FEATURE ARTICLE, DECEMBER 2004

2005 Outlook

ATLANTA

Our field has been quite active, as shopping centers seem to attract significant attention from buyers, thus increasing sales prices. Also, the buying pool was formerly local or regional, and now properties are being sold to buyers from across the United States, especially California, where prices are much higher and yields lower. Owners who have not been sellers in recent years have taken advantage of these prices.

Craig Taylor Senior Associate CB Richard Ellis’ Atlanta office

We believe that retail — multi-tenant to some extent and single-tenant to a higher degree — has fared the best in terms of sales velocity. In many ways, retail is less management-intensive than the competing investment vehicles (multifamily, office and industrial), and thus attracts more buyers from a wider radius. For that reason, it is also easier for syndicators to package and sell portions within a fund (i.e., Tenant-In-Common Fund). Also, the single-tenant is easy for a 1031 investor that desires passive returns.

We are already seeing an emergence of TIC funds (basically syndications per SEC regulations) that have entered the market as buyers. This will only continue to increase in 2005, as it is a fee-generating industry.

On the development side, we see more and more backfills of large boxes such as Wal-Mart and Kmart. In 2005 there also will be more infill renovations and more mixed-use projects, including retail on the bottom and office or condos on the top. Also look for more reverse 1031 exchanges, where a developer buys a piece of land,then sells a property afterwards, next year.

— Craig Taylor, CB Richard Ellis

Joshua Randolph Associate – Retail Investment Sales CB Richard Ellis’ Atlanta office

The outer suburbs of Atlanta have been more active in terms of development and eventual sale. We have traded three properties in Buford alone. Areas such as Dallas, Hiram, Alpharetta and Newnan have experienced retail center sales this year.

In order for the market to improve in 2005, interest rates need to stay low and retailers need to continue to show improved sales.

— Josh Randolph, CB Richard Ellis

Bob Mathews President Colliers Cauble & Company

For Atlanta’s office market to improve in 2005, we will need sustained month-to-month job growth. We also need for the technology sector, along with the service sector, to rebound and begin to add high paying jobs. For the industrial market, 2005 should be another good year given the increase in manufacturing demand and the growth in inventories as reported by various market sources.

With regard to office trends, the window for historically low, long-term rental rates is beginning to close, and most companies will realize that the time to act may have passed, depending upon the submarket, as demand and absorption grow.

The increase in industrial construction costs (steel and concrete) is having a huge effect on new construction and build-to-suits. The existing big box product is now moving briskly as tenants begin to see the benefit of existing product versus new construction, and that will be a significant trend in the market for 2005.

— Bob Mathews, Colliers Cauble & Company

Duke Realty Corporation’s Atlanta construction group is building a 130,000-square-foot build-to-suit facility for Williams Printing, an RR Donnelley Company, in Atlanta. The facility will be located in Duke’s Camp Creek Business Center. Williams Printing facility Williams Printing at Camp Creek Business Center is a state-of-the-art commercial printing complex employing sales, prepress, printing, finishing and distribution professionals. The new facility is expected to be operational in June of 2005. Tom Moran of RR Donnelley Corporate Real Estate and Jay Young of Hailey Realty managed the transaction for Williams Printing. Bruce Logue represented Duke Realty. Camp Creek Business Center is a 400-acre campus capable of accommodating more than 5 million square feet of mixed-use development. Located at the intersection of Camp Creek Parkway and Interstate 285, Camp Creek Business Center is near Hartsfield-Jackson International Airport, Interstates 20, 85 and 75, and less than 5 hours from the port city of Savannah.

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