Office Highlights

Atlanta . Q3 2011

Cumulative leasing activity slower so far in 2011

Metro Atlantas leasing activity has been trailing last years pace, but many deals are still getting done as tenants play musical chairs to leverage discounted pricing conditions. At the end of third quarter 2011, 7.0 million square feet has been transacted for so far this year across Atlanta. As is typical, tour velocity moderated during third quarters slow summer months, but is expected to pick up near year-end. The unemployment rate sits stubbornly above 10.0 percent and the overall job recovery is stuck in neutral as uncertainty about the U.S. and global economies remain. There have been pockets of improvement, particularly in the high tech, healthcare and insurance sectors, where some expansion has been occurring in the last nine months. However, with no game-changing factors on the horizon, market demand is likely to see only incremental improvements for a handful of submarkets in the near term. Rental rates have been and should continue to fluctuate along the bottom of the trough for most properties in the coming months. After rising in three consecutive quarters, the level of office sales activity was mostly unchanged during third quarter. The recession dried up capital markets activity for several years, but the last 12 months have seen total sales volume increase from those lows as investment dollars come off of the sidelines. Much of the recent activity has centered on distressed assets, but some middle market buildings and core stable assets have found buyer-seller agreement on pricing as well. Leasing activity Buckhead Sun Trust Robinson Humphrey is consolidating a secondary Downtown location to the Atlanta Financial Center South Tower in a new lease for 135,000 square feet. Also at Atlanta Financial Center, Morris Manning & Martin renewed its lease with a small expansion for a total footprint of 120,000 square feet in the East Tower. In a preparation for growth, State Bank Financial Corporation is relocating and expanding by several floors to 73,000 square feet with prominent signage at the Lenox Building. Downtown At Sun Trust Plaza, McKenna Long & Aldridge will maintain its 163,000-square-foot lease, committing to a long-term renewal through 2028. Engineering group, Newcomb & Boyd, signed an extension for 35,000 square feet at Sun Trust Plaza Garden Offices, where it will maintain the same footprint.

Tour activity

Leasing volume

Rents

Concessions

Sales volume Construction deliveries Construction starts

Arrows represent change from prior quarter

Midtown Arnall Golden Gregory renewed for 122,000 square feet at Atlantic Station, 171 17th Street, giving back 13,000 square feet in a reconfiguration of space that will allow them to bring additional attorneys on board. SunTrusts Atlanta Bank will be moving to Campanile Plaza, taking down 95,000 square feet in a contraction out of a Downtown building that it sold to Georgia State University. The Proscenium has lured Paul Hastings Janofsky and Walker from Bank of America Plaza to a new lease for 75,000 square feet; the law firms footprint will remain roughly the same. Central Perimeter Popeyes parent company, AFC Enterprises, is relocating within the submarket to North Terraces, where it will expand by 20,000 square feet with its new lease totaling 56,000 square feet. Also at North Terraces, technology group, Ventyx, is moving from the Cumberland area into 55,000 square feet in a lease that includes a 10,000-square-foot expansion. Several new mid-sized transactions were completed at Perimeter Crossing, including Apex Systems, Childrens Orthopedics of Atlanta and Walgreens Corp. for a total of 29,000 square feet. North Fulton New ProSys Corporation is relocating from a flex building to The Corners Office Park in a new lease for 43,000 square feet; the IT consultancy group will grow by about 10,000 square feet when it moves. At Brookside 300, Grainger extended a three-year lease for 30,000 square feet and gave back 6,000 square feet of space. Namasco Corporation renewed and expanded at Mansell Overlook 500, its new footprint totaling 29,000 square feet. Northlake At Century Center, the U.S. Federal Bureau of Investigation renewed its lease for 136,000 square feet.

Jones Lang LaSalle Atlanta Office Highlights Q3 2011 2

Northeast Rock-Tenn Corporation is expanding outside of its owned campus in Norcross and has newly leased 70,000 square feet at Hampton Green. At Peachtree Ridge, Pond & Company renewed its lease for 37,000 square feet. Northwest Graphic Packaging will be relocating from several older flex buildings in Marietta to 110,000 square feet of Class A space at Riveredge Summit. The top two floors of Platinum Tower have been leased by First Option Mortgage, which will maintain the same footprint, but gain building signage as part of the new deal. Wells Fargo expanded by 22,000 square feet when it consolidated from another location as part of a renewal for 38,000 square feet at Overlook III. Tenants in the market Buckhead Ameriprise Financial continues to consider expansion options by 60,000 square feet. Morgan Stanley is still in the market with a 60,000-square-foot requirement. Liberty Mutual is shopping for 40,000 square feet to house its IT group. Downtown Balfour Beatty Infrastructure is shopping for 20,000 square feet. Cox Curry is still in the market with a need for 16,000 square feet. Gude Management is considering a 10,000-square-foot expansion. Midtown The Coca-Cola Company has 125,000 square feet of temporary space under consideration in anticipation of a massive renovation project slated for its 1 Coca-Cola Plaza headquarters building. The U.S. FDIC is still in the market with an 80,000-square-foot requirement. Clarkston Consulting is shopping for 7,000 square feet. Central Perimeter AmeriCold Logistics remains in the market with a 75,000-square-foot requirement and is also considering Buckhead and North Fulton. Beazer Homes is in the market for 60,000 square feet. GE is looking for 60,000 square feet. Amerisave has a 50,000-square-foot requirement. North Fulton Verint Systems is currently shopping for a 120,000-square-foot requirement. CareerBuilder.com entered the market and is looking for 100,000 square feet. RedPrairie is still out for 100,000 square feet.

Northlake Emory Orthopaedics and Spine Center entered the market with a 100,000-square-foot requirement. Georgia Perimeter College has 20,000 square feet under consideration. Education Affiliates is shopping for 20,000 square feet. Northeast Primerica is still in the market with a 300,000-square-foot requirement. The Muscular Dystrophy Association continues to shop for 35,000 square feet. The Sanford-Brown Institute is looking for 30,000 square feet. Northwest IBM will be consolidating its footprint and continues to look for up to 200,000 square feet. Looking for 150,000 square feet, Travelport is out in the market. Manhattan Associates is still in the market with a requirement for 120,000 square feet. Gentiva Health Services is looking for 100,000 square feet . Sales activity Midtown In July 2011, the City of Atlanta sold 675 Ponce de Leon Avenue (2.0 million square feet, Class B) to Jamestown Properties for $15.4 million (nearly $8 per square foot). The latter agreed to pay an additional $11.6 million if it reaches certain milestones tied to the projects success in the coming years. North Fulton Rosemount Realty bought a four-building portfolio (399,641 total square feet, Class A) from LaSalle Investment Management in July 2011 for $53.5 million ($135 per square foot). The properties were 6455 East Johns Crossing, 3585 Engineering Drive, 6625 The Corners Parkway and 5707 Peachtree Parkway. Northwest Highwoods Properties Inc. purchased 3350 Cumberland Circle SE (502,519 square feet, Class A) for $86.3 million ($160 per square foot) from GE Asset Management in September 2011. Abbott Products Incorporated sold 793 Sawyer Road (112,000 square feet, Class A) to Osmotica Pharmaceutical Corporation for $3.3 million ($29 per square foot) in August 2011. Construction activity At the end of third quarter 2011, Atlanta had no new office product under construction.

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