NEWS

Office Market Update

Education Seminar: held Wednesday, September 20

2017 CBR Education Seminar -  September

The Atlanta Commercial Board of REALTORS® seminar, "Office Market Update," focused on rental growth, the length of the ownership cycle, and the promise of the Atlanta submarkets. Panel members included: Connie Engel, Partner at Childress Klein; Bill Hollett, Senior Vice President at Cousins Properties; Jeff Kelley, SIOR, Senior VP and Principal at Colliers International; and Mike McDonald, Managing Director at Eastdil. The panel was coordinated by Jim Caswell, Vice President of Leasing at Bridge Commercial Real Estate, LLC, and Scott Rees, Sr. Vice President, Leasing at PMRG.

Mike McDonald noted that there has been an influx of capital to the U.S. from international sources that are in search of higher returns, and new construction has been the result of the need to create investment opportunities. He noted that large class A projects affect values globally, such as the comps derived from the Leadenhall Building in London, England (nicknamed the “Cheesegrater Building”). When occupancy growth slows for these projects, it affects valuations locally in Atlanta as profit-seeking investors look globally, positioning the U.S. office market in the very healthy position it is in today.

The panel was asked why the ownership cycle was currently shortening. Mike McDonald suggested that it could be an indicator that office space could be at “peak pricing.” Although there is some international instability in the office market space, there are no fundamental problems in the market that would weaken it. Mr. McDonald noted that Class A ownership has actually lengthened, up to 5-6 years. He had observed that potential owners are running unusually long 15-20 year income models. However, Buckhead, Midtown, and central Perimeter areas are among the hottest in the local market with prices that might not match the fundamentals of the market.

Jeff Kelley noted that he felt the market had indeed slowed, but his anecdotal experience was not yet reflected in the statistics. An increase in employment was meant to fill spaces that were previously built out, but those jobs have not yet materialized. He said that the 10 year average of one million square feet in absorption per year since 2007 was a momentum trend that was not sustainable. Companies are starting to become more efficient with office space usage, and a slowdown would be reasonable.

Mr. Kelley observed that in an effort to build not for current needs, but for the next 10 years, transportation must be integral to the planning process. Long view forecasts of public transit usage are very favorable, and public transit needs to be bolstered.

The panel was asked about their observations on rental rates. Connie Engel felt that current rent growth prospects were exciting, particularly in areas like the Galleria that have been grown due to the Braves’ move. Many other parts of Atlanta are still a “bargain” in terms of their rental rates, and investors continue to underwrite rent growth.

Bill Hollett said he had observed trends related to employers concerns in a tight labor market. He agreed with Mr. Kelley’s mass transit observation, saying that inquiries he receives consistently ask that MARTA be a part of what potential clients want to consider. Additionally, heavily amenitized spaces are large part of the attraction-and-retention strategy for employees.

Mr. Hollett noted that single buildings have the ability to change things in a market, and when new buildings are as few as the next year’s construction implies, buildings similar to the few that are planned downtown near MARTA, schools, and downtown will shape the discussion about attracting millennials. Co-working models of office space are less popular with him, although models like Industrious, WeWork, and the Capital Factory (Texas) remain promising.

Connie Engle responded to the question of transportation by noting that driverless cars and public transportation can provide a key service as seen from another perspective: many existing buildings and office blocks have limited parking, and it is problematic when parking decks fill. Parking cars more densely or using ride-sharing services help keep parking available and buildings accessible to customers and employees.

Panelists:

Connie Engel, Childress Klein

Bill Hollett, Cousins

Jeff Kelley, Colliers

Mike McDonald, Eastdil

Panel Coordinator:

Jim Caswell, Bridge Commercial Real Estate, LLC

Scott Rees, PMRG

Jim Caswell

Jim Caswell

Bridge Commercial Real Estate, LLC,
Vice President of Leasing

Mr. Caswell is the Vice President of Leasing at Bridge Commercial Real Estate. Mr. Caswell is an Atlanta native who is a highly accomplished commercial office broker that has been involved in leasing transactions totaling over $100 Million in gross volume and over one million square feet. Mr. Caswell is involved in the leasing and marketing of over one million square feet of class “A” multi-story office product in almost every Atlanta Sub-Market. Throughout the day, Mr. Caswell works closely with investors, business owners, asset managers, brokers and attorneys in an effort to lease the firm’s Atlanta portfolio.

Mr. Caswell has over seven years of commercial real estate experience leasing commercial projects in the Atlanta area. Jim’s relationships with the younger commercial brokerage community and his aggressive approach to leasing makes him the perfect fit for more challenging leasing projects. Previously, Mr. Caswell was the Leasing Director at PC Associates; an Atlanta based commercial real estate developer. Mr. Caswell was responsible for the leasing and marketing of over 1.3 million square feet of Class “A” multi-story office product. As the Leasing Director he represented joint-venture partners such as Northwestern Mutual, Met Life and American Realty Advisors. During his tenure at PC Associates, Mr. Caswell created tremendous value through his leasing efforts during the disposition process of over 1.4 million square feet of commercial office space, The transactions exceeded over $270 million dollars in gross value.

Connie L. Engel

Connie Engel

Childress Klein
Partner

Ms. Engel is an accomplished commercial real estate executive. Her broad strengths include business development and commercial real estate development, personnel management, sales management and product marketing. Ms. Engel’s leadership abilities have been recognized by organizations, corporations and foundations. She is the immediate Past-Chair of the Kennesaw State University Foundation and in 2011 Connie was named Executive in Residence for the Coles College of Business at Kennesaw State University. Previously she was President of the National Association of Industrial and Office Properties of Georgia (NAIOP) and she is a Past President of Commercial Real Estate Women. Ms. Engel additionally has a wide understanding of current issues, obstacles and opportunities facing our country in foreign policy and national security which she has received through her membership in and involvement with Business Executives for National Security. (BENS).

Bill Hollett

Bill Hollett

Cousins Properties,
Senior Vice President

As senior vice president for leasing with Cousins Properties, William (Bill) Hollett is responsible for a number of the company’s Atlanta Class A office properties in Atlanta, including Terminus, 3348 and 3350 Peachtree, 8000 Avalon and 2 proposed new developments, Abernathy 400 and 10000 Avalon.

Over the past 30 years, Bill has established his expertise in leasing and asset management of Class A office properties and has been directly involved in the successful completion of more than 6 million square feet of leases, as well as leadership and support of successful leasing teams.

Prior to joining Cousins Properties, Bill was a managing director/senior vice president in 2011 and early 2012 with Parkway Properties, where he was the Atlanta market leader. From 2009 to 2011 and 2007 to 2009, he was the Atlanta market leader for Eola Capital LLC and America’s Capital Partners, respectively.

Jeff P. Kelley

Jeff P. Kelley, SIOR

Colliers International
Senior VP and Principal

Jeff Kelley has over 23 years of experience as a real estate professional specializing in office tenant representation. As an industry leader, he is well versed the real estate market and actively studies fluctuating trends. From negotiating optimal commercial leases to finding off-market building opportunities, Mr. Kelley has the knowledge and skills to deliver ideal outcomes to his clients. Mr. Kelley is an established professional in all aspects of the tenant representation process including financial analysis, workplace studies, construction management, lease negotiations and build- to-suit projects.

Mike McDonald

Mike McDonald

Eastdil Secured, LLC,
Managing Director

Mike McDonald is a Managing Director and Partner of Eastdil Secured. He co-founded the Atlanta office of Eastdil Secured (predecessor Eastdil) in 2000. Prior to joining Eastdil Secured, Mr. McDonald was a Vice President of Ben Carter Properties where he focused on office and retail investment sales, acquisitions on behalf of the firm and an offshore investor and office and retail development activities. He is one of the leading investment sales professionals in the Southeast and Sunbelt regions of the U.S. and has been involved in more than $5 billion of transactions over the past five years across the product type spectrum including office, retail, industrial and multi-family assets. Key transactions include 191 Peachtree, 1180 Peachtree, Atlanta Financial Center, The Brookdale Collection, Buckhead Plaza, Heritage Plaza, Las Olas Centre, The Mall of Georgia, Miami Center, One Alliance Center, The Post Properties Apartment Portfolio, and The Wildwood Collection. Mr. McDonald received a B.B.A in Banking & Finance from the University of Georgia and a Master’s degree in Real Estate from Georgia State University. Mike is an active member of NAIOP, ICSC and ULI.

Mike, and his wife Stephanie, live in Atlanta and have three children: Macartney, Michael and Riley. He is actively involved with Children’s Healthcare of Atlanta and enjoys playing golf, camping, coaching Little League baseball, reading and spending time with his family.

Scott Rees

Scott Rees

Eastern Division
Sr. Vice President of Leasing

As Senior Vice President of leasing, Scott Rees is responsible for the day to day leasing and marketing activity of such prominent Atlanta landmarks as Crown Pointe I & II, Powers Ferry Landing, 1955 & 2300 Lake Park Drive, 1600 Parkwood, Mansell Forest, Northridge Center & 66 Perimeter Center East.

As Senior Vice President of leasing, Scott Rees is responsible for the day to day leasing and marketing activity of such prominent Atlanta landmarks as Crown Pointe I & II, Powers Ferry Landing, 1955 & 2300 Lake Park Drive, 1600 Parkwood, Mansell Forest, Northridge Center & 66 Perimeter Center East.

Prior to joining PMRG, Mr. Rees was Principal of Rees Real Estate Advisors, where he served clients providing tenant representation services.

Tuesday, September 27, 2016
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