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3Q’11 ATLANTA OFFICE MARKET Leasing Highlights in Select CoStar Markets Color Coded by Vacancy Rate MARKET OVERVIEW The Atlanta Office market ended the third quarter 2011 with a vacancy rate of 19.6%. This rate represents a slight decrease North Fulton Vacancy: 19.3% from the previous quarter rate of 19.8%. This decrease YTD Abs: 67K SF Quoted Rates: $17.82 PSF occurred in a quarter where Atlanta saw 309,022 SF in net absorption and one building, 4,000 SF, deliver to the market. Central Perimeter Quoted rental rates ended the quarter at $19.08 PSF, down from last quarter rate of $19.19 PSF. Currently there is Northwest Atlanta Vacancy: 22.9% Vacancy: 19.8% YTD Abs: (353)K SF YTD Abs: 9K SF Quoted Rates: $18.42 PSF Quoted Rates: $20.17 PSF 765,077 SF of office product under construction in Northeast Atlanta Vacancy: 22.5% Metro Atlanta. Buckhead YTD Abs: (95)K SF Quoted Rates: $16.63 PSF Vacancy: 20.1% YTD Abs: 685K SF Quoted Rates: $23.32 PSF Downtown Atlanta ECONOMIC OVERVIEW West Atlanta Vacancy: 17.5% Vacancy: 26.8% YTD Abs: (356)K SF YTD Abs: 65K SF Quoted Rates: $17.66 PSF Most economists Quoted Rates: $15.17 PSF believe the European UNEMPLOYMENT RATE SEPT 2011 Midtown Atlanta Northlake debt crises will National 9.1% Vacancy: 20.8% Vacancy: 11.9% YTD Abs: (417)K SF Quoted Rates: $22.83 PSF YTD Abs: (49)K SF Quoted Rates: $17.48 PSF remain a threat to Georgia 10.3% the global economy Atlanta MSA 10.3% into 2012. Lower oil prices and the recent end to Japanese supply disruptions South Atlanta Vacancy: 19.1% stemming from the March earthquake have lifted YTD Abs: (129)K SF Quoted Rates: $17.51 PSF 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. Vacancy Rate: Less than 5% 5% to 10% 10% to 15% 15% to 20% Over 20% Atlanta’s outlook for the remainder of 2011 is optimistic. The healthcare, education and supply chain/distribution industriesLEASING HIGHLIGHTS continue to grow for Atlanta, as our business climate, locationSelect Markets by Vacancy Rate (YTD) to major transportation hubs, technology and talent pool remain favorable for corporate relocations. MARKET INDICATORS Vacancy Net Construction Rental Brannen Goddard Rate Absorption Rates Commercial Real Estate Services, Worldwide. 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
CONSTRUCTION ACTIVITY ATLANTA OFFICE MARKET THIRD QUARTER 2011 At the close of the quarter, the Atlanta Office market had a single building, 4,000 SF, in new construction VACANCY deliveries. This compares to 40,162 SF in deliveries last quarter and 21,000 SF this time last year. The overall vacancy rate at the end of the third quarter 2011 is 19.6%, down from the previous quarter when it Currently there is 765,077 SF of new office projects was 19.8%. The current rate represents over 41.2 million under construction (11 buildings), an increase from the square feet of vacant office space throughout the Metro 451,318 SF that was underway this time last year. Atlanta Office market, a 1% increase from this time last year. The current amount of vacant sublease space is 2.1 The largest projects currently underway are Cox million square feet, down slightly from last quarter. Headquarters, Buildings 1 & 2, totaling 600,000 SF located in the Central Perimeter submarket. NET ABSORPTION At the close of the quarter, an overall net absorption of QUOTED RENTAL RATES 309,022 SF was reported, an increase over the previous The current overall quoted Atlanta Office rental rate of quarter. The recorded net absorption for the current $19.08 PSF represented a $0.11 PSF decrease in rental quarter by class follows: Class A: 116,750 SF, Class B: rates from the end of the previous quarter, when rents 144,780 SF and Class C: 47,492 SF. were $19.19 PSF. Leasing activity was over 2.9 million square for the quar- The Class A rental rates are reported at $21.50 PSF with ter, up from the previous quarter. the highest rate reported in the Buckhead submarket at $24.55 PSF with Midtown closely following at $24.18 PSF. YTD NET ABSORPTIONS BY BUILDING TYPE » CLASS A 1,037,416 SF Class B sector ended the quarter with quoted rental rates » CLASS B (1,408,548) SF of $16.29 PSF, which is $0.11 PSF lower than last quarter » CLASS C (104,301) SF and $0.45 PSF lower than this time last year. » YTD (475,433) SFVACANCY RATES BY CLASS 5% Class A Class B Class C Total25.0% 95%20.0% Direct Sublet 15.0%10.0% 5.0% 0.0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011