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Q4 2010 | BUCKHEAD

ATLANTA

SUBMARKET REPORT

TRENDS & HIGHLIGHTS

Total SF

1,000,000

31%

Vacancy Rate

800,000

26%

YTD Net Absorption

324,583

YTD Deliveries

908,852

Square Feet

NEW SUPPLY, ABSORPTION AND VACANCY RATES

600,000 21% 400,000

19,696,470 23.5%

16% 200,000 11%

0 (200,000)

4Q09

1Q10

Absorption

2Q10

3Q10

Deliveries

4Q10

6%

Under Construction Avg. Class A Rate

0 $24.96

Source: CoStar Property

Vacancy

MARKET INDICATORS Q4 2010 VACANCY

NEXT QTR

UPDATE Recent Transactions in the Market SALES ACTIVITY

NET ABSORPTION CONSTRUCTION

RENTAL RATE

PROPERTY ADDRESS

SALE PRICE

SIZE SF

PRICE / SF

BUYER

3344 Peachtree Rd.

$167,300,000

482,699

$346.59

Parkway Properties

— —

Buckhead

LEASING ACTIVITY

www.colliers.com/atlanta

TENANT

PROPERTY ADDRESS

SIZE SF

TYPE

Reznick Group

Two Alliance Center

77,049

Class A Lease

Towers Watson

One Alliance Center

76,500

Class A Renewal

Securities Exchange Comm.

Atlanta Plaza One

58,650

Class A Lease

North American Electric Co.

Atlanta Fin. Ctr.-North

39,510

Class A Lease

Buckhead was the highlight of 2010. The submarket led all other office markets in absorption for the year and was second only to Central Perimeter in total leasing activity. It also led the Atlanta market in office space delivered with 908,852 SF in the year.

The submarket’s vacancy rate remains the highest in Atlanta at 23.5% overall (25.8% for Class A); however, since the delivery of 3630 Peachtree and Phipps Tower in the first quarter, office vacancy has decreased 1.9%. This downward trend is expected to continue.

Incentive packages in Buckhead were the most aggressive in 2010. Now that leasing activity has caught hold and larger spaces are becoming scarce, landlords are beginning to tighten their offerings.


MARKET REPORT | Q4 2010 | ATLANTA OFFICE | BUCKHEAD

SKYLINE REVIEW Space Available Direct Sublet 50 45 40

Floors

35 30 25 20 15 10 5

BUILDING RBA % LEASED LARGEST SPACE AVAIL. RENTAL RATE PER SF (Gross)

3344 Peachtree

Atlanta Plaza

3630 Peachtree

Two Alliance Center

Tower Place 100

482,699 SF

619,130 SF

436,585 SF

493,201 SF

609,936 SF

93.3%

83.7%

25.1%

80.2%

87.9%

12,475 SF

57,152 SF

327,044 SF

97,854 SF

23,135 SF

$32.00-$35.00

$26.50

$32.00-$34.00

$32.00-$34.00

$23.50-$24.50

1

2

3

4

5

3 2

8 4 10

5 5 1 4 9 7 10 6

6 12

P. 2

| COLLIERS INTERNATIONAL

8

3 7

1

2

9 11


MARKET REPORT | Q4 2010 | ATLANTA OFFICE | BUCKHEAD

RECENT DELIVERIES 3 Source: CoStar Property

3630 PEACHTREE 436,585 SF Delivered January 2010 Developer: Pope & Land

4

TWO ALLIANCE CENTER Terminus 100

Terminus 200

Phipps Tower

The Lenox Bldg.

Prominence in Buckhead

581,874 SF

564,850 SF

472,267 SF

348,152 SF

424,309 SF

100%

68%

18.4%

74.9%

74.9%

13,974 SF

97,225 SF

378,581 SF

32,611 SF

93,495 SF

$31.75-$33.00

$31.75-$33.00

$34.50

$26.00-$28.00

$23.45

6

7

8

9

10

AERIAL LEGEND

Buildings by Number (see opposite page)

493,201 SF Delivered September 2009 Developer: Tishman Speyer

7

TERMINUS 200

POINTS OF INTEREST

564,850 SF Delivered September 2009 Developer: Cousins Properties

1 Lenox Mall

7

UGA Terry College of Business Campus

2 Phipps Plaza

8

Ritz Carlton

3 Market Place

9

Intercontinental Hotel

4 Tower Walk

10

Grand Hyatt

5 Buckhead Station

11

JW Marriott

PHIPPS TOWER

Buckhead Village

479,041 SF Delivered March 2010 Developer: Crescent Resources

Lenox

8

MARTA Rail Line New Construction

Atlanta History

6 Center

12

COLLIERS INTERNATIONAL |

P. 3


MARKET REPORT | Q4 2010 | ATLANTA OFFICE | BUCKHEAD

IN THE NEWS

480 offices in 61 countries on 6 continents

• Buckhead’s

tallest building sells for $167M: The largest transaction to occur in Atlanta since 2008 was recently completed in Buckhead. The 3344 Peachtree building; a mixed-use tower containing both office, retail and multi-family components, sold to Parkway Properties in January. Only the office and retail components which total almost 483,000 SF were part of the $167.3 million sales price. The transaction sets the bar in terms of the amount required to purchase a Class A, well located, well leased office tower with numerous amenities. developer takes over Streets of Buckhead/Streets of Buckhead development in limbo: A San Diego developer will now take over development of Buckhead’s most ambitious, yet troubled project over the past few years. Brought in by financial backers, OliverMcMillan will take control from Atlanta developer Ben Carter to finish the stalled development. New plans for the 8-acres have not been released, though insiders expect Ben Carter’s vision of a “Rodeo Drive of the South” to be somewhat incorporated into them; however, a retooling is also expected to occur.

United States: 135 Canada: 39 Latin America: 17 Asia Pacific: 194 EMEA: 95

• California

• Buckhead

luring tenants from other markets: Positive absorption and strong leasing activity in Buckhead can be attributed to the submarket’s ability to attract companies from outside the submarket. High-quality office space at an affordable price, along with enticing incentive packages have been the catalysts to companies relocating their metro Atlanta offices to Buckhead.

AT A GLANCE | 3344 Peachtree •

50-story, mixed-use tower consisting of 482,699 SF of Class A office and retail, with 82 high-end condos atop.

Delivered Second Quarter 2008.

Office building currently 93.3% leased.

Sold for $167.3 million in January 2011 (office and retail portion only)

Purchased by Parkway Properties, a real estate investment firm located in Jackson, Mississippi. Seller was Regent Partners which developed the property.

$2 billion in annual revenue

• Over 2 billion square feet under

management • Over 15,000 professionals

UNITED STATES: Colliers International 1349 West Peachtree Street Suite 1100 Atlanta, Georgia, 30309 TEL +1 404 888 9000 FAX +1 404 870 2845

COLLIERS INTERNATIONAL ATLANTA OFFICE SPECIALISTS: Bob Allen

Craig Mendel

Lee Evans

Scott O’Halloran

Highest price paid for an Atlanta office tower since 2008. Highest price ever paid for a Buckhead office building.

Deming Fish

Hugh Pafford

Huston Green

Jodi Selvey

Russ Jobson

Fred Sheats

Largest tenants in building include: Jones Lang LaSalle; Weinberg, Wheeler, Hudgins, Gunn & Dial; Littler Mendelson PC; Hodges Ward Elliot and Fifth Third Bank.

Nicole Kamen

Pete Shelton

Jeff Kelley

Hayes Swann

Brett Kingman

Andrew Walker

Michael Lipton

Bob Ward

Bob Mathews COLLIERS INTERNATIONAL | ATLANTA OFFICE | BUCKHEAD LISTINGS

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 more than 61 countries worldwide.

PEACHTREE PALISADES 1,417 - 47,647 SF Lease Lee Evans / Scott O’Halloran

Accelerating success.

www.colliers.com/atlanta


4Q 2010 | Atlanta Buckhead Office | Market Report