As senior vice president for leasing with Cousins Properties, Bill Hollett is responsible for a number of the company’s Class A office properties in metro Atlanta. He has more than 28 years of experience leasing, managing or operating commercial office properties.
Reporter Newspapers recently posed some questions to him about the office market in the Perimeter area. Here are his answers.
Q: What is the current status of the office market in the Perimeter area? How big is the market? How big should it be?
A: The Central Perimeter submarket is very healthy as a result of strong absorption of office space during the past three years. CoStar lists the submarket as a 34-million-square-foot market (with 83 Class A buildings containing approximately 22 million square feet). The class A vacancy rate has fallen below 10 percent for the first time since 2000 and new speculative office development could commence in the next year.
Q: Is there demand for all types of office space, or is the demand centered on Class A space or on new office developments, such as those for State Farm and Mercedes?
A: It is a combination of both: a) demand for existing class A space still significantly outpaces the other classes of existing space in absorption and b) as you noted, firms such as State Farm and Mercedes have chosen new developments for a campus environment on available parcels of land that are well located in proximity to MARTA and/or the highway systems that service the submarket.
Q: What’s happening to rents?
A: Rents in the class A office market have increased by approximately 25 percent in the past three years.
Q: How does the Perimeter market fit into the overall metro Atlanta market now? How has that changed over time?
A: The Central Perimeter market has always been a logical consideration for companies that have larger employee bases that reside in the northern half of the metro area and also service clients on the north side of Atlanta. Examples include five Fortune 1000 companies, plus Veritiv, Cox Communications and Mercedes of North America have all chosen the submarket for their headquarters location. Since the early 2000s when MARTA opened the Sandy Springs and North Springs stations, the Perimeter CID successfully worked to make significant infrastructure changes on the roads leading to the highways and throughout the submarket (such as the Ashford-Dunwoody diverging diamond project, the Hammond interchange and Perimeter Center Parkway flyover). In addition, the increased walkability from sidewalks and crosswalks has converted the community into a more urban submarket that emphasizes walkability and proximity to retail, restaurants, hotels and residential.
Q: Do you think traffic troubles – either existing problems or fears of future problems — have an effect on the demand for office space in the Perimeter?
A: The leadership in the Perimeter (e.g. Perimeter CID, city of Sandy Springs, city of Dunwoody and city of Brookhaven) are working in concert with public officials and private enterprises to address the continuing growth of the area. The planned I-285/Ga. 400 Interchange, Ga. 400 collector distributor system, and Ga. 400/Abernathy Road projects are much needed and great examples of continued improvements to address traffic congestion and mobility for the area.