Q2 2013 | OFFICE

ATLANTA

MARKET REPORT

Mid-Year Results Show Atlantas Office Market on Solid Ground

Updated May 2012

MARKET INDICATORS
Q2 2013

Projected

Q3 2013

VACANCY
NET ABSORPTION
CONSTRUCTION

RENTAL RATE
CAP RATES

Led yet again by tenant expansions and small business growth, Atlanta office absorption topped
770,000 square feet in the second quarter bringing the year-to-date total to just over 870,000 square
feet. This amount represents 86% of the office space absorbed at mid-year 2012 and puts the Atlanta
market on track to absorb close to the same amount of office space as last year. In addition, as a
result of the positive activity, the overall vacancy rate for office has dropped almost 100 basis points
from this time last year and currently stands at 17%. Breaking down the positive gains in the quarter,
as mentioned, tenant expansions and small business growth were the major contributing factors.
Sustained growth in the professional service and technology industry sectors is leading office expansion
in Atlanta. Elsewhere, organic growth of small businesses is filling numerous vacancies across the
metro region. The largest move-in of the quarter was Primerica occupying its new build-to-suit of
344,476 square feet. The Northeast Atlanta submarket saw the highest amount of positive absorption
in the second quarter due directly to Primericas move. Central Perimeter continues to be the most
active leasing environment in Atlanta and had the second highest occupancy gain of the quarter absorbing
134,000 square feet. Overall, office leasing was fairly active and steady during the past three months.
Two of the years largest lease transactions were completed in second quarter and have taken two
large blocks of available space off of the market. This brings to light the dwindling supply of large office
availabilities in Atlanta. Currently, only seven options exist for companies seeking Class A office space
over 200,000 square feet. As this circumstance progresses, a number of developers are positioning
themselves with the ability to build the next new office tower once necessary conditions are met.
Atlantas office market is poised to see another strong year of occupancy gain in 2013. The back
half of the year is expected to be just as active, if not more, than the first half. In the past six
months, ten office headquarter relocations and/or regional hubs have been announced for the
metro area and are anticipated to bring over 2,700 jobs to the region. The most recent of these
continued on page 2

ATLANTA OFFICE

NEW SUPPLY, ABSORPTION AND VACANCY RATES

UPDATE
Atlanta Rental Rates
Overall Market & Class A (per sq. ft.)

6,000,000
$25.00
$25.00

25%

5,000,000

$24.00
$24.00

4,000,000

$23.00
$23.00

20%

3,000,000

10%

(3,000,000)

Market AVG

(4,000,000)

2013

2012

2011

2010

5%
0%

Absorption

www.colliers.com/atlanta

2009

(2,000,000)

2008

$17.00
$17.00

2007

(1,000,000)

2006

$18.00
$18.00

2013
2013

Class A

2012
2012

2011
2011

2010
2010

$19.00
$19.00

15%

1,000,000
2005

$20.00
$20.00

2,000,000

2004

$21.00
$21.00

Square Feet

$22.00
$22.00

Deliveries

Vacancy %

Atlantas office market

absorbed
just
over
770,000 square feet of
space in the second
quarter. Primerica was
the largest move-in
during the three month
period
with
the
companys new build-tosuit of 344,476 square
feet delivering.
The
overall vacancy rate for
Atlanta office now stands
at 17%, down 70 basis
points from this time last
year.

MARKET REPORT | Q2 2013 | OFFICE | ATLANTA

VACANCY & AVAILABILITY

Vacant Space-Space that is not currently

occupied by a tenant, regardless of any lease
obligation on the space.

leased by a tenant and is being offered for lease

back to the market by the tenant with the lease
obligation.

Large availabilities continue to decline.

Currently, only 19 options exist for companies
seeking over 200,000 SF of contiguous office;
only 7 of these are Class A properties.
Q2 2013 | Vacant Space By Type

All of Atlantas office submarkets saw occupancy

gains this quarter. Northeast Atlanta had the
most space absorbed thanks to Primericas
move into its new 344,476 SF build-to-suit.

Small business growth continues to show solid

performance as move-ins less than 10,000 SF
accounted for 35% of second quarter absorption.

Demand for space remains strong in Atlanta

with a number of large office requirements
floating around the market.
Q2 2013 | Net Absorption by Submarket

Build-to-Suit-A term describing property that

CLASS C
3,781,107 SF
VCY RATE = 17.3%

was developed specifically for a certain tenant

to occupy. Can be either leased or owned by
the tenant.

200,000

150,000

100,000

50,000

Class A

Class B

Class C

WEST ATLANTA

CLASS B
15,526,407 SF
VCY RATE = 17.3%

CLASS A
18,378,666 SF
VCY RATE = 16.7%

MIDTOWN

250,000

NORTH FULTON

300,000

footage that is committed to and signed

for under a lease obligation for a specific
building or market in a given period of
time. It includes direct leases, subleases and
renewals of existing leases. It also includes
any pre-leasing activity for buildings under
construction or planned.

BUCKHEAD

Leasing Activity-The volume of square

The second quarter of 2013 marks the eighth

consecutive quarter with positive absorption.

NORTHLAKE

that
complete
construction during a specified period of time.
A certificate of occupancy must have been
issued for the property for it to be considered
delivered.

Since its most recent peak at the end of 2011,

Central Perimeter has seen office vacancy drop
5.4%. This is the largest decrease in vacant space
of any other submarket in that amount of time.

SOUTH ATLANTA

Deliveries-Buildings

At mid-year 2013, Atlantas overall office

vacancy rate is down 0.7% from this time last
year. Class A vacancy has seen the largest
drop from mid-year 2012, down 1.5%.

NORTHWEST

Sublease Space-Space that has been

ABSORPTION & LEASING ACTIVITY

DOWNTOWN

Vacancy Rate-A percentage of the total

amount of physically vacant space divided by
the total amount of existing inventory.

NORTHEAST

occupied space over a given period of time,

calculated by summing all the positive
changes in occupancy and subtracting all the
negative changes in occupancy.

CENTRAL PERIMETER

Absorption (Net)-The net change in

to occur are Pulte Group, Inc. which announced it will be moving its headquarters from Bloomfield
Hills, Michigan to Atlanta and AthenaHealth which officially completed a lease for 60,000 square feet
at Jamestowns Ponce City Market development in Midtown to house a regional IT hub. In addition
to what has been reported, a number of large office requirements continue to float around the market
including AIG seeking over 120,000 square feet for a regional headquarters, Comdata scouting the
market for a new headquarters location up to 300,000 square feet and Motorola Solutions which is
looking for a possible headquarters relocation to accommodate up to 800 jobs. As mentioned earlier,
space options for requirements of this size are limited in Atlanta. Should the city land any of these
sizeable deals, it could spark the beginning of the next development cycle here.

Square Feet

DEFINITIONS

UPDATE Recent Transactions in the Market

SALES ACTIVITY
PROPERTY

SUBMARKET

SALES DATE

SALE PRICE

SIZE SF

PRICE / SF

BUYER

AT&T Midtown I & II

Midtown

4/25/2013

$205,000,000

794,110

$258.15

Cole Real Estate Investments

Three Ravinia

Central Perimeter

5/23/2013

$144,300,000

813,145

$177.46

CBRE Global Investors

One Alliance Center

Buckhead

6/21/2013

$140,100,000

553,017

$253.34

Highwoods Properties

Atlantic Center Plaza

Midtown

4/25/2013

pending

499,601

pending

Crocker Partners

LEASING ACTIVITY
PROPERTY

SUBMARKET

TENANT

LANDLORD

SIZE SF

TYPE

Midtown Center I & II

Midtown

AT&T

Cole RE/McFarlan CP

780,844

Class A Renewal

The Terraces

Central Perimeter

State Farm

Avalon Acquisition Co.

300,000+

Class A Lease

SunTrust Plaza Gardens

Downtown

Coca-Cola

Portman Mgmt. Co.

275,868

Class A Lease

Buckhead Atlanta

Buckhead

Spanx

Oliver McMillan

86,000

Class A Lease

P. 2

| COLLIERS INTERNATIONAL

MARKET REPORT | Q2 2013 | OFFICE | ATLANTA

UPDATE

Market Comparisons

VACANCY

TOTAL
SF

DIRECT
VCY
SF

DIRECT
VCY
%

SUB
VCY
SF

SUB
VCY
%

URBAN
DOWNTOWN
A
28
B
87
C
76
Total
191

14,871,600
9,137,555
4,041,094
28,050,249

2,883,666
901,578
1,104,580
4,889,824

19.4%
9.9%
27.3%
17.4%

324,479
1,310
325,789

2.2%
0.0%
1.2%

MIDTOWN
A
B
C
Total

38
99
39
176

15,210,297
6,050,291
919,239
22,179,827

2,496,836
819,704
49,909
3,366,449

16.4%
13.5%
5.4%
15.2%

136,498
15,015
11,424
162,937

BUCKHEAD
A
46
B
54
C
43
Total
143

15,654,914
4,562,343
1,090,105
21,307,362

2,746,997
628,210
58,567
3,433,774

17.5%
13.8%
5.4%
16.1%

URBAN TOTAL
A
112
B
240
C
158
Total
510

45,736,811
19,750,189
6,050,438
71,537,438

8,127,499
2,349,492
1,213,056
11,690,047

SUBURBAN
CENTRAL PERIMETER
A
70
20,002,733
B
143
7,472,979
C
91
1,565,250
Total
304
29,040,962
NORTH FULTON
A
100
B
321
C
62
Total
483

CLASS

BLDGS

EXISTING PROPERTIES

ABSORPTION

RENT

VCY
PRIOR
%

3,208,145
902,888
1,104,580
5,215,613

21.6%
9.9%
27.3%
18.6%

21.7%
10.3%
27.4%
18.8%

20,650
42,636
1,201
64,487

13,528
35,501
(12,323)
36,706

0.9%
0.2%
1.2%
0.7%

2,633,334
834,719
61,333
3,529,386

17.3%
13.8%
6.7%
15.9%

17.4%
13.8%
6.9%
16.0%

19,695
(662)
2,336
21,369

4,414
(10,722)
17,498
11,190

450,000
450,000

$27.18
$18.14
$13.98
$25.32

115,443
24,947
200
140,590

0.7%
0.5%
0.0%
0.7%

2,862,440
653,157
58,767
3,574,364

18.3%
14.3%
5.4%
16.8%

18.4%
14.6%
5.5%
16.9%

11,113
11,865
848
23,826

45,457
5,283
2,974
53,714

100,000
100,000

$25.53
$18.89
$17.29
$24.06

17.8%
11.9%
20.0%
16.3%

576,420
41,272
11,624
629,316

1.3%
0.2%
0.2%
0.9%

8,703,919
2,390,764
1,224,680
12,319,363

19.0%
12.1%
20.2%
17.2%

19.1%
12.4%
20.3%
17.4%

51,458
53,839
4,385
109,682

63,399
30,062
8,149
101,610

550,000
550,000

$24.19
$18.21
$14.33
$22.59

2,649,725
1,879,590
372,495
4,901,810

13.2%
25.2%
23.8%
16.9%

189,656
63,271
252,927

0.9%
0.8%
0.9%

2,839,381
1,942,861
372,495
5,154,737

14.2%
26.0%
23.8%
17.7%

15.0%
25.5%
24.8%
18.2%

155,189
(36,644)
15,254
133,799

177,229
40,687
18,896
236,812

578,000
578,000

$22.55
$17.63
$13.21
$20.20

15,473,169
11,155,361
1,070,330
27,698,860

2,637,558
1,644,415
101,456
4,383,429

17.0%
14.7%
9.5%
15.8%

40,669
91,046
131,715

0.3%
0.8%
0.5%

2,678,227
1,735,461
101,456
4,515,144

17.3%
15.6%
9.5%
16.3%

17.9%
15.1%
9.4%
16.4%

91,724
(54,374)
(1,080)
36,270

83,920
(1,163)
(11,491)
71,266

NORTHEAST ATLANTA
A
57
7,759,846
B
409
13,512,491
C
124
2,373,086
Total
590
23,645,423

1,268,859
2,948,338
267,546
4,484,743

16.4%
21.8%
11.3%
19.0%

41,497
30,913
5,460
77,870

0.5%
0.2%
0.2%
0.3%

1,310,356
2,979,251
273,006
4,562,613

16.9%
22.0%
11.5%
19.3%

18.4%
21.1%
11.7%
19.3%

397,158
(133,087)
4,503
268,574

350,188
(150,984)
10,234
209,438

NORTHLAKE
A
19
B
329
C
163
Total
511

2,505,820
11,964,159
3,813,161
18,283,140

368,607
1,820,529
305,384
2,494,520

14.7%
15.2%
8.0%
13.6%

17,546
196,650
214,196

0.7%
1.6%
1.2%

386,153
2,017,179
305,384
2,708,716

15.4%
16.9%
8.0%
14.8%

15.6%
17.2%
8.6%
15.2%

5,418
36,923
20,877
63,218

37,780
(150,550)
25,905
(86,865)

NORTHWEST ATLANTA
A
73
B
417
C
148
Total
638

17,098,682
15,019,180
2,537,128
34,654,990

2,016,081
3,205,680
330,309
5,552,070

11.8%
21.3%
13.0%
16.0%

103,521
130,823
234,344

0.6%
0.9%
0.7%

2,119,602
3,336,503
330,309
5,786,414

12.4%
22.2%
13.0%
16.7%

12.5%
22.8%
13.4%
17.0%

21,460
82,112
10,365
113,937

191,488
64,124
27,050
282,662

SOUTH ATLANTA
A
19
B
239
C
130
Total
388

1,445,570
9,320,911
2,675,953
13,442,434

324,858
980,706
457,958
1,763,522

22.5%
10.5%
17.1%
13.1%

16,170
10,065
26,235

1.1%
0.1%
0.2%

341,028
990,771
457,958
1,789,757

23.6%
10.6%
17.1%
13.3%

24.0%
10.5%
18.8%
13.6%

6,555
(9,333)
44,723
41,945

WEST ATLANTA
A
B
62
C
36
Total
98

1,520,889
1,746,729
3,267,618

133,617
715,819
849,436

8.8%
41.0%
26.0%

133,617
715,819
849,436

8.8%
41.0%
26.0%

8.8%
41.1%
26.1%

9,265,688
12,612,875
2,550,967
24,429,530

14.4%
18.0%
16.2%
16.3%

409,059
522,768
5,460
937,287

0.6%
18.8%
16.2%
0.6%

9,674,747
13,135,643
2,556,427
25,366,817

15.0%
18.8%
16.2%
16.9%

17,393,187
14,962,367
3,764,023
36,119,577

15.8%
16.7%
17.2%
16.3%

985,479
564,040
17,084
1,566,603

0.9%
0.6%
0.1%
0.7%

18,378,666
15,526,407
3,781,107
37,686,180

1,566,603
1,534,852
1,570,088
1,542,489
1,561,213

0.7%
0.7%
0.7%
0.7%
0.7%

37,686,180
38,112,294
38,212,662
38,118,311
39,131,614

SUBURBAN TOTAL
A
338
B
1,920
C
754
Total
3,012

64,285,820
69,965,970
15,781,637
150,033,427

ATLANTA MARKET GRAND TOTAL

A
450
110,022,631
B
2,160
89,716,159
C
912
21,832,075
Total
3,522
221,570,865

NET
NET
NEW
NEW
ABSORP ABSORP SUPPLY SUPPLY
CURR SF YTD SF CURR SF YTD SF

U/C

VCY
CURR
%

TOTAL
VCY
SF

DELIVERIES

UNDER AVG
CONSTR RENT
SF
RATE

$19.87
$17.61
$11.72
$18.39

$20.52
$14.22
$14.88
$17.99

60,000
60,000

$18.99
$13.96
$12.68
$15.48

$20.19
$17.03
$14.12
$16.96

16,650
16,650

$22.07
$15.14
$13.99
$18.11

26,482
(16,767)
33,751
43,466

200,000
200,000

$18.90
$15.75
$13.49
$15.72

784
2,381
3,165

206
12,363
12,569

15.7%
18.6%
16.8%
17.2%

677,504
(113,619)
97,023
660,908

867,087
(214,447)
116,708
769,348

344,476
344,476

344,476
344,476

838,000
16,650
854,650

$20.54
$15.24
$13.76
$16.84

16.7%
17.3%
17.3%
17.0%

17.1%
17.2%
17.8%
17.2%

728,962
(59,780)
101,408
770,590

930,486
(184,385)
124,857
870,958

344,476
344,476

344,476
344,476

1,388,000
16,650
1,404,650

$22.39
$15.72
$13.45
$19.00

17.0%
17.2%
17.3%
17.3%
17.7%

17.2%
17.3%
17.3%
17.7%
17.9%

344,476
433,822
340,000

344,476
789,822
356,000
356,000

1,404,650
1,171,126
1,154,476
1,388,298
1,228,298

$19.00
$18.90
$18.96
$18.89
$18.97

344,476
344,476

344,476
344,476

$12.96
$13.96
$13.41

QUARTERLY
COMPARISONS AND TOTALS
QUARTERLY COMPARISON AND TOTALS
Q2-13
Q1-13
Q4-12
Q3-12
Q2-12

3,522
3,521
3,521
3,517
3,517

221,570,865
221,226,389
221,226,389
220,792,567
220,792,567

36,119,577
36,577,442
36,642,574
36,575,822
37,570,401

16.3%
16.5%
16.6%
16.6%
17.0%

NOTE: STATISTICAL SET CONSISTS OF OFFICE PROPERTIES 10,000 SF AND UP, INCLUDING OWNER-OCCUPIED
PROPERTIES; AND EXCLUDING MEDICAL OFFICE AND PROPERTIES WHERE THE GOVERNMENT IS 100% OWNER AND
OCCUPIER. WHILE COSTAR ATTEMPTS TO PROVIDE THE MOST ACCURATE DATA AT THE END OF EVERY QUARTER,
REVISIONS ARE MADE THROUGHOUT THE YEAR ACCOUNTING FOR DISCREPANCIES IN PAST REPORTING.

770,590
100,368
339,471
1,013,303
735,780

870,958
100,368
2,366,521
2,027,050
1,013,747

SOURCE: COSTAR PROPERTY, COLLIERS RESEARCH

COLLIERS INTERNATIONAL |

P. 3

MARKET REPORT | Q2 2013 | OFFICE | ATLANTA

CONSTRUCTION

RENTAL RATES

Primericas new build-to-suit of 344,476 square

feet was the only delivery of the quarter.

Ponce City Market continues to see positive

momentum and is well on its way to being over
50% leased prior to its delivery in 2014.

With large contiguous blocks of office space

diminishing, a number of developers are
beginning to market new developments. The
next significant office project will likely be
either in Central Perimeter or North Fulton.

Atlantas average asking rent for office space

increased $0.10/sf between quarters and is the
highest its been since the end of 2011.

There are signs and instances pointing to a

trend of rising office rents in Atlanta.

482 offices in
62 countries on
6 continents
United States: 140
Canada: 42
Latin America: 20
Asia Pacific: 195
EMEA: 85

INVESTMENT & SALES ACTIVITY

There was significant investment activity for

Atlanta office properties this quarter with
transactions totaling over $650 million.

$2 billion in annual revenue

Over 1.1 billion square feet under

CONSTRUCTION ACTIVITY (100,000 SF+)

management
PROPERTY ADDRESS

SUBMARKET

SIZE (SF)

DELIVERY DATE

Cox HQ - Ptree Dunwoody Rd.

Central Perimeter

578,000

Second Quarter 2015

Ponce City Market

Midtown

450,000

First Quarter 2014

Porsche NA - 340 Henry Ford II Ave

South Atlanta

200,000

Third Quarter 2014

Buckhead Atlanta (office portion)

Buckhead

100,000

First Quarter 2014

Canton
GAINESVILLE
Cumming

CHEROKEE CO.
FULTON
CO.
FUL
L
FORSYTH
CO.
FOR
R

Allatona
Lake

Emerson

Lake
Lanier

Woodstock
CHEROKEE CO.

Acworth

Sugar Hill

FO
RS
FU

Mountain
Park

CO
.
CO
.

NORTHEAST
ATLANTA

e
hooch e
tac

Cha
t

PAULDING CO.
COBB CO.

Alpharetta
Roswell

NORTHWEST
ATLANTA

Bras

H
YT
O
LT

BARTOW CO.

OFFICE SUBMARKETS

Buford

HA
GW
INN LL CO
.
ETT
CO
.

NORTH
FULTON
Rive
r

BARTOW CO.
CHEROKEE CO.

Cartersville

Duluth

316
CO
BB
FU
LT
CO
O
.
N
CO
.

MARIETTA

CENTRAL
PERIMETER

Lawrenceville

DORAVILLE
Norcross

CHAMBLEE
SMYRNA

NORTHLAKEG

W
IN
DE NE
KA TT
LB
C
CO O.
.

BUCKHEAD
Austell
COBB CO.
DOUGLAS CO.

Clarkston

WEST
ATLANTA

ch
e

Douglasville

MIDTOWN
DECATUR
DE
ECA
ATUR

CO
.

ATLANTA

Snellville

Stone
Mountain
G
W
IN
NE
TT

R
iv

PAULDING CO.

DEKALB CO.
C
FULTON CO.
C

Powder
Springs

Avondale
Estates
Estate

DOWNTOWN

W
AL
TO
N

CO
.

att

o
ho
ac

Ch

EAST
POINT
COLLEGE
PARK HAPEVILLE

DEKALB
HENRY

Hartsfield-Jackson
International Airport

FULTON CO.
COWETA CO.

Palmetto

FOREST
PARK

SOUTH
ATLANTA
Riverdale
Riverda

Fairburn

CO.
CO.

Conyers
Covington
RO
C
NE KDA
WT LE
ON CO
CO .
.

CLAYTON
LAYT
L
A ON CO.

Union City

675

DE
KALB
RO
CO
CK
.
DA
LE
CO
.

Lithonia

Stockbridge

.
ON CO
FULT
CO.
TTE
FAYE

Jonesboro

UNITED STATES:
Atlanta
Caldwell Zimmerman
Executive VP | Colliers Manager
Two Midtown Plaza | Suite 1100
1349 West Peachtree Street, NE
Atlanta, Georgia, 30309
TEL +1 404 888 9000
FAX +1 404 870 2845

RESEARCHER:
Atlanta
Scott Amoson
Vice President | Director of Research
Two Midtown Plaza | Suite 1100
1349 West Peachtree Street, NE
Atlanta, Georgia, 30309
TEL +1 404 877 9286
FAX +1 404 870 2845

McDonough
BU
TT
S

CO
.

HENRY CO.
CLAYTON CO.

Fayetteville

The Atlanta office market

consists of ten submarkets.
They include the urban markets
of Downtown, Midtown and
Buckhead, and the suburban
markets of Central Perimeter,
North Fulton, Northwest Atlanta,
Northeast Atlanta, Northlake,
South Atlanta and West Atlanta.
The major interstates in the
region include: I-75, I-85, I-285,
I-575, I-985, I-675 and I-20.
Georgia 400 and US 316 also
play important roles to Atlantas
transportation system.

Over 13,500 professionals

Newnan
Peachtree City

This market report is a research document of Colliers

International. Information herein has been deemed
reliable and no representation is made as to the accuracy
thereof. Colliers International-Atlanta, Inc., and certain
of its subsidiaries, is an independently owned and
operated business and a member firm of Colliers
International Property Consultants, an affiliation of
independent companies with over 480 offices throughout
62 countries worldwide.

Accelerating success.

www.colliers.com/atlanta