2Q 2012 | Atlanta Midtown Office | Market Report

Page 1

Q2 2012 | MIDTOWN

ATLANTA

SUBMARKET REPORT

TRENDS & HIGHLIGHTS NEW SUPPLY, ABSORPTION AND VACANCY RATES 300,000

Square Feet

250,000 200,000 150,000 100,000 50,000 0 (50,000)

2Q11

3Q11

Absorption

4Q11

1Q12

Deliveries

2Q12

20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10%

Total SF

22,251,996

Vacancy Rate

17.1%

YTD Net Absorption

464,351

YTD Deliveries Under Construction

0 450,000

Avg. Class A Rate

Vacancy

$26.95

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

Promenade II

$137,500,000

774,344

$177.57

Cousins Properties

Ten Peachtree Place

$61,400,000

258,917

$237.14

Prudential Real Estate

201 17th Street

$48,800,000

349,402

$139.67

CBRE Investors

855 Peachtree St.

$4,500,000

17,346

$259.43

Shops at Viewpoint LLC

Midtown

LEASING ACTIVITY

www.colliers.com/atlanta

TENANT

PROPERTY ADDRESS

SIZE SF

TYPE

Oxford Industries

999 Peachtree

30,713

Class A Lease

EarthLink

1375 Peachtree

22,562

Class A Sublease

Legacy Property Group

1180 Peachtree

14,413

Class A Lease

MJ Brunner Inc.

1100 Peachtree

12,076

Class A Lease

For the second consecutive quarter, Midtown’s office absorption topped 200,000 square feet. Most of the occupancy gains in second quarter were from tenants ranging between 10,000 to 30,000 square feet. The largest move-in was SunTrust which moved into 95,510 SF at Campanile.

Midtown’s office vacancy rate has dropped 2% percent from this time last year. The submarket is currently tied for second in year-to-date absorption with Buckhead.

Office leasing has been steady in Midtown, but only for full-floor transactions and smaller. Larger transactions greater than 50,000 SF are taking place where supply is abundant, rents are low and incentives are more aggressive.

Midtown should finish the year with its strongest office absorption since 2005.


MARKET REPORT | Q2 2012 | ATLANTA OFFICE | MIDTOWN

SKYLINE REVIEW Space Available Direct Sublet 50 45 40

Floors

35 30 25 20 15 10 5

BUILDING

One Atlantic Center

1180 Peachtree

1075 Peachtree

Promenade II

1100 Peachtree

RBA

1,079,312 SF

670,443 SF

752,710 SF

774,344 SF

581,833 SF

TYPICAL FLOOR SIZE

23,500 SF

22,130 SF

26,360 SF

24,372 SF

22,269 SF

% LEASED

90.8%

96.3%

63.3%

71.4%

87.2%

66,748 SF

9,510 SF

136,343 SF

95,797 SF

46,162 SF

$28.50-$34.50

$35.25

$36.00-$38.00

$26.00

$27.68-$32.93

1

2

3

4

5

LARGEST SPACE AVAIL. RENTAL RATE PER SF (Gross)

7 5

10

2 8 6 3

3 5 2

4

8

6 9 11

1 4

9

1

10 12

3 4 1 2 P. 2

7

| COLLIERS INTERNATIONAL


MARKET REPORT | Q2 2012 | ATLANTA OFFICE | MIDTOWN

ACTIVE PROJECTS Source: CoStar Property

1 SKY HOUSE 320 Multi-Family Units 8,400 SF Retail Under Construction Developer: Novare Group

2 77 12TH STREET 314 Apartment Units Under Construction Developers: Daniel Corporation/ Selig Enterprises

3 1400 PEACHTREE

999 Peachtree

271 17th Street

The Proscenium

Atlantic Center Plaza

Campanile Bldg.

621,007 SF

541,318 SF

533,135 SF

499,601 SF

446,626 SF

22,995 SF

26,300 SF

25,000 SF

20,816 SF

23,382 SF

93.5%

65.6%

100%

82.8%

52%

22,520 SF

105,534 SF

20,480 SF

181,189 SF

203,357 SF

$27.00-$29.00

$29.50-$30.50

$28.00-$32.00

$23.00-$26.50

$28.65-$30.65

6

7

8

9

10

AERIAL LEGEND

Buildings by Number (see opposite page)

POINTS OF INTEREST 1 Georgia Tech

7

Colony Square

2 Atlantic Station

8

Federal Reserve

9

Margaret Mitchell House & Museum

4 of Art & Design

10

Technology Square

5 Ansley Park

11

The Fox Theater

12

The Varsity

Center for

3 Puppetry Arts

1.7-Acre Site Zoned for Mixed-Use Recently Sold for $6M (Jun. ‘11) Owner: Dewberry Capital

OFF MAP PONCE CITY MARKET Mixed-Use Redevelopment 450,000 SF Office 245,494 SF Retail 20,645 SF Restaurants 204 Residential Units 160 Hotel Rooms Developers: Jamestown Prop./ Green Street Prop.

PROPOSED DEV. 4

MARTA Rail Line Savannah College

New Construction

Woodruff Arts

6 Center

METROPOLITAN CENTER 570,000 SF Office Tower Mixed-Use Development Developer: Daniel Corp/MetLife/ Selig Company COLLIERS INTERNATIONAL |

P. 3


MARKET REPORT | Q2 2012 | ATLANTA OFFICE | MIDTOWN

IN THE NEWS • Jamestown

522 offices in 62 countries on 6 continents

• KanAm

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

makes move to sell 999 Peachtree: Jamestown Properties has placed 999 Peachtree on the market. With only a few spaces remaining following recent transactions, Jamestown has brought the building up to 94% leased and shifted its focus to Ponce City Market which is Atlanta’s largest reurbanization project. Jamestown is asking approximately $160 million for the office tower and hopes to receive multiple offers from real estate investors seeking core assets. to sell Midtown AT&T office towers: Like many other office owners in Atlanta, KanAm has decided to place the Midtown I & II office buildings, 100% leased to AT&T, on the market for sale. The German real estate investor is liquidating the fund the buildings are in as a result of the euro crisis and uncertainty overseas. The buildings were bought back in 2007 for $242 million. The sales price for the two office buildings totaling 832,000 SF has yet to be disclosed.

• Third

new Midtown apartment tower planned: Novare Group and Batson-Cook Development are planning yet another apartment tower in Midtown; the third in less than a year. The project will be known as 100 Sixth Street and located behind the Viewpoint condo tower. Expected completion is in 2014.

• Prudential

buys Ten Peachtree Place for $61 million: Prudential Real Estate Investors completed its purchase of Ten Peachtree Place in May paying $61.4 million for the 260,000 SF office tower. The building was previously owned by a partnership between Cousins Properties and The Coca-Cola Co. Factors attracting Prudential to the office investment were its long-term lease with AGL Resources and its close proximity to MARTA. AT A GLANCE | Ponce City Market

Former Sears, Roebuck & Co. mailing facility and most recently Atlanta City Hall East.

2-million square foot complex to be redeveloped into a mixed-use project containing 245,000 SF of retail space; 450,000 SF of Class A office; loft-style condominiums; several hundred multi-family residences for sale and rent; and restaurants.

Jamestown Properties is investing $180 million into the redevelopment, including $15.5 million to the City of Atlanta for the property. Under construction as of 4th Quarter 2011.

COLLIERS INTERNATIONAL | ATLANTA OFFICE | MIDTOWN LISTINGS

PERSHING POINT PLAZA

715 PEACHTREE

13,000-64,521 SF Sublease Scott O’Halloran / Lee Evans / Deming Fish

328,600 SF Lease Scott O’Halloran / Lee Evans / Deming Fish

ONE ATLANTIC CTR.

1355 PEACHTREE

11,538 SF Sublease Pete Shelton / Bob Ward / Jeff Kelley

2,571 SF Sale/Lease 7,433 SF For Sale Andrew Walker / Fred Sheats

www.colliers.com/atlanta

$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

Jill Bomar

Craig Mendel

Lee Evans

Scott O’Halloran

Deming Fish

Hugh Pafford

Huston Green

Jodi Selvey

Tim Huffman

Fred Sheats

Russ Jobson

Pete Shelton

Jeff Kelley

Hayes Swann

Drew Lavine

Will Tyler

Michael Lipton

Andrew Walker

Nicole Littleton

Bob Ward

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.

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