While Atlanta's office vacancy rates remain high around 19-20% and rental rates have leveled off, the biggest submarket of Buckhead is experiencing positive absorption due to companies moving to more desirable areas with reduced costs. Major transactions in the second quarter included several lease and renewal deals for office spaces over 20,000 square feet. The lack of new office construction in the city and Georgia's continued high unemployment rate are also influencing the tenant's market.

1. Atlanta, Georgia
Te n a n t ’ s G u i d e North American Markets S e c o n d Q u a r t e r 2 0 11
Overview Major Transactions
While landlord concessions have cooled slightly, it is still a hot Tenant/Buyer Size Type Lease/Sale
tenant's market in Atlanta. Most submarkets experienced negative Morris, Manning & Martin 125,000 Office Renewal
absorption for the second quarter, except for Buckhead. Positive North Highland 69,922 Office Lease
absorption in the most prestigious submarket in Atlanta is due Kemira HQ 46,000 Office Lease
primarily to the “flight to quality”, whereby companies are moving I-Tech 44,000 Office Lease
to more desirable areas or buildings, often with a reduction in
McGuire Woods 39,600 Office Renewal
overall occupancy costs.
Windham Brannon 35,000 Office Lease
Ashworth University 32,000 Office Expansion
Atlanta's class A office vacancy rate continues to hover around
19%-20% in most major submarkets. Office building rents have TitleMax 27,644 Office Lease
leveled out, with only slight declines from the end of 2010. The ThyssenKrupp 26,000 Office Lease
average quoted rental rate is approximately $18.5/SF, although PowerPlan Consultants 23,094 Office Lease
class A buildings in Midtown and Buckhead are commanding a
premium with asking rates of up to $24.00/SF. Rent abatement of
1.0 to 1.5 months for each year of lease term is the norm. Vacancy Rate
Q4 2010 Q1 2011 Q2 2011
Market Trends
23.3%
22.4%
21.2%
21.2%
21.1%
Ÿ The absence of cranes in Atlanta is remarkable for a city that
20.8%
20.7%
25%
20.1%
19.9%
19.8%
19.7%
once added an average of 3.26 MSF of office space a year.
20%
There is no speculative office building construction in Atlanta's
12.8%
major submarkets and none is expected for the next 18-36 15%
months.
Ÿ Georgia's unemployment rate was 9.8% in May, the 46th 10%
straight month that the state's unemployment rate was higher 5%
than the U.S. rate.
Ÿ With more than 226 total CMBS loans in special servicing, 0%
Class A Class B Class A Class B
Atlanta leads the nation. Of this total, 46 are office buildings, CBD CBD Suburban Suburban
with more expected delinquencies as values decline due to
rising vacancy rates. In recent months, Downtown's Peachtree
Center and the One Peachtree Pointe and the Campanile
building in Midtown have been transferred to special servicers.
Average Rental Rates
CBD Q4 2010 Q1 2011 Q2 2011
Tenant's Perspective Class A Office $19.35 $19.32 $19.31
Class B Office $15.89 $15.57 $15.41
Atlanta businesses, like those nationwide, are using these
recessionary times to reevaluate their office space needs.
Suburban Q4 2010 Q1 2011 Q2 2011
CresaPartners offers Project Management services to assist our Class A Office $20.40 $20.34 $20.25
clients in utilizing their current space more productively or to Class B Office $15.64 $15.52 $15.51
relocate to buildings with more efficient floor plans. Companies
that are considering downsizing should contact a CresaPartners
Advisor, who can evaluate leasing options and introduce a Project
Manager to analyze “square foot per employee” requirements.
With more than 1,400 clients, and experience negotiating over 200
lease transactions each year, CresaPartners Atlanta Advisors are Prepared By CresaPartners
knowledgeable about current market trends and leverage this 3475 Piedmont Road, Suite 900
expertise to reduce occupancy costs for the businesses that we Atlanta, Georgia 30305
represent. 404.257.8866 www.cresapartners.com