Q2 2012 Atlanta, Georgia Office Property Sales Analysis

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Q2 2012 Atlanta, Georgia Office Property Sales Analysis

Metro Volume and Pricing

Last year’s nearly $1.1 billion in sales covering 42 transactions has been followed by a slowdown.* 14 deals meet Reis’ criteria; the total for the first half of 2012 was $233.6 million. The average selling price has fallen as well—from $123 psf for all of 2011 to $81 psf for first half 2012. The total for second quarter 2012 alone for seven completed sales was $134.4 million at a mean price of $80 psf. In the latest quarter’s largest deal, fourth largest in a year, Prudential Real Estate Investors, on behalf of a German institutional investor, paid Ten Peachtree Place Inc. $61 million ($235 psf) for the 259,498-square-foot, multi-tenant, fully occupied Ten Peachtree Place property in Midtown Atlanta. The sale closed in May at a 6.0% cap rate.

Top Submarkets

Downtown Atlanta led all other submarkets in property volume sold over the past four quarters at 2.7 million square feet. The low $45 psf average selling price, however, left the CBD with a total dollar volume of just $120 million. For 1.4 million square feet sold, meanwhile, the Midtown/Pershing submarket led the metro area in dollar volume at $250 million. The mean selling price was $175 psf. For 214,764 square feet traded, Peachtree Corners led in average price for the period at $222 psf. Buckhead/Lenox, with 357,736 square feet sold, followed at $191 psf. The 974,758 square feet sold in Roswell/Alpharetta fetched a combined total of $101 million at a mean price of $104 psf.

Cap Rate Comparisons and Forecasts

Average cap rates measured by the quarter have been erratic. Second quarter’s 7.2% was preceded by 10.9% the quarter before and by 8.3% the quarter before that. A steadier performance is seen in the 12-month rolling cap. Reis puts the second-quarter 12-month rate at 9.0%, down from first quarter’s 9.5%, up from 8.9% as of second quarter 2011. Twelve-month rolling cap rates for the South Atlantic and U.S. markets for the latest quarter were 7.7% and 7.5%, unchanged and up from 7.4% a quarter earlier.