january 29 2013 i national economy ii atlanta economy iii
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January 29, 2013 I. National Economy II. Atlanta Economy III. - PowerPoint PPT Presentation

January 29, 2013 I. National Economy II. Atlanta Economy III. Market Update IV. Ackerman & Co. Update V. Conclusions NATIONAL ECONOMY Recovery (GDP Percentage Change) 6 1Q 2008 3Q 2009 E R 4 2 0 -2 Total loss in -4 GDP


  1. CENTRAL PERIMETER SUBMARKET D Office Total SF 28,638,264 Vacant SF 5,740,266 Percent Vacant 20.0% SF Under Construction 0 2011 Net Absorption (215,446) 2012 Net Absorption 1,137,738 Avg. Annual Absorption (11-12) 461,146 %Vacant 36 Months @ Avg. 15.2%

  2. BIG DEALS Office State Farm Insurance Central Perimeter  434,513 SF  Perimeter Center East  Consolidation ( to Atlanta – new jobs )  750 employees  Owner: Rubenstein Partners / Wells Real Estate Funds  Leasing Brokers: Andy Sumlin & Caroline Nolen of Cushman & Wakefield  Tenant Representatives: Sam Holmes and John Shlesinger of CBRE

  3. NORTH FULTON SUBMARKET D Office Total SF 24,215,566 Vacant SF 4,839,654 Percent Vacant 20.0% SF Under Construction 102,000 2011 Net Absorption 108,559 2012 Net Absorption (103,632) Avg. Annual Absorption (11-12) 2,464 %Vacant 36 Months @ Avg. 19.9%

  4. METRO ATLANTA MARKET D Industrial Total SF 579,204,962 Vacant SF 71,229,875 Percent Vacant 12.3% SF Under Construction 1,598,581 2011 Net Absorption 8,504,815 2012 Net Absorption 4,877,452 Avg. Annual Absorption (11-12) 6,691,135 %Vacant 36 Months @ Avg. 9.0%

  5. NORTHEAST SUBMARKET D Industrial Total SF 153,032,648 Vacant SF 16,684,712 Percent Vacant 10.9% SF Under Construction 659,497 2011 Net Absorption 1,760,564 2012 Net Absorption 2,086,427 Avg. Annual Absorption (11-12) 1,924,996 %Vacant 36 Months @ Avg. 7.1 %

  6. BIG DEALS Industrial Carter’s Northeast / Braselton / W. Jackson Ind  1,061,663 SF  625 Braselton Parkway  Renewal / Expansion (by 505,269 SF)  Owner: Duke  Leasing Company: Brian Sutton of Duke  Tenant Representative: Blaine Kelley of CBRE

  7. BIG DEALS Industrial FedEx BTS Northeast Atlanta  215,000 SF  6721 Atlantic Boulevard  New  Owner & Landlord: Paranet Corporation Services, Inc.

  8. SOUTH ATLANTA SUBMARKET D Industrial Total SF 149,281,560 Vacant SF 19,768,722 Percent Vacant 13.2% SF Under Construction 285,600 2011 Net Absorption 5,846,600 2012 Net Absorption 492,997 Avg. Annual Absorption (11-12) 3,169,799 %Vacant 36 Months @ Avg. 6.9%

  9. BIG DEALS Industrial Owens Corning (Insulation and Roofing maker) Airport/North Clayton Ind.  1,044,288 SF  8095 McLarin Road  Relocation / Expansion (from 2 nearby buildings at 1200 Oakley Industrial Blvd.)  Owner: USAA Real Estate Company  Leasing Company: Brian Cardoza of Prologis  Tenant Representatives: Paul Roeser, Bob Robers & Ryan Wood of JLL

  10. BIG DEALS Industrial Nestle Purina Petcare South Atlanta  448,172 SF  5005 Terminus Drive  New  Owner: Hodges MD Enterprises  Leasing Company: Chet Koenig of Avison Young  Tenant Representative: Blaine Kelley of CBRE

  11. BIG DEALS Industrial Carter’s S Clayton/Henry Cnty Ind.  311,000 SF  Space Center Building  Expansion (216,000 SF)  Owner: Space Center Atlanta  Leasing Company: Greg Haynes & Todd Barton of CBRE  Tenant Representative: Blaine Kelley of CBRE

  12. I-20 W/FULTON INDUSTRIAL SUBMARKET D Industrial Total SF 89,265,098 Vacant SF 12,235,679 Percent Vacant 13.7% SF Under Construction 653,484 2011 Net Absorption (206,811) 2012 Net Absorption 1,204,480 Avg. Annual Absorption (11-12) 498,835 %Vacant 36 Months @ Avg. 12.0%

  13. BIG DEALS Industrial New Breed Logistics I-20W/Fulton Industrial  439,487 SF  5400 Fulton Industrial Blvd.  New  Owner: FIB Grocer CDP LLC  Landlord Representative: Scott Plomgren of Colliers International  Tenant Representative: Dan Rose of Cassidy Turley

  14. METRO ATLANTA MARKET D Retail Total SF 350,320,885 Vacant SF 35,322,718 Percent Vacant 10.1% SF Under Construction 367,061 2011 Net Absorption 473,213 2012 Net Absorption 1,849,498 Avg. Annual Absorption (11-12) 1,161,356 %Vacant 36 Months @ Avg. 8.8%

  15. BUCKHEAD SUBMARKET D Retail Total SF 13,189,767 Vacant SF 1,021,267 Percent Vacant 7.7% SF Under Construction 0 2011 Net Absorption (275,716) 2012 Net Absorption 375,163 Avg. Annual Absorption (11-12) 49,724 %Vacant 36 Months @ Avg. 6.6%

  16. CENTRAL PERIMETER SUBMARKET D Retail Total SF 10,640,265 Vacant SF 896,650 Percent Vacant 8.4% SF Under Construction 0 2011 Net Absorption 97,589 2012 Net Absorption 220,506 Avg. Annual Absorption (11-12) 159,048 %Vacant 36 Months @ Avg. 3.9%

  17. GA 400 SUBMARKET D Retail Total SF 34,007,309 Vacant SF 3,525,777 Percent Vacant 10.4% SF Under Construction 9,977 2011 Net Absorption 286,328 2012 Net Absorption 189,366 Avg. Annual Absorption (11-12) 237,801 %Vacant 36 Months @ Avg. 8.3%

  18. NORTH COBB SUBMARKET D Retail Total SF 41,896,805 Vacant SF 4,042,147 Percent Vacant 9.6% SF Under Construction 449,388 2011 Net Absorption (159,426) 2012 Net Absorption 390,366 Avg. Annual Absorption (11-12) 115,470 %Vacant 36 Months @ Avg. 8.8%

  19. MARKET UPDATE | 2012 Office Current Future % Vacancy Market Conditions Market Conditions 36 Months Average Metro Atlanta 17.3% Downtown 23.5% Midtown 14.3% Buckhead 12.0% Northwest 18.0% Central Perimeter 15.2% North Fulton 19.9%

  20. MARKET UPDATE | 2012 Industrial Current Future % Vacancy Market Conditions Market Conditions 36 Months Average Metro Atlanta 9.0% Northeast 7.1% South Atlanta 6.9% I-20 W/Fulton Ind. 12.0%

  21. MARKET UPDATE | 2012 Retail Current Future % Vacancy Market Conditions Market Conditions 36 Months Average Metro Atlanta 8.8% Buckhead 6.6% Central Perimeter 3.9% Georgia 400 8.3% North Cobb 8.8%

  22. I. National Economy II. Atlanta Economy III. Market Update IV. Ackerman & Co. Update V. Conclusions

  23. 2012 YEAR IN REVIEW D Ackerman & Co. Goals  Lease 800,000 SF in existing portfolio › 68% Achieved − Mozley Finlayson 35,000 SF − McGriff Siebel 62,000 SF − Shorter College 27,000 SF − Northside Hospital 12,000 SF − Other deals 404,000 SF TOTAL 540,000 SF

  24. 2012 YEAR IN REVIEW D Ackerman & Co. Goals  Lease 800,000 SF in existing portfolio › 68% Achieved  Acquire 4 new assets › 100% Achieved

  25. 2012 YEAR IN REVIEW D Acquisition Highlights Academy Warner Robbins  January 2012  $3.4 MM  62,000 SF

  26. 2012 YEAR IN REVIEW D Acquisition Highlights Winn Medical Center  March 2012  $3.6 MM  65,200 SF

  27. 2012 YEAR IN REVIEW D Acquisition Highlights Westside Center  December 2012  $5.8 MM  60,458 SF

  28. 2012 YEAR IN REVIEW D Acquisition Highlights Norcross Center & Brook Hollow Business Park  January 2013  $10.3 MM  322,158 SF

  29. 2012 YEAR IN REVIEW D Ackerman & Co. Goals  Lease 800,000 SF in existing portfolio › 68% Achieved  Acquire 4 new assets › 100% Achieved  Sell 4 new assets › 50% Achieved

  30. 2012 YEAR IN REVIEW D Dispositions Highlights Academy Warner Robbins  November 2012  $12 MM

  31. 2012 YEAR IN REVIEW D Dispositions Highlights Camp Creek III  January 2012  $8.8 MM

  32. 2012 YEAR IN REVIEW D Ackerman & Co. Goals  Lease 800,000 SF in existing portfolio › 68% Achieved  Acquire 4 new assets › 100% Achieved  Sell 4 new assets › 50% Achieved  Develop 2 new medical centers › 50% Achieved

  33. 2012 YEAR IN REVIEW D Under Construction Henry Physician Center  December 2012  60,000 SF MOB

  34. 2012 YEAR IN REVIEW D Ackerman & Co. Goals  Lease 800,000 SF in existing portfolio › 68% Achieved  Acquire 4 new assets › 100% Achieved  Sell 4 new assets › 50% Achieved  Develop 2 new medical centers › 50 % Achieved  Grow brokerage volume by $2MM › 100% Achieved

  35. 2012 YEAR IN REVIEW D Ackerman & Co. Goals  Lease 800,000 SF in existing portfolio › 68% Achieved  Acquire 4 new assets › 100% Achieved  Sell 4 new assets › 50% Achieved  Develop 2 new medical centers › 50 % Achieved  Grow brokerage volume by $2MM › 100% Achieved  Add 500,000 SF of management and leasing › 160% Achieved; added more than 800K SF

  36. 2013 Goals: D Ackerman & Co.  Lease 800,000 SF in existing portfolio.  Make four new acquisitions.  Sell four assets.  Develop two new medical buildings.  Grow brokerage volume by $2MM.  Add 500,000 SF of management and leasing.

  37. I. National Economy II. Atlanta Economy III. Market Update IV. Ackerman & Co. Update V. Conclusions

  38. CONCLUSIONS . Office  Atlanta office absorption is coming back.  Jobs are returning (even construction) and those people need work space.  Short-term, no T.I. renewals are still common; but increasingly some tenants are choosing to go long because terms are not getting better.  Debt and equity are plentiful  Keys to successful acquisitions: › Fundamentally good real estate › Good basis › Current income

  39. CONCLUSIONS . Industrial  Absorption is positive two years in a row – but a few big deals still carry too much impact.  Demand is being driven by GDP growth and exports.  Functional product at distressed pricing is hard to find; must have motivated seller and under leased product.  Housing recovery will provide small tenant absorption.  Development is occurring.

  40. CONCLUSIONS D Retail  It is very difficult to make broad, accurate conclusions about retail.  The credit tenant market and grocery-anchored retail are at all time high.  Smaller, simpler projects are doing better.  Key to retail investment are: › Good location › Great parking › Food, entertainment, and low-price point merchants › Barriers to entry; intown preferred

  41. ON THE ECONOMIC, BUSINESS & POLITICAL ENVIRONMENT Roger Tutterow, Ph.D. Mercer University Tutterow_RC@Mercer.edu

  42. Question #1: 42 months into a recovery and we are still talking about "double dips" - why is the economy so sluggish and when will it turn around?

  43. GDP vs. Final Sales

  44. Contributions To GDP Growth GDP = Consumption Gross Net Exports Government Investment 2011:Q4 4.1 1.45 3.72 -0.64 -0.43 2012:Q1 2.0 1.72 0.78 0.06 -0.60 2012:Q2 1.3 1.06 0.09 0.23 -0.14 2012:Q3 3.1 1.12 0.85 0.38 0.75 Gross Nonresidential Residential Inventory Investment = 2011:Q4 3.72 0.93 0.26 2.53 2012:Q1 0.78 0.74 0.43 -0.39 2012:Q2 0.09 0.36 0.19 -0.46 2012:Q3 0.85 -0.19 0.31 0.73 Source: Bureau of Economic Resource

  45. Institute of Supply Management’s “PMI”

  46. Consumer Sentiment

  47. Consumer Sentiment 100 3Q-07 4Q-07 90 1Q-08 2Q-08 3Q-08 80 4Q-08 1Q-09 70 2Q-09 3Q-09 4Q-09 60 1Q-10 Index of Consumer Index of Current Index of Consumer 2Q-10 Sentiment Economic Conditions Expectations 3Q-10

  48. Retail Sales

  49. Leading Economic Indicators (source: Conference Board, % change in last 6 months) 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% -14% Nov-04 Mar-05 Nov-05 Mar-06 Nov-06 Mar-07 Nov-07 Mar-08 Nov-08 Mar-09 Nov-09 Mar-10 Nov-10 Mar-11 Nov-11 Mar-12 Nov-12 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12

  50. Question #2: If the economy is truly growing, why is job growth so low?

  51. Change in Employment (non-farm payrolls) 600 500 400 300 200 100 0 -100 -200 -300 -400 -500 -600 -700 -800 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12

  52. U.S. Average Labor Participation Rate

  53. Employment By State (2009 to 2010) -3% -2% -1% 0% 1% 2% 3% North Dakota DC Alaska Texas Indiana Massachusetts Vermont West Virginia Kentucky Pennsylvania New York Arkansas South Dakota Michigan Tennessee Rhode Island Maryland Virginia Montana South Carolina Nebraska New Hampshire Mississippi Wisconsin Maine Utah Iowa Minnesota Oregon Hawaii Illinois Ohio Louisiana Alabama Delaware Oklahoma New Jersey Florida Colorado Connecticut Idaho North Carolina Wyoming New Mexico California Missouri Georgia Kansas Washington Arizona Nevada

  54. State Employment (2010 to 2011) -2% -1% 0% 1% 2% 3% 4% 5% 6% North Dakota DC Utah Texas Michigan Tennessee Colorado New York Louisiana Oklahoma Minnesota Indiana Washington Maryland Virginia Alaska Kentucky Pennsylvania North Carolina South Carolina Florida Georgia Oregon Wyoming Arizona West Virginia Connecticut Ohio Illinois California Hawaii Deleware South Dakota Kansas Nevada Vermont Massachusetts Iowa Idaho Wisconsin Nebraska New Hampshire Rhode Island New Jersey New Mexico Maine Missouri Mississippi Arkansas Alabama Montana

  55. State Employment (2011 to 2012) -2% -1% 0% 1% 2% 3% 4% 5% 6% 7% North Dakota Oklahoma Utah Texas Arizona Kentucky Louisiana Indiana Colorado Washington California Idaho Ohio Hawaii New York Tennessee South Carolina Georgia Minnesota Maryland Michigan New Jersey Virginia Massachusetts Vermont Dist of Col North Carolina Iowa Florida Nebraska Kansas Oregon Nevada Montana Wyoming Pennsylvania Arkansas Illinois South Dakota Alabama Missouri Connecticut Delaware Alaska New Hampshire West Virginia Maine Mississippi New Mexico Wisconsin Rhode Island

  56. Change in Employment: GA

  57. Change in Employment: GA & ATL

  58. Employment Change: GA 12% Gainesville 10% 8% Recovery 6% Athens Hinesville 4% Macon Savannah Brunswick Valdosta Atlanta Columbus Dalton Albany 2% Augusta Rome Warner Robins 0% -25% -20% -15% -10% -5% 0% Recession

  59. Job Grow th by Sector (y/y though August 2012)

  60. Question #3: Oil prices have been falling as of late. Is that the new normal? And, does that take all the inflation worries off the table?

  61. Prices: What Happened to Deflation?  CPI was flat in December, after being down 0.3% in November and up 0.1% in October.  Core up 0.1% in December and November, after being up 0.2% in October.  Overall CPI up at an 1.7% annual rate over last 12 months. Core up 1.9% over same period.  Energy component up 0.5% over last 12 months.

  62. Core CPI 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12

  63. Crude Oil (Spot Price, WTI)

  64. PPI Commodity Index 220 200 180 160 140 120 100 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

  65. Question #4: "Operation Twist" has been extended until the end of 2012. Can the "Fed" save the day and where do interest rates go from here?

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