Midtown Atlanta’s 4th Quarter Office Market Report
Here are the highlights for Midtown Atlanta’s 4th Quarter Office Market Report written by our Research Department here at Colliers International.
Midtown was the only major office submarket to have positive absorption in 2009. The largest move-ins of the year includes BB&T for 86,721 SF, Womble Carlysle for 79,566 SF and AECOM for 52,521 SF.
Overall office vacancy is up 1.7% from the end of 2008 in Midtown, but this is mostly due to the delivery of 271 17th Street.
Leasing activity, while steady throughout most of the year, has begun to slow in the submarket as of late. Despite there being a number of large tenants seeking space, Midtown vacancy will increase yet again in 2010 thanks to 1075 Peachtree delivering. The office tower will deliver in first quarter and is currently 12% leased.
As is common place nowadays, a notice for foreclosure auction has been issued for the Midtown site of 0.91 acres proposed to be the Mandarin Oriental Hotel. Tivoli Properties is the current owner and took out a $13.5 million loan on the property which will be coming due this November. The notice is procedural and an agreement between the bank and borrower could still be worked out. However, given the state of the economy, a resolution may not be reached by the date of auction February 2. Complicating matters is the likelihood of projects such as the Mandarin being years away from development.
Alston & Bird is “kicking the tires” for approximately 350,000 to 400,000 square feet of new office space in Midtown. The law firm currently leases space in One Atlantic Center, where it has been for a long time. Proposals are being considered by Alston & Bird from developers who have sites in the submarket able to accommodate new Class A office towers. These developers include Shailendra/Jamestown, Daniel Corporation/MetLife and Pope & Land. Whether or not the law firm signs on for any of these buildings, development of any new office tower in Atlanta will face multiple obstacles given current market conditions. Alston & Bird is also considering renewing at One Atlantic Center.
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