One of the commercial real estate industry's annual bellwether reports is out, and it details continued pain in office markets across the country, with Atlanta among the most beat-up. In terms of occupancy, Atlanta has good company in the 20% and higher category- other cities include New York, Seattle and Miami. But that list is likely of scarce comfort to office owners and developers reckoning day-in-and-out with Atlanta's total vacancy rate of 24.8%. More bad news: Atlanta's average asking rents are near the bottom of the pile, averaging just $24.06 per square foot (psf). What is more, as tenants merrily jump around taking advantage of the soft market, landlords here are having to provide, on average, 11 months of free rent and $50 psf in tenant improvements to get new leases signed. On the upside: the Atlanta office investment market is ticking up, with a billion dollars worth of transactions closing in 2011 (and 2012 is looking even better). Most notably, Regent Partners got a record price (for Buckhead) in selling the office portion of the Sovereign Building (aka 3344 Peachtree Road) for $346 per foot. We'd bet owners' current woes will be quickly forgotten if more can get psf sales prices with a '3' in the front.
· North American Skyline Review [Jones Lang LaSalle]