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SPRING 2011 | RETAIL

ATLANTA

MARKET REPORT

Atlanta Retail Market Showing Positive Signs

MARKET INDICATORS SPRING 2011

FALL ‘11 Proj.

VACANCY

The Atlanta retail market turned the corner in 2010 posting a total occupancy increase of 621,629 square feet for the year. The positive activity comes on the heels of 2 million square feet given back by retailers in 2009; arguably one of Atlanta’s worst years for retail landlords. Heading into 2011, it appears the positive momentum from last year has continued. For the fourth time in five quarters, Atlanta’s retail market experienced positive absorption. Total retail occupancy increased 534,617 square feet from January to March. Shopping Centers saw the majority of activity, accounting for 75% of the positive absorption in first quarter. The most active retail categories in the market include discount retailers such as Family Dollar and Dollar Tree, and also Fast Food/Casual Dining concepts. Another active component includes retailers backfilling some of the empty big-boxes vacant in the market. These retailers range from fitness companies and apparel companies, to other miscellaneous concepts. Many of the spaces these companies backfill are from retailers which were bankrupted by the recession. Vacancy in the Atlanta retail market still remains above the 10% mark; however, positive absorption coupled with the absence of new construction is beginning to trend the rate downwards. Going forward, much of the same is expected to continue. Modest activity should continue to keep Atlanta’s retail market positive, and slowly reduce the amount of vacant space available.

NET ABSORPTION

The following are excerpts from CoStar’s 1st Quarter 2011 analysis of the Atlanta retail market breaking out the important components which factor into overall market conditions:

CONSTRUCTION RENTAL RATE

Net Absorption/Leasing Activity

CAP RATES

“Retail net absorption was moderate in Atlanta first quarter 2011, with positive 534,617 SF absorbed. The largest lease signings in 2011 include: the 27,136 SF lease by LA Fitness at Terrell Mill Village and the 18,000 SF lease by American Backyard at Barrett Pavilion.” Vacancy

UPDATE

“Atlanta’s retail vacancy rate decreased in the first quarter 2011, ending the quarter at 10.2%. Over the past four quarters, the market has seen an overall decrease in the vacancy rate of 0.2%.”

Atlanta Retail Rental Rates Overall Market (per sq. ft. NNN) $16.00

$16.00

$15.50

$15.50

$15.00

$15.00

$14.50

$14.50

$14.00

$14.00

$13.50

$13.50

$13.00

$13.00

Rental Rates “Average quoted rental rates in the Atlanta retail market are down over previous quarter levels, and down from this time last year. Quoted rental rates ended the first quarter of 2011 at $13.47 per square foot. That amount is down $0.21 per square foot last quarter and $0.93 per square foot from a year ago. Inventory & Construction

$12.50

2011 2011

2010 2010

2009 2009

2006 2006 2007 2007 2008 2008

$12.50

AVG Rental Rate NNN SOURCE: COSTAR PROPERTY

www.colliers.com/atlanta

“During the first quarter 2011, five buildings totaling 18,564 square feet were completed in the Atlanta retail market. Over the past four quarters, a total of 167,416 square feet of retail space has been built in Atlanta. There was 540,254 square feet of retail space under construction at the end of first quarter. Total retail inventory in the Atlanta market area now totals 334,911,025 square feet.”


MARKET REPORT | Q1 2011 | RETAIL | ATLANTA

Total SF

NEW SUPPLY, ABSORPTION AND VACANCY RATES 14,000,000

12%

Vacancy Rate

12,000,000

480 offices in 61 countries on 6 continents

10.2%

10%

10,000,000

Square Feet

334,911,025

2010 Absorption

621,629

2010 Deliveries

506,593

4%

Under Construction

540,254

2%

Avg. Rental Rate NNN

$13.47/sf

8,000,000 8%

6,000,000 4,000,000

6%

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

2,000,000 0 (2,000,000)

2005 2006 2007 2008 2009 2010 2011

(4,000,000) Absorption

Deliveries

Vacancy

$2 billion in annual revenue

• Over 2 billion square feet under

NOTE: 2011 DATA IS YEAR TO DATE

SOURCE: COSTAR PROPERTY

management • Over 15,000 professionals

ATLANTA-MSA | Annual Housing Permits

ATLANTA RETAIL | Investment Cap Rates UNITED STATES:

70,000

8.5%

60,000

Jon Barry President, Principal | Atlanta 5871 Glenridge Drive, NE Suite 400 Atlanta, Georgia, 30328 TEL +1 404 574 1018 FAX +1 404 574 1118

8.0%

50,000

7.5%

40,000 30,000

7.0%

20,000

6.5%

10,000 0

6.0% 2006

2007

2008

2009

2010

2011 YTD

Single-Unit

2005

Multi-Unit

2006

2007

2008

Atlanta Qrtly AVG

SOURCE: U.S. CENSUS BUREAU

2009

2010

US Qrtly AVG

SOURCE: REAL CAPITAL ANALYTICS

UPDATE Recent Transactions in the Market RESEARCHER:

SALES ACTIVITY PROPERTY

SALES DATE

SALE PRICE

SIZE SF

PRICE/SF

BUYER

Atlantic Station (ret. port.)

12/31/2010

$75,300,000

558,025

$134.94

CB Richard Ellis Inv.

Fountain Oaks Shopping Ctr.

12/23/2010

$19,000,000

160,817

$118.15

Westplan Investors

Main Street @ Town Center

12/28/2010

$16,700,000

113,615

$146.99

Westwood Financial

2901 Clairmont Rd.

1/25/2011

$16,700,000

128,776

$129.68

IRA Realty Capital

Village Shops @ Flowery Br.

4/12/2011

$13,700,000

93,942

$145.83

Kimco Realty Corp.

Oglethorpe Crossing

2/16/2011

$9,700,000

58,413

$166.06

Coro Realty Adv.

Atlanta Scott Amoson 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 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.

Accelerating success.

www.colliers.com/atlanta


Spring 2011 | Metro Atlanta Retail | Market Report