160,134 SFQ3 NET ABSORPTION $

Q2 813,336 SF

15.0%Q3 VACANCY #

Q2 14.9%

2,407,091 SFQ3 LEASING ACTIVITY $

4,540,376 SFUNDER CONSTRUCTION $

517,172 SFNEW SUPPLY DELIVERED $

$24.13 SFAVERAGE ASKING RENT (PER YR.) #

$170AVERAGE SALES PER SF #

$797 M245 SALES TRANSACTIONS #

Q3 2017Atlanta Office Market Report

UNDER CONSTRUCTIONpercentage by Submarket

ABSORPTIONin SF, 2007-YTD 2017

VACANCYpercentage, 2007-YTD 2017

OVERALL RENTAL RATES

LARGEST PROJECTS UNDER CONSTRUCTION as of Q3 2017

Class C$16.14 #

Overall$24.13#

Class A$27.88#

MARKET OVERVIEW

Overall vacancy increased slightly in Q3 10 basis points to 15% with a net absorption of 160,134 SF and leasing activity of 2,407,091 SF. Average asking rents have continued to escalate to $24.13 PSF over all classes. Office development continues to grow with 4,540,376 SF currently under construction and 517,172 SF of delivered product in Q3, bringing year to date deliveries to 2,132,425 SF. Of the 4.5M SF currently under construction, there are 11 buildings over 100,000 SF that are already 71% preleased. Consolidation has began changing the dynamics of office space as companies continue to shrink their footprint to create more efficient layouts. However, more businesses are announcing corporate relocations or expansions almost daily, including professional service firm Accenture adding 800 jobs, global professional service company Tech Mahindra, 600 jobs and data-privacy startup OneTrust, 500 jobs across the Metro area. Atlanta continues to see positive, but not as strong, activity.

Building Name Building Address SF Preleased Delivery

Coda 771 Spring St 760,000 59% Q1-19

Park Center II -State Farm 240 Perimeter Ctr Pky 670,000 100% Q2-20

NCR Corp 864 Spring St 485,000 100% Q1-18

725 Ponce 725 Ponce de Leon Ave 430,000 20% Q1-19

4004 Perimeter Summit 4004 Summit Blvd 355,000 0% Q4-17

ABSORPTION• Overall net absorption for Metro Atlanta in Q3 2017 was positive 160,134 SF,

bringing year-to-date absorption to 785,133 SF

VACANCY RATE• Vacancy increased slightly to 15.0% Q3 2017• Midtown reported to lowest submarket vacancy at 10.8%

RENTAL RATES• Average quoted asking rental rate for all classes increased from $23.93 PSF to

$24.13 PSF

DEVELOPMENT/CONSTRUCTION• There was 4,540,376 SF of office space under construction in Q3 2017• There was 517,172 SF of office space delivered in Q3 2017

SALES ACTIVITY• The largest sale transaction of Q3 was the sale of the State Farm building in the

Central Perimeter submarket, 590,926 SF for $275 M

LEASING ACTIVITY• Leasing activity was 2,407,091 SF in Q3• The largest lease transaction of Q3 was signed by Eversheds Sutherland;

188,823 SF renewal in the Midtown submarket

Lee & Associates | Q3 2017 Atlanta Office Market Report

Class B $19.09 $

3.30M

‐0.65M

2.69M

‐0.45M

‐0.01M

1.56M

2.80M3.22M

3.68M

0.42M

0.79M

‐3.00

‐2.00

‐1.00

0.00

1.00

2.00

3.00

4.00

5.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016  YTD2017

15.1%

16.3%

18.6% 19.7% 19.8% 18.9%

17.6%

16.4%

14.7% 14.8% 15.0%

12%

13%

14%

15%

16%

17%

18%

19%

20%

2007 2009 2011 2013 2015 YTD2017

BUYER TYPEQ3 2017 sales

CAP RATESpercentage, 2007-YTD 2017

Lee & Associates | Q3 2017 Atlanta Office Market Report

OFFICE SUBMARKET DATA

The information and details contained herein have been obtained from third-party sources believed to be reliable; however, Lee & Associates Atlanta has not independently verified its accuracy. Lee & Associates Atlanta makes no representations, guarantees, or express or implied warranties of any kind regarding the accuracy or completeness of the information and details provided herein, including but not limited to the implied warranty of suitability and fitness for a particular purpose. Interested parties should perform their own due diligence regarding the accuracy of the information. The information provided herein, including any sale or lease terms, is being provided subject to errors, omissions, changes of price or conditions, prior sale or lease, and withdrawal without notice. Third-party

data sources: CoStar Group, Inc., Real Capital Analytics, and Georgia State Economic Forecasting Center.The Lee & Associates Atlanta Office Market Report compiles market data by using a third-party database for the proprietary analysis of over 15,000 office properties in the Atlanta Metropolitan Area. © Copyright 2017 Lee & Associates Atlanta. All rights reserved.Market report analysis by: Kate Hunt, Research and Database CoordinatorMarket report created by: Brittany Sturdivant, Marketing Coordinator

ATLANTA SUBMARKET MAP

Office Submarkets TotalInventory

VacancyTotal SF

VacancyQ3 ‘17

Net AbsorptionYTD Total

UnderConstruction

YTDDeliveries

Asking Rent PSF

Buckhead 22,091,848 3,162,244 14.3% -5,144 147,617 737,087 $32.93

Central Perimeter 28,488,803 4,244,533 14.9% -93,196 1,045,966 15,402 $26.80

Downtown Atlanta 26,283,665 4,042,567 15.4% 184,061 124,000 - $24.77

Midtown Atlanta 21,412,333 2,305,168 10.8% 148,864 1,986,671 17,000 $30.94

North Fulton 25,597,384 3,641,036 14.2% 133,285 418,025 357,575 $22.95

Northeast Atlanta 22,864,969 4,932,924 21.6% -44,214 109,497 94,000 $17.81

Northlake 18,426,216 2,431,689 13.2% 125,093 93,000 223,755 $19.49

Northwest Atlanta 33,000,302 5,169,719 15.7% 252,094 518,000 597,606 $22.71

South Atlanta 13,030,516 1,703,060 13.1% 60,459 97,600 90,000 $18.41

West Atlanta 2,759,926 536,289 19.4% 23,831 - - $20.71

Total 213,955,962 32,169,229 15.0% 785,133 4,540,376 2,132,425 $24.13

Office Submarkets TotalInventory

VacancyTotal SF

VacancyQ3 ‘17

Net AbsorptionYTD Total

UnderConstruction

YTDDeliveries

Asking Rent PSF

Class A 111,591,047 17,046,464 15.3% 647,906 4,235,315 1,985,023 $27.88

Class B 87,068,959 13,515,900 15.5% 299,636 305,061 147,402 $19.09

Class C 15,295,956 1,606,865 10.5% -162,409 - - $16.14

Total 213,955,962 32,169,229 15.0% 785,133 4,540,376 2,132,425 $24.13

19%4.0%

4.0%

Private User REIT/Public

73%

Institutional

7.9% 7.9% 8.1%

8.6%

9.5%

8.4%

8.6%9.1%

8.4%8.1% 7.95%

6%

7%

8%

9%

10%

2007 2009 2011 2013 2015 YTD2017

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Property Name Submarket Buyer Seller SF Sales / PSF

1 State Farm Central Perimeter Mirae Asset Global Investments State Farm Insurance 590,926 $275 M / $466

2 Piedmont Center 1-4* Buckhead The Ardent Companies Northwestern Mutual Life Insurance 519,000 $88.0 M / $170

15 Piedmont Center* Buckhead The Ardent Companies Northwestern Mutual Life Insurance 330,000 $55.9 M / $170

Northside Cherokee Towne Lake Northwest Physicians Realty Duke Realty 100,797 $38.0 M / $377

5 550 Pharr Rd Buckhead 550 Phar Holdings LLC 550 Buckhead LLC 108,155 $20.0 M / $185

Q3 2017 TOP SALES*Portfolio sales as individual property sales

Q3 2017 TOP LEASESProperty Name Address Submarket Tenant Name SF Lease Type

999 Peachtree 999 Peachtree St NE Midtown Eversheds Sutherland 188,823 Renewal

Three Alliance 3550 Lenox Rd NE Buckhead Aon Risk Services 64,655 New

Platinum Tower 400 Interstate N Pky SE Northwest Aveanna Healthcare 60,899 New

Royal Centre Four 11700 Great Oaks Way North Fulton Ultimate Software 55,404 New

Stonebridge II 1120 Sanctuary Pky North Fulton Delta Dental Insurance 51,886 New

About Lee & AssociatesIn 2010, our Atlanta office joined Lee & Associates, the largest broker-owned commercial real estate sales organizations in the U.S. As a local office of this highly respected national firm, the Atlanta team capitalizes on Lee’s stellar reputation to continue its paradigm of establishing long-term, client-driven relationships to develop customized solutions for every client’s specific real estate requirement.

3500 Lenox Road Suite 200Atlanta, GA 30326404.442.2810

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