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The State of the Atlanta Office Market Jim Bacchetta, VP Atlanta Division Manager

The State of the Atlanta Office Market Jim Bacchetta, VP Atlanta Division Manager. 2008 – 2010 The Dark Days of the Recession. In Atlanta’s Buckhead, Vacant Office T owers S et off Battle for Tenants.

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The State of the Atlanta Office Market Jim Bacchetta, VP Atlanta Division Manager

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  1. The State of the Atlanta Office Market Jim Bacchetta, VP Atlanta Division Manager

  2. 2008 – 2010 The Dark Days of the Recession In Atlanta’s Buckhead, Vacant Office Towers Set off Battle for Tenants. “The owners of four new and largely vacant office towers are locked in a bruising battle for tenants” “It’s an ugly time to be a landlord.” “Landlords are in a tough spot because Buckhead’s prime office market has a 35.3% vacancy rate” By Maura Webber Sadovi The Wall Street Journal ‘Ridiculous Concessions’ asked for lease space in Buckhead “There is fear and loathing in Buckhead.” “Activity now is down two-thirds from what it was a year ago.” By John Schaffner Reporter Newspapers

  3. 2008 – 2010 The Dark Days of the Great Recession Commercial Real Estate Glut in Atlanta “Cousins took a $39 million write-down on its 25-story Terminus 200 building.” “Bloodbath in Buckhead.” Investor Village Atlanta Awash in Empty Office Struggles to Recover From Binge “Atlanta has a large hole to dig out of.” By John Helyar & Steve Matthews Bloomberg.com

  4. Market Cycle Clock Peaking phase Falling phase Rising phase Bottoming phase Where is Atlanta on the cycle clock? Source: Jones Lang LaSalle – as of 9/30/12

  5. Market Cycle Clock Houston, San Francisco, Seattle Peaking phase Falling phase Silicon Valley Austin, San Francisco Peninsula Dallas Fort Lauderdale, Orlando, West Palm Beach Rising phase Bottoming phase New York, Orange County, Richmond Denver Miami, United States Baltimore, Detroit, New Jersey, Washington, DC Boston, Pittsburgh Indianapolis, Los Angeles, Sacramento, San Diego Atlanta, Minneapolis, Oakland-East Bay, Philadelphia, Portland, San Antonio Jacksonville, Milwaukee, Phoenix, Westchester County Source: JLL Q2 ‘13 Source: Jones Lang LaSalle – as of 9/30/12 Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Fairfield County, Hampton Roads, Raleigh-Durham,St. Louis, Tampa

  6. What attracts CEO’s and Entrepreneurs to Atlanta? • World’s largest airport, direct flights to 81 foreign cities • 70 foreign consulates, doubled since the Olympic Games • Convergence of three major interstates: I-75, I-85, I-20 • Huge Industrial Sector: 600M SF, 4th largest industrial market • Abundant, well-educated, non-union workforce • Mild Climate • Affordable housing • Strong Fiber Infrastructure

  7. 2012-13 Atlanta Business Accolades #3 Most Fortune 500 Headquarters Source: FORTUNE Magazine #1 City for Young Entrepreneurs Source: Under 30 CEO Magazine #1 City for Lowest Cost of Doing Business Source: KPMG #1 Best City for New College Grads Source: Forbes #1 Top US Airport for Business Travel Services and Connecting Flights Source: Travel Leaders Group #4 City for Doing Business Source: CNBC #2 Most Tech-Friendly Cities Source: pcworld.com #1 Most Innovative City Source: Wall Street Journal #1 Top Moving Destination Source: Penske Truck Rental #2 Metro with the Fastest 3G/4G Wireless Combo and Most Publically Available Wi-Fi. Source: pcworld.com #1 Best Place in the U.S. to do Business Source: Entrepreneur Magazine

  8. Atlanta Submarkets Analysis North Fulton Alpharetta Central Perimeter Northeast Atlanta Cumberland/ Galleria Buckhead Northlake Midtown Downtown South Atlanta/ Airport

  9. Atlanta Class A Commercial Office Submarket Dynamics Spec Development? Not any time soon…

  10. Absorption Analysis When will vacant space be absorbed? *Landlords are happy at 10% vacancy!

  11. BUCKHEAD: Dwindling Development Sites N Three Alliance Tishman Speyer – ~500K SF 3344 Peachtree Parkway Properties 483K SF / 97% Leased Terminus 200 Cousins/Morgan Stanley Prop. 566K SF / 88% Leased Regent Partners ~500K SF One Alliance Center HIW 553K SF / 67% Leased Terminus 100 Cousins Properties 655K SF / 99% Leased BH LOOP Two Alliance Center HIW 492K SF / 92% Leased Phipps Tower Manulife 472K SF / 93% Leased PEACHTREE RD Coro ~250K SF 3630 Peachtree Pope & Land/Duke Realty 436K SF / 75% Leased GA 400 LENOX RD Marta Competitive Set Development Sites

  12. Highwoods Properties

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