Broker Sees Office Leasing Turnaround

"We went through an economic slowdown in the first quarter, but I think the market is in pretty good condition right now," Giordano, director of leasing at Lincoln Property Co., tells Globest.com. "We think it's starting to turn around."

Atlanta has both a Midtown and a Downtown market. Taking together, however, the central business district had an 8% vacancy rate, an improvement from almost 10% last year, according to numbers supplied by Richard Bowers & Co.

"I think both markets (Midtown and Downtown) are starting to pick up," says Giordano.

Midtown often appeals to office users who like being closer to trendy areas such as Buckhead, while Downtown often appeals to government offices or law firms that want to be near the courthouse.

Rates for class A are running "anywhere from $23 to $26, and even pushing $30," says Giordano. Class B space is more like $19 per sf to $22 per sf in both areas.

At the Equitable Building, owned and managed by Lincoln, the rates are about $20 per sf to $23 per sf. The building is 93% occupied, but the Federal Reserve is taking its 100,000 sf to its own building later this year.

Giordano does not seem concerned because large-scale users are still taking space in Midtown and Downtown. The pending merger of either First Union Corp. or SunTrust Bank with Wachovia Bank could have a large impact, but Giordano says "no one knows yet how that thing will play out."

Wachovia leases about 380,000 sf at 191 Peachtree. But it has seven years left on its lease.

The start-up of Ted Turner's planned office tower Downtown was recently put off for two years, but that had little impact on the office market because it features little speculative space.

Some observers say Midtown has emerged as outdistancing Downtown in going farther towards a viable commercial and residential atmosphere, a factor that influenced Chicago-based pension fund Rreef Funds to sell its Downtown property and buy a 410,000 sf office tower under construction in Midtown.

Giordano says both areas should do well, but particularly Downtown because there are no major new offices planned--not known ones anyway--at this time.