"It's a very solid asset, class A mid-rise office building withstructured parking right in the heart of Buckhead, which is themost appealing submarket for office product in Atlanta," JeffHanson, president and chief investment officer of Grubb & EllisRealty Investors, tells GlobeSt.com. He adds that part of thebuilding's appeal is its proximity to Lenox Square Mall and theRitz Carlton Hotel, among other high-quality lodging options.

|

One Live Oak, which opened in 1982, was also attractive to thebuyer because of the historical performance of the asset, which hasconsistently maintained high occupancy and solid credit tenants,says Hanson. The building is currently 92% leased, with anchortenants including the Securities and Exchange Commission and theUniversity of Georgia Real Estate Foundation Inc. Rental rates atthe building range between $24 and $25 per sf.

|

According to a second-quarter Marcus & Millichap report theBuckhead/Lenox submarket currently has an 11.8% vacancy rate andthe highest rents in the Metro Atlanta area at $23.35 per sf, a4.1% increase from the same time last year. The submarket is alsoexpecting 625,000 sf of inventory this year, which may cause a risein the vacancy rate to the mid-13% range, says the report.

|

The five new buildings under construction in the Buckhead areadid create a challenge during the marketing of One Live Oak, saysHayes Swann, managing director with DTZ Rockwood, which representedthe seller in the transaction. However, he says, there was verystrong interest in the property, with about 130 confidentialityagreements returned. "It's an A-plus location that will stand wellduring good times and bad," Swann says.

|

G&E is confident that the new product being delivered inBuckhead will not prove a difficult obstacle for One Live Oak. "Thevacancy that is going to occur with the onset of the new productbeing delivered is going to be within that ultra-core, class Aproduct that has a cost basis associated with the [newly] developedproduct," says Hanson. "All those buildings will be asking $10 [persf] more per year than what tenants could occupy our building with.Our rent roll is deeply conducive to maintaining most, if not all,of our tenant base and continue to attract like kind tenants."

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.