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  • COLL IERS INTERNATIONAL 2009 U.S. Real Estate Review

    A SURVEY OF COMMERCIAL REAL ESTATE MARKETS

    www.colliers.com

  • Colliers Research Services Group is recognized as a knowledge leader in thecommercial real estate industry, and provides clients with valuable marketintelligence to support business decisions. Colliers researchers providemulti-level support across all property types, ranging from data collectionto comprehensive market analysis.

    Colliers Research has developed powerful technological tools to provideclients with valuable market intelligence. Our expansive databases housedetailed information on properties nationwide, including historical supply,demand, absorption data, and transaction comparables. Research uses thisinformation to produce quarterly surveys of office and industrial marketsin over 70 North American metropolitan areas.

    Colliers research reports provide standardized information for each market.Market Highlights reports based upon quarterly surveys include inventory,vacancy, absorption and rental rates in side-by-side comparisons forNorth American markets as well as quarter-to-quarter comparisons andaggregated national statistics. Investment sales prices and cap rates arereported as well.

    Research groups across the country also have expertise in location andsite analysis, geographic information systems, and financial modeling.To ensure that our clients real estate decisions are thoroughly informed,our researchers perform numerous financial analyses. Options includecomprehensive occupancy cost comparisons for potential lease locationsand complex lease vs. own scenarios.

    The information contained herein has been obtained from sources deemed reliable. While every reasonableeffort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for anyinaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of thematerial contained in this report.

    Colliers International is a worldwide affiliation of independently owned and operated companies.

    COLLIERS RESEARCH

  • TABLE OF CONTENTS

    UNITED STATES REAL ESTATE REVIEW

    Message from the Executive Vice President, Market & Economic Research 1

    U.S. NATIONAL MARKETS APPENDICES

    U.S. Office Market 68U.S. Industrial Warehouse Market 69U.S. Retail Centers 70U.S. Investment Sales Market 71 75Glossary 76Colliers U.S.A. Office Locations 77

    U.S. CITY ANALYSES AND FORECASTS

    Atlanta, GA 5Bakersfield, CA 6Baltimore, MD 7Boise, ID 8Boston, MA 9Charleston, SC 10Charlotte, NC 11Chicago, IL 12Cincinnati, OH 13Cleveland, OH 14Columbia, SC 15Columbus, OH 16Dallas/Ft. Worth, TX 17Denver, CO 18Detroit, MI 19Fairfield, CA 20Ft. Lauderdale/Broward County, FL 21Fresno, CA 22Greenville, SC 23Hartford, CT 24Honolulu, HI 25Houston, TX 26Indianapolis, IN 27Jacksonville, FL 28Kansas City, MO-KS 29Las Vegas, NV 30Little Rock, AR 31Los Angeles, CA 32Los Angeles/Inland Empire, CA 33

    Louisville, KY 34Memphis, TN 35Miami/Dade County, FL 36Milwaukee, WI 37Minneapolis, MN 38Nashville, TN 39New Jersey Central 40New Jersey Northern 41New York, NY 42 44Oakland, CA 45Orange County, CA 46Orlando, FL 47Philadelphia, PA 48Phoenix, AZ 49Pleasanton/Walnut Creek, CA 50Portland, OR 51Raleigh/Durham, NC 52Reno, NV 53Sacramento, CA 54San Diego, CA 55San Francisco, CA 56San Francisco/San Mateo Peninsula, CA 57San Jose/Silicon Valley, CA 58Santa Rosa/Sonoma County, CA 59Seattle/Puget Sound, WA 60St. Louis, MO 61Stockton, CA 62Tampa Bay, FL 63Washington, DC 64 65West Palm Beach, FL 66

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    www.colliers.com

  • How deep and how long are the questions repeated almostdaily by all those in the real estate industry? This yearsReal Estate Review shows income-producing real estateweakened considerably during the latter half of 2008;evidence thus far in 2009 suggests the downwardmomentum at year-end has accelerated and is almostguaranteed to continue for the remainder of 2009.

    At times like this good market insight has never beenmore valued. This report attempts to synthesize themany thousands of leases signed, properties traded anddevelopments undertaken to give the reader a broad senseof the current, and more importantly,future direction of the marketplace inwhich we operate. The outlook hasnever been so daunting; having abetter understanding of the drivers ofdemand and challenges ahead will helpnavigate through what promises to bevery treacherous waters.

    Credit, credit and credit were the topthree issues reported by almost everymarket in the country. Businesses,consumers and investors are thirsting forthis critical ingredient to a thriving androbust economy. Housing remains a keyconcern but layoffs and job losses arequickly becoming the top issue for real estate ownersand investors. Jobs and job growth are critical for income-producing real estate; as job losses mount, the outlook forreal estate becomes more uncertain.

    For the commercial real estate sector, two overridingissues will dominate the balance of 2009 and quitepossibly well into 2010. To some extent they areinterrelated but deteriorating fundamentals and theability to refinance maturing debt will be key themesthat will be an immense challenge for investors andlenders alike. Fundamentals will weaken significantlywith vacancies for office, retail and industrial real estateexceeding the highs of the 2001-2003 period and will getvery close to the highs experienced during the early1990s. Because occupancies will be lower and rentsreduced, refinancing will be increasingly difficult with theneed for substantial equity infusions for many of thetransactions done since 2005-2006. Lenders have alreadyincreased underwriting standards and will be sure to only

    apply stricter lending standards as the economy deteriorates.This will put enormous downward pressure on propertyprices, further reducing the ability of owners to refinance.

    The outlook has seldom looked as ominous but whetherthe economy stabilizes this year or next, this recession willend and the next period of expansion will begin. Alreadythere are signs the next up-cycle will be very differentfrom the last. Less leverage will be a certainty, limitinganother round of cap rate compression.Consumer spendingwill be far more subdued as debt reduction will remaina top priority. Corporations will be far more careful with

    working capital meaning expansionwill only take place after carefulconsideration. As always, prime realestate will be highly coveted whilemarginal locations will languish untilan alternative use can be found.Previously high cost centers will struggleas corporations seek out the most costcompetitive alternative.

    A newmindset similar to that experiencedduring the post-Depression era will beevident in many parts of the country.This movement toward prudence willnot extend indefinitely but real estateinvestors should be cognizant of a more

    conservative mindset for a considerable period of time.The seeds of growth have already been planted with theunprecedented response by policymakers both in the U.S.and around the world. Fiscal and monetary policies arebeginning to take effect as demonstrated by a markedimprovement in the commercial paper market as well asfor corporate bonds.

    This is not to suggest the coming months and quarterswont be full of tension and anxiety they will.Whenever the economy slows substantially, as recent datahas shown, there is good reason to be cautious.All of us at Colliers are available to help you navigatethrough this challenging period.

    Ross J. MooreExecutive Vice President,Market and Economic ResearchColliers International U.S.A.ross.moore@colliers.com

    The Colliers U.S. RealEstate Review providesmarket by market dataand commentary for59 metropolitan areasacross the country.

    The result is one of themost comprehensivereviews of its kind.

    www.colliers.com 1

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    SEEKING CLARITY IN THE MIDST OF A PROLONGED RECESSION

  • U.S. CITY ANALYSES AND FORECASTS

    www.colliers.com

  • ATLANTA, GACO L L I E R S I N T E RNAT I ONA L l U . S . R E A L E S TAT E R E V I EW 2 0 0 9

    CONTACT:Mike Spears mike.spears@colliers.com l RESEARCH: Scott Amoson scott.amoson@colliers.com 5

    OFFICE

    Office absorption finished 2008 in slightly positive territory.Despite the tough economy, Atlanta gained just under 100,000 SFof office tenants for the year.

    The top leases were Deloitte & Touches 247,700 SF renewal andexpansion Downtown, AT&Ts renewal of 221,000 SF in Northlakeand Primerica Financials 195,200 SF renewal in Northeast Atlanta.

    Atlanta was hit hard by the slowdown in the housing market.Previously known for being one of the nations leaders, the metroAtlanta region saw housing starts drop 88% in the past two years.

    Office construction in Atlanta remained heavily concentrated in theBuckhead and Midtown submarkets. Over 3.3 million SF of officespace was under construction in these two markets at year-end.

    Office Outlook Leasing activity in 2009 will continue to reel from the economicrecession. Absorption will be fairly strong in the first half of2009 thanks to scheduled move-ins, but will anemic in the latter half.

    Job losses will continue to accumulate in 2009. Professional &Business Services and Information & Financial Activities willbe the biggest industry losers affecting office demand.

    Office vacancy will rise over the next few years thanks toover-development in Buckhead and Midtown.

    The implications of Wachovias presence in Atlanta has yet to bedetermined by Wells Fargos buyout of the bank. Wachovia hasover 400,000 SF