Buckhead’s 2nd Quarter Office Market Report
Buckhead Office Market at a Glance:
• Buckhead office absorption is up 32% from this time last year. Second quarter’s positive absorption can be mostly attributed to a number of small occupancies ranging between 7,000 to 13,000 square feet. The larger move-ins for the quarter mostly consisted of relocations within the submarket which in some cases resulted in a net loss of occupied space.
• Office leasing remains strong in the submarket. Tenants with leases expiring in the next couple of years, and requiring a full floor of office space are looking at Buckhead office towers.
• Concessions and allowances are averaging a year of free rent and between $60-$80 per square foot on a 10-year deal for Class A office space in the submarket; still among the highest in Atlanta.
Buckhead Office Market in the News:
• Sony Ericsson relocating Americas HQ to Atlanta: As part of a global restructuring strategy, Sony Ericsson is moving from its current North American headquarters in Research Triangle Park, North Carolina to Terminus 200 in Buckhead. The company will lease two floors totaling 48,907 SF in the recently delivered office tower. The relocation provides Sony Ericsson with $4 million in state incentives, and closer proximity to its biggest customer AT&T Mobility and Hartsfield-Jackson International Airport. The move will bring 180 jobs to Atlanta including top management executives, sales persons and marketing staff.
• Huge deal for Buckhead tower: One of the largest leases this year was recently signed at Buckhead’s Terminus 200 building. Greenberg Traurig will occupy 110,329 SF in the office tower, moving into the office tower next summer. The agreement took more than a year to be completed due to a restructuring of debt by Cousins Properties. The transaction brings Terminus 200 to almost 50% leased.
• A success story in Buckhead: Prominence in Buckhead, which lost its anchor tenant Marsh & McLennan in the first quarter, is back up to 62% leased thanks to recent lease signings. The building was 35% leased prior to 105,000 SF in lease commitments by Wells Fargo, Railcar Management and JP Morgan. Owners of the building have been credited with pursuing an aggressive strategy to increase occupancy.
Recently Office Buildings Sold in Buckhead:
Tower Place 200 (‘09 Forc.) sold for $32,000,000 or $123.13 per Square Foot to CW Capital
3166 Mathieson Dr. (‘09) sold for $3,350,000 or $394.12 per Square Foot to Forum Inv. Properties
38 Old Ivy-3 & 4 (‘09) sold for $2,058,000 or $328.96 per Square Foot to ISP Sports
Recent Lease Activity in the Buckhead Office Market:
Greenberg Traurig leased 110,329 Square Feet at Terminus 200
Novelis leased 100,200 Square Feet at Two Alliance Center
Omnicom Group One leased 100,000 Square Feet at Alliance Center
Wells Fargo leased 57,704 Square Feet at Prominence
Buckhead Office Market Stats:
Total SF: 19,728,911
Vacancy Rate: 24.7%
YTD Net Absorption: 29,488
YTD Deliveries: 915,626
Under Construction: 0
Avg. Class A Rate: $25.67
