Buckhead Submarket.Indd
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Offi ce Submarket Report ATLANTA | BUCKHEAD Q1 2018 Key Takeaways Market Indicators Buckhead Buckhead > Following a string of mediocre quarterly activity, Buckhead posted Relative to prior period Q1 2018 Q2 2018* its strongest absorption in 3.5 years in the fi rst quarter with VACANCY occupancy increasing by more than 188,000 square feet. NET ABSORPTION > Move-ins at Three Alliance contributed to the strong quarter. Aon, Mass Mutual, Kajima, and Gallup combined for a total of CONSTRUCTION -- 108,000 square feet of occupancy in the building. RENTAL RATE > With demand picking up in the fi rst quarter, the Class A average rental rate in Buckhead increased 1.6% from last quarter. With no *Projected new construction expected for some time, and landlords remaining confi dent on market conditions, rents are expected to continue increasing over the course of the year. Summary Statistics All Buckhead Offi ce Market Classes Class A Class B > Buckhead’s strong fi rst quarter will help the submarket achieve positive absorption in 2018. A few anticipated vacancies are Total Inventory (Millions Square Feet) 21.7 17.1 3.8 expected next quarter, but given the recent pick-up in leasing in Q1, absorption activity should remain in positive territory. Vacancy Rate 12.9% 14.9% 6.4% Absorption, Deliveries and Vacancy Change From Q4 2017 -0.9% -1.0% -0.3% 800,000 15% Absorption YTD 189 177 12 14% (Thousands Square Feet) 600,000 13% Construction Deliveries YTD -- - 400,000 12% (Thousands Square Feet) Square Feet 11% Under Construction 200,000 -- - 10% (Thousands Square Feet) 0 9% 1Q17 2Q17 3Q17 4Q17 1Q18 Asking Rents (200,000) 8% Per Square Foot Per Year Absorption Deliveries Vacancy Average Quoted $33.37 $34.37 $23.89 Change From Q4 2017 1.6% 1.6% - UPDATE - Recent Transactions in the Market Notable Leasing Activity TENANT PROPERTY LANDLORD SIZE (SF) TYPE Baker, Donnelson, Bearman Monarch Plaza Highwoods Properties 50,248 Class A Renewal & Contraction Terminus Tower Place 100 Dev. Auth. of Fulton Co. 41,698 Class A Lease Morgan Stanley Terminus 100 Cousins Properties 33,000 Class A Expansion Regus (No18) Buckhead Atlanta Oliver McMillan 31,957 Class A Lease Notable Sales Activity PROPERTY SALES DATE SALE PRICE SIZE (SF) PRICE / SF BUYER Three Alliance Center 1/5/2018 $270,000,000 506,647 $532.92 State of Florida Retirement System Resurgens Plaza 11/30/2017 $92,700,000 438,062 $211.61 Zeller Realty Group 1718-1720 Peachtree Rd. 4/16/2018 $62,200,000 366,232 $169.84 n/a 3475 Lenox Rd. 12/29/2017 $50,075,000 201,488 $248.53 Sage Equities Sources: CoStar Property, Colliers Research Skyline Review Space Available Direct Sublet 50 45 40 35 30 Floors 25 20 15 10 5 BUILDING 3344 Peachtree Atlanta Plaza 3630 Peachtree Two Alliance Center Tower Place 100 RBA 484,527 SF 629,884 SF 436,309 SF 491,888 SF 613,821 SF TYPICAL FLOOR SIZE 22,000 SF 23,000 SF 28,259 SF 25,000 SF 19,586 SF % LEASED 92.1% 79.7% 95.1% 94.2% 88.4% LARGEST SPACE AVAIL. 17,711 SF 43,137 SF 18,512 SF 62,918 SF 13,461 SF RENTAL RATE PER SF (Gross) $44.00 $34.50-$36.50 $40.00-$43.00 $39.75-$40.75 $36.00-$38.00 12345 3 3 2 7 9 3 8 4 8 5 10 7 1 5 1 1 2 4 9 11 10 6 6 2 12 2 Offi ce Submarket Report | Q1 2018 | Buckhead | Colliers International - Atlanta Proposed Projects 1 Source: CoStar Property TWO CAPITAL CITY PLAZA Mixed-Use Project 550,000 SF Offi ce 9,500 SF Retail 300 Apartment Units 50 Condos Construction Pending Developer: Regent Partners 2 One Alliance Terminus 100 Three Alliance Monarch Tower Monarch Plaza Center 655,000 SF 506,647 SF 527,761 SF 555,243 SF 368,688 SF THE OFFICE AT 24,259 SF 25,500 SF 23,262 SF 24,619 SF 25,124 SF BUCKHEAD ATLANTA 315,000 SF Class A Offi ce 86.2% 90.3% 77.7% 83.4% 79.9% Construction Pending Developer: Oliver McMillan 166,649 SF 13,147 SF 69,948 SF 75,825 SF 18,396 SF 3 $40.00-$42.00 $45.00-$47.00 $36.00-$39.00 $39.50 $36.00-$39.00 67 8910 Aerial Legend Points of Interest UGA Terry College 1 Lenox Mall 7 of Business Campus 3462 PEACHTREE RD 373,844 SF Class A Offi ce 2 Phipps Plaza 8 The Whitley Construction Pending Buildings by Number Developer: Simon Property Gr. (see opposite page) Lenox Intercontinental 3 9 Market Place Hotel MARTA Rail Line 4 Tower Walk 10 New Construction Grand Hyatt 5 Buckhead Station 11 JW Marriott Atlanta History 6 12 Buckhead Atlanta Center 3 Offi ce Submarket Report | Q1 2018 | Buckhead | Colliers International - Atlanta In The News > Atlanta’s Three Alliance Center Acquired for Record Price: The recent sale of Three Alliance FOR MORE INFORMATION Center set a record for Atlanta, reaching the highest per square foot price ever in the city’s Scott Amoson history at $533/sf. Developer Tishman-Speyer sold the offi ce tower to the pension fund for the VP, Director of Research | Atlanta State of Florida. The building delivered mid-2017 and is now almost 95% leased. Average gross +1 404 877 9286 rents at the offi ce tower are among the highest in Atlanta at $46/sf gross. [email protected] > Terminus plans 150-job expansion; doubles Buckhead offi ce: Atlanta-based Terminus will be relocating from its existing Buckhead offi ces at 3280 Peachtree Rd. to Tower Place 100. The company leased 42,000 square feet in the building, doubling its current offi ce space at the COLLIERS INTERNATIONAL nearby Terminus building. The investment totals upwards of $10 million and will create up to ATLANTA OFFICE SPECIALISTS 150 more jobs over the next couple of years. Market demand is the reason Terminus needed more offi ce space. Scott DeMyer Bryce Metcalf Jessica Doyle Paul Reese > Plans fi led to kick off major redevelopment at Phipps Plaza: Simon Property Group has fi led plans with the City of Atlanta to begin work on its $200 million redevelopment at Phipps Plaza. Lee Evans Emily Richardson The new project will include a 150-room Nobu Hotel, a 12-story offi ce building totaling Deming Fish Jodi Selvey 374,000 square feet, and a 90,000 square foot LifeTime Athletic facility. Chuck Francis Fred Sheats Huston Green Pete Shelton Josh Gregory Hayes Swann AT A GLANCE | Buckhead GA 400 Park > Signature 9-acre park in the heart of Buckhead. Russ Jobson Will Tyler Jeff Kelley Andrew Waguespack > Over a half-mile long greenspace to span across GA 400, connecting Dany Koe Andrew Walker Lenox Road to Peachtree Road. Drew Levine Bob Ward > $250 million plan estimated to Michael Lipton Stewart Yates draw 2.6 million visitors per year. > Buckhead CID Board approved work necessary for the planning and design phase of the park. > Ground-breaking is hoped to begin in 2020, with completion in 2022. Colliers International | Atlanta Offi ce | Buckhead Listings THE OFFICE AT PEACHTREE PALISADES 1776 PEACHTREE BUCKHEAD ATLANTA 5,824-6,211 SF Lease 2,000-135,000 SF Lease 315,000 SF Offi ce Lee Evans / Scott DeMyer/ Deming Fish / Scott DeMyer Chuck Francis Emily Richardson Colliers International | Atlanta Promenade | Suite 800 1230 Peachtree Street, NE Atlanta, Georgia, 30309 Copyright © 2017 Colliers International. +1 404 888 9000 The information contained herein has been obtained from sources deemed reliable. While colliers.com/atlanta every reasonable eff ort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional4 advisorsNorth priorAmerican to acting onResearch any of the material & Forecast contained Report in this report. | Q4 2014 | Offi ce Market Outlook | Colliers International.