St.

16,475

Class C Lease

Emory Healthcare

P’tree Center-North Tower

16,085

Class A Lease

Third quarter absorption in the Downtown submarket was the fourth highest in Atlanta’s office market. A handful of small move-ins were the contributing factor to the increase in occupancy.

As expected, demand in the submarket remains tepid. Not much leasing activity is occurring in Downtown office buildings. For the year, renewals have been the bulk of the transactions that have taken place.

Bank of America’s downsizing at Bank of America Plaza will affect fourth quarter occupancy figures Downtown. The submarket will finish the year with an increase in its overall vacancy from 2010.

Downtown Class A buildings still boast the most affordable rental rates in the metro area.


MARKET REPORT | Q3 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

1,287,997 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

62.8%

98%

88%

81.5%

89.4%

203,068 SF

23,545 SF

91,442 SF

102,045 SF

95,177 SF

$28.25-$29.25

$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 | Q3 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 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

18,845 SF

18,101 SF

14,121 SF

13,816 SF

29,130 SF

48%

80.1%

75.3%

83.1%

74.2%

181,634 SF

18,413 SF

84,795 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 | Q3 2011 | ATLANTA OFFICE | DOWNTOWN

IN THE NEWS

512 offices in 61 countries on 6 continents

• ‘Times

Square South’ proposed: Seven Oaks and Legacy Property Group have teamed up for a proposed office tower in Downtown, which would be the first to be built since Barry Real Estate’s 55 Allen Plaza if it were to go under construction. The office building, known as 285 Marietta, would be 350,000 SF and located on the same block as the Embassy Suites Hotel which fronts Centennial Olympic Park. It would feature a video wall to invoke the feel of a “Times Square” setting. Though current market conditions do not warrant new development, the developers are looking to attract companies with a younger workforce which tend to be creative and high-tech. Their hope is to land a requirement such as a Turner Broadcasting expansion and have that company lease the majority of the new building. This would be the only way the development would be kicked off given the slow recovery and lack of job growth in Atlanta’s office market.

• BentleyForbes

seeking Bank of America Plaza partners: BentleyForbes is looking for equity partners to help with its beleaguered loan on Bank of America Plaza. Earlier this year, the lender on the mortgage transferred the debt of $363 million to special servicing. According to popular rating agencies, the loan faces imminent default. Invesco has been mentioned as a possible partner to help with the restructuring of the debt; however, this is only speculation. Nevertheless, BentleyForbes will need to find an investor soon as Bank of America downsizes from its original lease in the building, thus reducing a significant amount of cash flow to the owners. It could also just walk away from the loan and turn it over to the lender. If it does so, BentleyForbes still owes a significant amount of tax on the debt forgiveness. 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.


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