Office values dip in suburbs

Atlanta’s suburban office market is not as strong as the intown market, according to the third-quarter sales report from LoopNet and REAL Capital Analytics.

The capitalization rate in the suburbs has climbed to 7.7 percent compared to 7 percent last year. Rising cap rates indicate sinking real estate values.

In dollar volume, both suburban and central business district deals are down sharply —- 51.5 percent and 68.5 percent respectively, the report says. But the central business district cap rate has remained unchanged at 6.5 percent.

For the two markets combined, the price paid per square foot rose to $190, up 22.6 percent over 12 months. The intown increase was steeper than that in the suburbs.

Vacancy rates drive concerns

In its third-quarter report, Jones Lang LaSalle, the global real estate company, says “experts now fear the impending rise of commercial foreclosures.”

As for Atlanta, “the local office market has historically been resilient in recovering from previous downturns. One primary reason for Atlanta’s ability to rebound is the diversification of industries.” Other reasons are strong population growth, Hartsfield-Jackson International Airport, and the highway and rail system, the report says.

Most Atlanta tenants are staying put, so office space absorption is essentially flat, and rents have declined for two consecutive quarters, JLL says.

The vacancy rate has risen to 16.56 percent from 16.1 percent for the third quarter of 2007. Just under 23 million square feet of space is empty, the report says. And only 14 percent of the nearly 4 million square feet of office space under construction is preleased, according to JLL.

TODAY’S BIG NUMBER

$48.1

in millions, the price paid for a portfolio of properties in Marietta totaling 48.5 acres. The buyer was Capital Commercial Investments of Austin.

Source: Databank

KSU says land fits future plans

Kennesaw State University continues to buy land.

In two deals, the university last month bought 76 more acres, paying $16.35 million or $214,562 an acre, Databank says.

The tracts are near Big Shanty and Chastain roads and I-75. The sellers were C. Richard King III and Tom Preacher, and R. Julian McCamy, according to Databank.

Earlier, KSU bought 7.5 acres on Busbee Drive, including the Gold’s Gym site, for almost $4.7 million.

Explaining that deal, Arlethia Perry-Johnson, special assistant to the university president, said KSU is banking land for future expansion.

NOTABLE DEALS

Sales for the quarter ending in September.

OFFICES

Property……………..Location…..Price

1. 675 W. Peachtree*…..Atlanta……$345 mil.

2. Three Glenlake……..Atlanta……$106 mil.

3. BellSouth Advertising, Publishing….Tucker….$72 mil.

RETAIL

1. Perimeter Square…….Atlanta……$42.2 mil.

2. Life Time Fitness.. ..Alpharetta…$28.3 mil.

3. Village Shoppes at East Cherokee….Woodstock….$18 mil.

MULTIFAMILY

1. The Heights at Princeton Lakes….Atlanta….$40 mil.

2. Post Oglethorpe……………….Atlanta….$38.5 mil.

3. AMLI at Peachtree……………..Peachtree City….$36.6 mil.

(tie)The Retreat at Peachtree City……..$36.6 mil.

*Former BellSouth tower

Source: LoopNet/REAL Capital Analytics

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