ATLANTA — At Arnall Golden Gregory’s Fall Breakfast Briefing, four office executives reported they felt the market was at or approaching bottom and that they had renewed optimism for activity over the next 18 months. The panelists — Rudy Prio Touzet, CEO of Eola Capital; Casey Wold, senior managing director of Tishman Speyer; Don Miller, CEO and director of Piedmont Office Realty Trust; and Chris Port, senior vice president of CBRE — focused on Atlanta during the 40-minute panel, but gave national perspective as well.
When questioned on a national overview by AGG Partner Phil Skinner, Miller said he believed that the office sector in growth markets, like Atlanta and Dallas, is still in somewhat of a downward slide. Touzet believes that there will be continued erosion of net operating income across portfolios, but added he is seeing early signs of debt in the marketplace for office acquisitions and refinance. Wold reported that his team is getting out 2 years ahead of maturation on key loans and renegotiating now, as it takes about 10 months to negotiate with banks. Both Wold and Touzet feel that there will be no big disaster in the commercial real estate sector; they contend that large banks, coupled with private equity firms that have amassed funds over the last 2 years, have the power to avoid a landslide in the commercial real estate market.
Locally, the panel’s attention was focused on the Buckhead and Midtown sectors of the Atlanta. Buckhead has had five significantly large office towers deliver in 2008 and 2009 in a market that has not seen much absorption. Panelists reported leasing activity down by greater than 60 percent, and that many office tenants are in the market 2 to 3 years before lease maturation looking for a better deal on quality space. Port said that Buckhead and Midtown are overstored with office inventory, and that these markets of Atlanta would be looking at a “historically high absorption period” to fill this space.
Arnall Golden Gregory’s Fall Breakfast Briefing was held on Tuesday, November 17 on the 30th Floor of Tishman Speyer’s recently delivered Two Alliance Center building in Buckhead. The building is currently 30 percent leased.
— Randall Shearin