2010 Global Market Report - NAI Commercial Real Estate

Atlanta, GeorgiaHonolulu, HawaiiContactNAI Brannen Goddard+1 404 812 4000Metropolitan AreaEconomic Overview2009Population2014 EstimatedPopulationEmploymentPopulationHouseholdAverage IncomeMedianHousehold IncomeTotal PopulationMedian Age5,537,9296,190,6362,591,351$76,542$65,88035Metropolitan Atlanta is home to over 5 million residents and137,000 businesses. Atlanta’s diverse population, deep talentpool, strong local communities, global transportationand quality of life contribute to its economic strength andongoing growth. Atlanta ranks fifth in the United States forthe number of Fortune 500 headquarters. The Atlanta arearemains a haven for both national/international relocationsand expansions and is ranked second-least-expensive city inthe country in which to operate a corporate headquarters.Atlanta is also home to the world’s busiest airport with 30airlines and an average of 1,500 daily flights to over 250worldwide destinations. Additionally, Atlanta is the rail centerof the South and one of the five most important distributioncenters in the US, with two major rail carriers each operatingover 100 freight trains daily to and from Atlanta.The Atlanta Office market supply has outweighed the demand,pushing the vacancy rate up in the 19-22% range,creating negative net absorption and declining rental rates.With over 196 million SF of inventory, it is anticipated that theOffice market will experience more negative net absorptionand remain flat for 2010.At the close of the third quarter, the Industrial market, withover 560 million SF of inventory, reported a slowdown inabsorption. The amount of new construction has droppedconsiderably and although vacancy rates have climbed overthe past several quarters and rental rates decreased slightly,leasing activity remains active.Atlanta’s Retail market, with over 298 million SF of inventory,is reporting a slight decline in market conditions. Vacancyrates are hovering in the 10-14% range, negative net absorptionis reported and rental rates are down from the last severalquarters.One of the larger office projects under construction at theend of Q3 is Phipps Tower, a 486,000 SF building to becompleted in Q1 2010. The largest industrial lease-signingyear to date is the 556,800 SF lease signed by Smuckersin South Atlanta.ContactNAI ChaneyBrooks+1 808 544 1600Metropolitan AreaEconomic Overview2009Population2014 EstimatedPopulationEmploymentPopulationHouseholdAverage IncomeMedianHousehold IncomeTotal PopulationMedian Age895,361870,854431,431$80,939$66,05338Honolulu is the 51st largest economy in the United Statesand is a vibrant and resilient metropolitan city. The commercialreal estate market is expected to maintain limited growththroughout 2010. The dire projections for 2009 were lessthan expected and visitor arrivals, a major economicindicator for Hawaii, were greater than projected for 2009.The Honolulu market will benefit from the increase in theYen value as Japanese investors seek more value for theirinvestments.The Honolulu CBD saw 2009 end with vacancy rates above10.73% and negative absorption. Average asking rents are$2.91/SF gross per month. Landlords are very focused onretention and we are seeing a softening in asking rates andmore concessions such as free rent and liberal TIallowances. Market rates on average are 11% below theasking rates at year-end 2008.Oahu’s industrial market continues to outperform its mainlandcounterparts. The demand for bulk warehouse space hassoftened with the weakening of tourist arrivals, resulting inan island-wide vacancy rate of 5.22%. Average asking rentalrates for bulk warehouse space ranges from $0.95/SFto $1.20/SF net for the most desirable locations. Goingforward, we expect to see a leveling off in Oahu’s industrialmarket due primarily to a softening housing market andtourist arrivals; however, we anticipate renewed sales activityas opportunistic investors acquire available industrialparcels.Honolulu’s retail sector, which benefited from tremendousgrowth and an influx of capital for redevelopment projectsfrom 2006 through mid-2008, has changed considerably.Many retailers who are locked into long term leases atpreviously negotiated rental rates are finding the economicchallenges too difficult to navigate. Major shifts are projectedin hotel and resort property ownership as opportunities tobuy distressed assets that are irreplaceable become moreprevalent.Hawaii’s real estate market is firmly in a period of adjustment.This type of market always creates opportunity for theentrepreneurial investor and user. We are seeing anonslaught of extend and blend as well as lease assignments.We anticipate a stabilization of the market in the second halfof 2010.Atlanta At A Glance(Rent/SF/YR) Low High Effective Avg. VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAIL$$$$$$$$$23.0022.9116.2320.0019.7915.822.402.503.75$$$$$$$$$32.6226.2519.8325.8825.3419.403.253.507.00N/AN/AN/AN/AN/AN/AN/AN/AN/A92.0%22.1%19.9%75.0%12.2%17.8%12.1%13.1%15.6%DowntownNeighborhood Service CentersCommunity Power CenterRegional Malls$$$$10.0011.0010.0013.64$40.00$23.00$22.00$50.00N/AN/AN/AN/A8.0%14.5%9.5%4.1%DEVELOPMENT LAND Low/Acre High/AcreOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-park$$$$10.0075,000.0025,000.0035,000.00$$$$25.00200,000.0075,000.00150,000.00Urban Retail/Commercial Land $ 1,200,000.00 $ 4,000,000.00Retail/Commercial LandResidential$$150,000.0020,000.00$$400,000.00150,000.00Honolulu At A Glance(Rent/SF/YR) Low High Effective Avg. VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAIL$$$$$$$$$33.0027.0023.4028.2025.2015.0014.2811.4019.56$$$$$$$$$48.2439.0033.0045.0043.2027.0020.2819.5640.20$$$$$$$$$43.9234.6826.7646.9831.8022.2017.2815.4829.886.6%10.3%13.9%N/AN/AN/A7.3%5.0%3.2%Downtown$ 28.40 $ 210.00 $ 124.20 2.6%Neighborhood Service CentersCommunity Power CenterRegional Malls$$$32.7620.0448.96$$$64.9242.3679.80$$$48.8431.2064.322.5%7.1%2.6%DEVELOPMENT LAND Low HighOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidential$ 950,000.00 $ 6,700,000.00$ 655,000.00 $ 3,700,000.00$ 420,000.00 $ 2,700,000.00$ 375,000.00 $ 875,000.00$ 1,420,000.00 $ 12,000,000.00N/AN/A2010 Global Market Report ■ www.naiglobal.com 87