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(300,000) 20% 15% 10% 5% 0% Absorption Deliveries Vacancy % Square Feet New buildings with specula- tive office space: Adjustments in the real estate cycle: Continued & increased funding of Georgia venture capital: Rents Absorption Vacancy 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 (1,000,000) (2,000,000) (3,000,000) (4,000,000) Year $M Deals 2011 $423.86 61 2012 $252.32 55 2013 $396.47 43 2014 $491.60 60 2015 $836.07 71 SOURCE: MONEYTREE REPORT DATA SOURCE: COSTAR RE CYCLE IMAGE SOURCE: RCLCO DATA SOURCE: COSTAR Given the current economic con- dions, we believe we will con- nue to see announcements of “spec” office buildings as devel- opers try to take advantage of a ght market. Unl then, current condions point to concession packages decreasing, higher rents, more scruny on credit risk, long- er lease terms, less flexibility and fewer space opons in the most desirable buildings and areas. According to real estate cycle anal- ysts, 2016 will see a peak in the co- mmercial real estate cycle, follow- ed by an adjustment in the overall cycle. We have been through these cycles many mes and will work smarter to posion our clients with the right landlords who understand the market swings both ways. Buckhead: high $30’s to mid-$40’s Central Perimeter: low $30’s North Fulton: high $20’s Class A Class B Class C Down to 12.1% 12.6% 13.6% 8.8% Class A: 14,717,736 SF Class B: 17,398,651 SF NORTH FULTON NORTHWEST ATL BUCKHEAD MIDTOWN NORTHLAKE DOWNTOWN SOUTH ATL WEST ATL CENT. PERIMETER NORTHEAST ATL 500,000 400,000 300,000 200,000 100,000 0 (100,000) (200,000) Square Feet Class A: + 674,579 SF Class B: + 338,526 SF 2012 2013 2014 2015 $27 $25 $23 $23 $19 $17 Class A AVG Market AVG Office rental rates are at histori- cal highs in Atlanta, net ab- sorption reached a 10-year high in 2015, and vacancy is at a 10-year low, resulting in a very tight Atlanta office mar- ket, with rents continuing to rise, in 2016. Venture capital investment in Georgia companies nearly doubled from 2014 to 2015. As money continues to flow into funding start-ups in all sectors, 2016 will likely bring significant and overdue changes to the Atlanta office market to fill de- mand as the real estate cycle adjusts this year. The Atlanta office market has experienced pre-recession numbers in overall absorption due to corporate relocations and movement in the tech sector, such as NCR, WorldPay, and FISERV. Overall, the Atlan- ta office market has fully re- covered and now surpassed pre-recession 2008 numbers!
