office market september 2004 prepared for presented by james phillpott senior research associate...
TRANSCRIPT
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Office Market September 2004prepared for
Presented by
James PhillpottSenior Research AssociateCushman & Wakefield
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Table of Contents
The Office Leasing Market– Historical Perspective– Current Market Conditions– Top Deals
The Office Investment Sales Market– Sales Activity and Future Pipeline
Four Year Market Forecast– Deliveries– Absorption– Occupancy
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3rd Quarter 2004
Office Leasing Market
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Metro Atlanta Office Map
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Office Market Cycle
Overall Atlanta Deliveries and Occupancy
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004 YT
D
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
New Supply
Overall Occupancy Rate
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0%
5%
10%
15%
20%
25%
1995 1996 1997 1998 1999 2000 2001 2002 2003 3Q04
SubleaseDirect
Atlanta Office Market
Historical Vacancy Rates
Source: Cushman & Wakefield Research Services
3%
19.5%
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$10
$12
$14
$16
$18
$20
$22
$24
1995 1996 1997 1998 1999 2000 2001 2002 2003 3Q04
8%
12%
16%
20%
24%
Overall Vacancy Rate v. Overall Weighted Average Asking Rent
Asking Rent
Vacancy RateVacancy Rate
Atlanta Office Market
Source: Cushman & Wakefield Research Services
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1.49 1.6 1.78 2.25 2.11 1.74
4.965.78
4.99 4.79
12.4
9.310.0
12.812.0
9.6
18.2
22.6
25.1 25.5
0.0
5.0
10.0
15.0
20.0
25.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2q04
Atlanta Office Market
Direct v. Sublease Available Square Feet (in millions)
Source: Cushman & Wakefield Research Services
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44
77
172
395
0 50 100 150 200 250 300 350 400 450
100,000 +
50,000 - 99,999
25,000 - 49,999
10,000 - 24,999
Number of Spaces
Atlanta Office Leasing Opportunities
Number of Spaces Available by Size
Source: Cushman & Wakefield Research Services
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0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2Q03 3Q03 4Q03 Q1/2004 Q2/2004 3Q04
SF
CBD Midtown
Buckhead Central Perimeter
Georgia 400 Northwest
Northeast Northlake / Decatur
Airport / South Atlanta
Quarterly Comparison
Source: Cushman & Wakefield Research Services
Atlanta Office Market Leasing Activity
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Q4/2003Q1/2004
Q2/2004Q3/2004
Class C
Class B
Class A
15%
17%
19%
21%
23%
25%
Class CClass BClass A
Atlanta Office Market
Historical Vacancy Rates by Class
Source: Cushman & Wakefield Research Services
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Current Market Dynamics SummaryLeasing Market
Vacancy Rates have Stabilized
New Supply Pipeline Is In Check…for now
Subleases Are Slowly Disappearing
Leasing Activity Currently on the Decline– mortgaged against future activity with early renewals
Diversified Supply of New and Re-let Space
Flight to Quality as Tenants Take Advantage of Market Conditions
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Investment Sales
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Office Sales Trend Through Mid-Year 2003In Millions
$561
$377
$161
9
17
13
100
300
500
700
2001 2002 Mid-Year 2003
0
2
4
6
8
10
12
14
16
18
Volume # Deals
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Office Sales TrendIn Millions
$561 $377 $635$929
1817
13
23
100
300
500
700
900
2001 2002 2003 2004-YTD
0
5
10
15
20
25
Volume # Deals
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Current Market Dynamics SummaryOffice Sales
2004 Sales Total $929 Million YTD
Year End 2004 Will Top Atlanta’s 1998 record of $1.3 Billion
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Four Year Forecast
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Office Market Forecast
Overall Atlanta Deliveries and Occupancy
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
New Supply
Overall Occupancy Rate
12.3 Million SF Absorption
19.5 Million SF Absorption4.7% Increase in Occupancy
9.5% Increase in Occupancy
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Conclusion
Things are finally looking up!