The 1st quarter of 2011 saw 413,722 SF of negative absorption in the Atlanta commercial real estate office market, raising the vacancy rate to 20% while average rental rates dropped to $19.39/SF. PricewaterhouseCoopers signed a deal for 140,000 SF in Midtown, while major deals also included Cotton States taking 67,000 SF in Deerfield Center and Ultimate Software's 49,000 SF in Galleria 400. While it remains a tenant's market, deal economics and concessions are tightening, and Class A properties are garnering most attention as the recovering market progresses through 2011.

1. I hope all is well and you are enjoying this amazing spring weather. The 1st quarter of 2011 was an active one in the metro Atlanta commercial real estate office market. Below is a brief rundown of some key happenings as well as where we stand moving forward. RATESApproximately 413,722 SF of negative absorption helped facilitate a rise in the vacancy rate to 20% while average rental rates dropped to $19.39/SF. Construction is still measured as 40,650 SF was delivered last quarter and only 199,162 SF remains under construction. DEAL ACTIVITY AND ANNOUNCEMENTSLook for a new name on the city skyline as PricewaterhouseCoopers is relocating to 140,000 SF at 12th and Midtown. New Buckhead buildings maintained positive momentum including big hits from Reznick Group and Prudential, both choosing the high profile Two Alliance Center in Buckhead over renewing in Central Perimeter. Buckhead couldn’t sway McGuire Woods however, as they agreed to take 40,000 SF at Promenade II and stay in Midtown. Major deals outside the CBD’s included Cotton States taking 67,000 SF at One Deerfield Center and Ultimate Software’s 49,000 SF deal at Galleria 400. Major renewals included Arnall Golden Gregory, HCA, and McKenna Long Aldridge while deals still yet to land are Primeria, Paul Hastings, Gentiva, Manhattan Associates, and FDIC. A laundry list of players working on expanding their footprint in the city include Novelis, SecureWorks, HP, Alston and Bird, Suniva, Turner, Habitat for Humanity, and FedEx. Red Hat passed on an Atlanta relocation however Panasonic could still have the city in the mix for a new HQ site. IBM is still undergoing a large consolidation, cutting their space by 75% and leaving a 225,000 SF hole in Cumberland’s RiverEdge. FORECASTLast quarter posted the best numbers since the beginning of 2008 for investment sales. There is still a lot of money on the sidelines looking to be placed and eyeing Atlanta. We need additional initiatives, such as Metro Atlanta Chamber’s “Hire One”, to continue to boost employment and job growth. Cousins’ future downtown redevelopment of the ‘Gulch’ as a transit hub should aid in transportation problems. While it’s still considered a tenant’s market, deal economics and concessions are tightening. A consistent theme seen among leasing seems to be Class A properties garnering the lion’s share of attention as B-C product waits patiently for further recovery. Albeit slow, the increasing activity seen in the 1st quarter is very encouraging as we progress through the first half of 2011 and towards a healthier and robust economy. As always, please don’t hesitate to contact me with any questions or if I can be a resource for you in any way<br />