ATLANTA OFFICE MARKET MARKET OVERVIEW The Atlanta Office market ended the third quarter 2011 with a vacancy rate of 19.6%. This rate represents a slight decrease from the previous quarter rate of 19.8%. This decrease occurred in a quarter where Atlanta saw 309,022 SF in net absorption and one building, 4,000 SF, deliver to the market. Quoted rental rates ended the quarter at $19.08 PSF, down from last quarter rate of $19.19 PSF. Currently there is 765,077 SF of office product under construction in Metro Atlanta. ECONOMIC OVERVIEW Most economists believe the European debt crises will remain a threat to the global economy into 2012. Lower oil prices and the recent end to Japanese supply disruptions stemming from the March earthquake have lifted impediments to consumer spending, ending the third quarter better-than-expected. However, uncertainty will impact the confidence of business leaders and consumers dampening future business investment and hiring. Atlanta’s outlook for the remainder of 2011 is optimistic. The healthcare, education and supply chain/distribution industries continue to grow for Atlanta, as our business climate, location to major transportation hubs, technology and talent pool remain favorable for corporate relocations. Commercial Real Estate Services, Worldwide. Brannen Goddard 404 812 4000 | fax 404 816 3939 | www.naibg.com Suite 1100 | 5555 Glenridge Connector | Atlanta GA 30342 Information is deemed from reliable sources. No warranty is made as to its accuracy. ATLANTA OFFICE MARKET // Third Quarter 2011 Vacancy Rate: Less than 5% 5% to 10% 10% to 15% 15% to 20% Over 20% North Fulton Vacancy: 19.3% YTD Abs: 67K SF Quoted Rates: $17.82 PSF Northlake Vacancy: 11.9% YTD Abs: (49)K SF Quoted Rates: $17.48 PSF West Atlanta Vacancy: 26.8% YTD Abs: 65K SF Quoted Rates: $15.17 PSF South Atlanta Vacancy: 19.1% YTD Abs: (129)K SF Quoted Rates: $17.51 PSF Northwest Atlanta Vacancy: 19.8% YTD Abs: 9K SF Quoted Rates: $18.42 PSF Northeast Atlanta Vacancy: 22.5% YTD Abs: (95)K SF Quoted Rates: $16.63 PSF Downtown Atlanta Vacancy: 17.5% YTD Abs: (356)K SF Quoted Rates: $17.66 PSF Central Perimeter Vacancy: 22.9% YTD Abs: (353)K SF Quoted Rates: $20.17 PSF Buckhead Vacancy: 20.1% YTD Abs: 685K SF Quoted Rates: $23.32 PSF Midtown Atlanta Vacancy: 20.8% YTD Abs: (417)K SF Quoted Rates: $22.83 PSF LEASING HIGHLIGHTS Select Markets by Vacancy Rate (YTD) UNEMPLOYMENT RATE SEPT 2011 National 9.1% Georgia 10.3% Atlanta MSA 10.3% 3Q’11 MARKET INDICATORS Construction Rental Rates Net Absorption Vacancy Rate
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ATLANTA OFFICE MARKET
MARKET OVERVIEW
The Atlanta Office market ended the third quarter 2011 with a vacancy rate of 19.6%. This rate represents a slight decrease from the previous quarter rate of 19.8%. This decrease occurred in a quarter where Atlanta saw 309,022 SF in net absorption and one building, 4,000 SF, deliver to the market. Quoted rental rates ended the quarter at $19.08 PSF, down from last quarter rate of $19.19 PSF. Currently there is 765,077 SF of office product under construction in Metro Atlanta.
ECONOMIC OVERVIEW
Most economists believe the European debt crises will remain a threat to the global economy into 2012. Lower oil prices and the recent end to Japanese supply disruptions stemming from the March earthquake have lifted impediments to consumer spending, ending the third quarter better-than-expected. However, uncertainty will impact the confidence of business leaders and consumers dampening future business investment and hiring.
Atlanta’s outlook for the remainder of 2011 is optimistic. The healthcare, education and supply chain/distribution industries continue to grow for Atlanta, as our business climate, location to major transportation hubs, technology and talent pool remain favorable for corporate relocations.
Commercial Real Estate Services, Worldwide.
Brannen Goddard404 812 4000 | fax 404 816 3939 | www.naibg.com Suite 1100 | 5555 Glenridge Connector | Atlanta GA 30342Information is deemed from reliable sources. No warranty is made as to its accuracy. ATLANTA OFFICE MARKET // Third Quarter 2011
Leasing Highlights in Select CoStar MarketsColor Coded by Vacancy Rate
Vacancy Rate: Less than 5% 5% to 10% 10% to 15% 15% to 20% Over 20%
The overall vacancy rate at the end of the third quarter 2011 is 19.6%, down from the previous quarter when it was 19.8%. The current rate represents over 41.2 million square feet of vacant office space throughout the Metro Atlanta Office market, a 1% increase from this time last year. The current amount of vacant sublease space is 2.1 million square feet, down slightly from last quarter.
NET ABSORPTION
At the close of the quarter, an overall net absorption of 309,022 SF was reported, an increase over the previous quarter. The recorded net absorption for the current quarter by class follows: Class A: 116,750 SF, Class B: 144,780 SF and Class C: 47,492 SF.
Leasing activity was over 2.9 million square for the quar-ter, up from the previous quarter. YTD NET ABSORPTIONS BY BUILDING TYPE
» CLASS A 1,037,416 SF
» CLASS B (1,408,548) SF
» CLASS C (104,301) SF
» YTD (475,433) SF
CONSTRUCTION ACTIVITY
At the close of the quarter, the Atlanta Office market had a single building, 4,000 SF, in new construction deliveries. This compares to 40,162 SF in deliveries last quarter and 21,000 SF this time last year.
Currently there is 765,077 SF of new office projects under construction (11 buildings), an increase from the 451,318 SF that was underway this time last year.
The largest projects currently underway are Cox Headquarters, Buildings 1 & 2, totaling 600,000 SF located in the Central Perimeter submarket.
QUOTED RENTAL RATES
The current overall quoted Atlanta Office rental rate of $19.08 PSF represented a $0.11 PSF decrease in rental rates from the end of the previous quarter, when rents were $19.19 PSF.
The Class A rental rates are reported at $21.50 PSF with the highest rate reported in the Buckhead submarket at $24.55 PSF with Midtown closely following at $24.18 PSF.
Class B sector ended the quarter with quoted rental rates of $16.29 PSF, which is $0.11 PSF lower than last quarter and $0.45 PSF lower than this time last year.
Significant Third Quarter 2011 Lease Transactions (New & Renewal)Building Submarket Square Feet Tenant NameWindward Plaza - Bldg 300 North Fulton 203,245 GE Consumer Finance
Atlanta Financial Center - South Upper Buckhead 135,075 SunTrust Robinson Humphrey
2635 Century Center Chamblee 119,178 FBI
Companile Plaza Midtown 72,232 SunTrust Bank
4501 Northpoint Parkway North Fulton 59,501 Total Systems Services
Significant Third Quarter 2011 Construction DeliveriesBuilding Submarket Square Feet Class4536 Nelson Brogdon Blvd - Bldg B Northeast Atlanta 4,000 B
Significant Third Quarter 2011 Properties Under ConstructionBuilding Submarket Square Feet Delivery
Cox Headquarters Bldg 1 Central Perimeter 300,000 2Q 2012
Cox Headquarters Bldg 2 Central Perimeter 300,000 4Q 2012
Parkway Professional Northeast Atlanta 67,500 4Q 2011
7316 Spout Springs Road Northeast Atlanta 20,000 3Q 2011
1887 Powder Springs Road Northwest Atlanta 16,650 3Q 2012
All Construction Activity (Markets Ranked by Under Construction Square Footage)
Under Construction InventoryMarket # Bldgs Total RBA Preleased SF Preleased % Available SFCentral Perimeter 3 616,000 611,840 99.3% 4,160