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GODDARD
Atlanta
Office |Report
| Fourth2007
Quarter 2009
Office Report
First Quarter
Brannen Goddard
Commercial Real Estate Services, Worldwide.
Atlanta Office Market
Fourth Quarter 2009
Leasing Highlights in Select CoStar Markets
Color Coded by Vacancy Rate
Leasing Highlights
Market Overview
Select Markets by Vacancy Rate (YTD)
The Atlanta Office market reported a
fourth quarter 2009 vacancy rate of
19.1%. This vacancy rate represents an
increase over the last quarter rate of
18.8%. This increase occurred in a
quarter where Atlanta saw (640,262)
square feet in negative net absorption
and 82,597 square feet in deliveries.
Rental rates ended the quarter at $19.77
psf, down from last quarter, and there is
1,732,432 sf currently under construction.
North Fulton
Vacancy:
YTD Abs:
Avg Rent:
19.9%
(379)K SF
$18.15 PSF
Northwest Atlanta
Vacancy:
YTD Abs:
Avg Rent:
Central Perimeter
19%
(197)K SF
$18.72 PSF
Vacancy:
YTD Abs:
Avg Rent:
21.7%
(926)K SF
$20.78 PSF
Northeast Atlanta
Vacancy:
YTD Abs:
Avg Rent:
Buckhead
Vacancy:
YTD Abs:
Avg Rent:
20.4%
(56)K SF
$24.98 PSF
21.8%
(145)SF
$17.31 PSF
Downtown Atlanta
Vacancy:
YTD Abs:
Avg Rent:
West Atlanta
Vacancy:
YTD Abs:
Avg Rent:
17.3%
(645)K SF
$18.97 PSF
30.7%
52K SF
$16.07 PSF
Northlake
Midtown Atlanta
Vacancy:
YTD Abs:
Avg Rent:
2009 saw weak demand, falling values,
tighter lending practices and fewer
transactions. As we head into 2010, most
economists are predicting a slow road to
recovery. Housing has bottomed, industrial vacancies are about to peak, and
office and multi-family vacancies should
peak this year. Job losses will continue
through the first half of 2010, but at a
much slower rate.
Vacancy:
YTD Abs:
Avg Rent:
18.5%
169K SF
$21.82 PSF
12.1%
(317)K SF
$17.63 PSF
Economic Overview
UNEMPLOYMENT RATE (OCT)
National
Georgia
Atlanta MSA
South Atlanta
Vacancy:
YTD Abs:
Avg Rent:
10.0%
10.3%
10.1%
Long-term growth prospects remain
healthy given Atlanta’s diverse economy,
strong in-migration and population
growth, transportation and status as a
logistics and distribution hub.
18.5%
299K SF
$18.24 PSF
MARKET INDICATORS
Vacancy Rate:
Less than 5%
5% to 10%
10% to 15%
Brannen Goddard
Commercial Real Estate Services, Worldwide.
15% to 20%
Over 20%
Vacancy
Rate
Net
Absorption
Construction
Rental
Rates
9%
Vacancy Rates by Class
1993-2009 4Q
Class A
Class
A
Class B
Class C
Class B
Class C Total
Total
91%
25.0%
Direct
Sublet
20.0%
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
Vacancy
Net Absorption
Across all sectors for the fourth quarter, a negative net
absorption of (640,262) square feet was reported.
Atlanta hasn’t experienced a year end negative net
absorption since 2003. The year-to-date net absorptions by Class are:
Class A - (558,678)
Class B - (1,368,173)
Class C - ( 216,580)
YTD (2,143,431)
Absorption & Deliveries
Past 12 Quarters
Absorption
& Deliveries
Net Absorption
Deliveries
2,500
2,000
1,500
Millions SF
The overall vacancy rate at the end of the fourth
quarter 2009 is 19.1%, up from the previous quarter
when it was 18.8%. The current rate represents over
38.1 million square feet of vacant office space throughout the Metro Atlanta Office market, a 14% increase
from this time last year. The current amount of vacant
sublease space is 3.5 million square feet.
1,000
500
0
(500)
(1,000)
(1,500)
2007 2007
1q
2q
2007 2007 2008
3q
4q
1q
2008 2008
2q
2008 2009 2009
3q
4q
1q
2q
2009 2009
3q
4q
Overall
Rates
Overall Vacancy
Vacancy &
& Quoted
Quoted Rates
Vacancy Rate
Average Vacancy
Quoted Rates
25.00%
$21.50
$21.00
20.00%
$20.50
15.00%
$20.00
$19.50
10.00%
$19.00
5.00%
$18.50
0.00%
$18.00
2006 4q
2007 1q
2007 2q
2007 3q
2007 4q
Brannen Goddard
Commercial Real Estate Services, Worldwide.
2008 1q
2008 2q
2008 3q
2008 4q
2009 1q
2009 2q
2009 3q
2009 4q
All data for text, charts & graphs provided by ©CoStar Property.
All Construction Activity
Markets Ranked by Under Construction Square Footage
Under Construction Inventory
# Blds
Market
Buckhead
Midtown Atlanta
Northwest Atlanta
South Atlanta
Northeast Atlanta
Northlake
West Atlanta
Central Perimeter
Downtown Atlanta
North Fulton
Totals
Total RBA
2
1
3
1
1
1
0
0
0
0
9
Preleased SF
922,585
719,003
56,710
21,000
7,134
6,000
0
0
0
0
1,732,432
Quoted Rental Rates
Class A
Preleased %
4,860
86,280
4,500
0
2,140
0
0
0
0
0
97,780
Available SF
0.5%
12.0%
7.9%
0.0%
30.0%
0.0%
0.0%
0.0%
0.0%
0.0%
5.6%
917,725
632,723
52,210
21,000
4,994
6,000
0
0
0
0
1,634,652
Based on Full-Service Equivalent Rental Rates
Class B
Class C
Total M arket
$25.00
At the close of the fourth quarter, the
Atlanta Office market delivered 82,597
square feet of new speculative projects, down dramatically from the
previous quarter.
Currently, more than 49% of the office
space under construction is located in
Buckhead Class A buildings. Of the
over 1.7 million square feet currently
under construction, over 922,585
square feet is in Buckhead, and
719,003 square feet is in Midtown.
One of the largest projects currently
underway at the end of the fourth
quarter is 12th & Midtown, a 719,003
square foot building, 12% pre-leased.
Future Deliveries
$20.00
Rental Rates
Construction Activity
2,000,000
$15.00
1,800,000
1,600,000
$10.00
1,400,000
1,200,000
$5.00
1,000,000
800,000
$0.00
2006 1q
2006 2q
2006 3q
2006 4q
2007 1q
2007 2q
2007 3q
2007 4q
2008 1q
2008 2q
2008 3q
2008 4q
2009 1q
2009 2q
2009 3q
2009 4q
600,000
400,000
200,000
-
Market Highlights
2010 1Q
Significant Fourth Quarter 2009 Lease Transactions
Building
Submarket
Square Feet
Tenant Name
2651 Satellite Boulevard
Duluth/Suwanee/Buford
182,956
NCR Corporation
113,264
Delta Dental Insurance
Stonebridge III
North Fulton/Forsyth
500 Northpark
Central Perimeter
70,218
Oracle Corporation
RiverEdge One
Cumberland/Galleria
35,639
AssuranceAmerica Corp
Significant Fourth Quarter 2009 Construction Deliveries
Building
Submarket
Cherokee Medical Office Center
Northwest Atlanta
Square Feet
60,000
Class
A
Significant Fourth Quarter 2009 Properties Under Construction
Building
Submarket
12th & Midtown
Midtown Atlanta
Square Feet
719,003
First Quarter 2010
Phipps Tower
Buckhead
486,000
First Quarter 2010
3630 Peachtree
Buckhead
436,585
First Quarter 2010
2000 Village Professional Drive
Northwest Atlanta
34,060
First Quarter 2010
Build on the power of our network.™ Over 325 offices worldwide.
2010 2Q
Quoted Rental Rates
The current overall Atlanta Office
rental rate of $19.77 per square foot
represented a $0.05 per square foot
decrease in rental rates from the end
of the previous quarter, when rents
were $19.82 per square foot.
The Class A rental rates are reported
at $21.91 with the highest rate reported in the Buckhead submarket at
$26.12.
Delivery
Class B sector ended the fourth
quarter with quoted rental rates of
$17.02 per square foot, which is $0.05
per square foot lower than last quarter
and $0.67 per square foot lower than
this time last year.
Total Atlanta Office Market Statistics
Existing Inventory
Market
# Blds
Fourth Quarter 2009
Vacancy
Total RBA
Direct SF
Sublease SF
Total SF
Vac %
YTD Net
YTD
Under
Quoted
Absorption
Deliveries
Const SF
Rates
Buckhead
116
18,675,248
3,623,098
191,982
3,815,080
20.4%
-55,711
1,058,051
922,585
24.98
Central Perimeter
264
28,266,783
5,441,654
691,046
6,132,700
21.7%
-925,712
0
0
20.78
Downtown Atlanta
147
25,466,693
3,905,841
490,974
4,396,815
17.3%
-644,718
0
0
18.97
Midtown Atlanta
125
18,681,469
2,905,836
542,851
3,448,687
18.5%
169,369
548,039
719,003
21.82
North Fulton
339
24,866,003
4,282,817
655,764
4,938,581
19.9%
-379,048
262,787
0
18.15
Northeast Atlanta
384
19,032,789
3,875,142
277,072
4,152,214
21.8%
-145,454
108,696
0
17.31
Northlake
384
19,060,860
2,253,872
60,055
2,313,927
12.1%
-316,813
82,400
0
17.63
Northwest Atlanta
439
32,366,769
5,556,203
598,349
6,154,552
19.0%
-196,791
199,666
50,710
18.72
South Atlanta
243
10,219,418
1,860,800
26,170
1,886,970
18.5%
299,245
371,547
21,000
18.24
51
2,869,990
879,864
2,127
881,991
30.7%
52,202
18,000
0
16.06
2,492
199,506,022
34,585,127
3,536,390
38,121,517
19.1%
-2,143,431
2,649,186
1,713,298
19.77
West Atlanta
Totals
Class
Statistics
ClassAAMarket
Statistics
Existing Inventory
Market
# Blds
Total RBA
Vacancy
Direct SF
Sublease SF
Total SF
Vac %
YTD Net
YTD
Under
Quoted
Absorption
Deliveries
Const SF
Rates
Buckhead
48
13,532,105
2,911,165
144,967
3,056,132
22.6%
56,896
1,058,051
922,585
26.12
Central Perimeter
76
19,150,436
3,470,415
508,423
3,978,838
20.8%
-533,817
0
0
21.79
Downtown Atlanta
25
13,478,924
2,881,251
475,448
3,356,699
24.9%
-537,259
0
0
20.01
Midtown Atlanta
31
13,567,752
2,268,067
452,876
2,720,943
20.1%
338,100
548,039
719,003
22.84
North Fulton
97
13,863,876
2,091,695
450,262
2,541,957
18.3%
18,507
163,000
0
19.99
Northeast Atlanta
60
6,497,234
1,340,927
92,961
1,433,888
22.1%
-17,073
108,696
0
19.68
Northlake
15
1,842,320
209,287
16,727
226,014
12.3%
-9,700
0
0
21.17
Northwest Atlanta
72
15,754,880
2,175,779
462,416
2,638,195
16.7%
-42,446
60,000
34,060
20.96
South Atlanta
17
1,238,024
499,859
14,732
514,591
41.6%
168,104
301,547
21,000
21.69
1
71,500
5,580
0
5,580
7.8%
10
0
0
25.34
442
98,997,051
17,854,025
2,618,812
20,472,837
20.7%
-558,678
2,239,333
1,696,648
21.91
West Atlanta
Totals
Class
Statistics
ClassBBMarket
Statistics
Existing Inventory
Market
# Blds
Buckhead
Total RBA
Vacancy
Direct SF
Sublease SF
Total SF
Vac %
YTD Net
YTD
Under
Absorption
Deliveries
Const SF
Quoted
Rates
42
4,518,139
658,938
42,365
701,303
15.5%
-104,883
0
0
19.27
129
7,645,412
1,421,743
182,623
1,604,366
21.0%
-333,021
0
0
19.09
Downtown Atlanta
60
8,467,068
572,665
15,526
588,191
6.9%
-95,415
0
0
16.12
Midtown Atlanta
73
4,505,242
566,480
78,551
645,031
14.3%
-142,518
0
0
17.79
North Fulton
219
10,351,558
2,159,044
198,969
2,358,013
22.8%
-387,069
99,787
0
15.89
Northeast Atlanta
291
11,601,047
2,437,656
184,011
2,621,667
22.6%
-123,010
0
0
15.69
Northlake
279
14,306,641
1,715,127
43,328
1,758,455
12.3%
-194,043
82,400
0
17.57
Northwest Atlanta
316
15,007,819
3,166,486
135,933
3,302,419
22.0%
-158,932
139,666
16,650
16.95
South Atlanta
179
7,462,290
1,020,037
11,438
1,031,475
13.8%
116,205
70,000
0
17.61
31
1,294,712
176,716
2,127
178,843
13.8%
54,513
18,000
0
20.39
1,619
85,159,928
13,894,892
894,871
14,789,763
17.4%
-1,368,173
409,853
16,650
17.02
Central Perimeter
West Atlanta
Totals
ClassCCMarket
Statistics
Class
Statistics
Existing Inventory
Market
# Blds
Total RBA
Vacancy
Direct SF
Sublease SF
Total SF
Vac %
YTD Net
YTD
Under
Absorption
Deliveries
Const SF
Quoted
Rates
Buckhead
26
625,004
52,995
4,650
57,645
9.2%
-7,724
0
0
20.26
Central Perimeter
59
1,470,935
549,496
0
549,496
37.4%
-58,874
0
0
13.65
Downtown Atlanta
62
3,520,701
451,925
0
451,925
12.8%
-12,044
0
0
16.27
Midtown Atlanta
21
608,475
71,289
11,424
82,713
13.6%
-26,213
0
0
14.83
North Fulton
23
650,569
32,078
6,533
38,611
5.9%
-10,486
0
0
16.14
Northeast Atlanta
33
934,508
96,559
100
96,659
10.3%
-5,371
0
0
14.74
Northlake
90
2,911,899
329,458
0
329,458
11.3%
-113,070
0
0
14.86
Northwest Atlanta
51
1,604,070
213,938
0
213,938
13.3%
4,587
0
0
13.95
South Atlanta
47
1,519,104
340,904
0
340,904
22.4%
14,936
0
0
13.21
West Atlanta
19
1,503,778
697,568
0
697,568
46.4%
-2,321
0
0
10.04
431
15,349,043
2,836,210
22,707
2,858,917
18.6%
-216,580
0
0
14.47
Totals
All data for text, charts & graphs provided by ©CoStar Property.
Brannen Goddard
Commercial Real Estate Services, Worldwide.
tel 404 812 4000
fax 404 816 3939
www.naibg.com
Suite 1100
5555 Glenridge Connector
Atlanta GA 30342