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ATLANTA-Despite a strong showing throughout 2007, real estate experts are projecting that 2008 will not be as strong due to the questionable economic outlook. “Nevertheless, as the fastest-growing city in the country and the number one location under consideration for young college professionals, we fully expect the Atlanta office market to have positive absorption in 2008 unless there is a severe economic downturn,” according to a Richard Bowers & Co. Q4 report for the Atlanta office market.

Richard Bowers is projecting that occupancy rates will likely increase by a small percentage with the limited number of deliveries projected for 2008. Rental rates, which have been relatively stable in comparison to other US markets, are also expected to move upwards possibly by as much as $1 per sf.

According to Richard Bowers, the office market experienced 75,300 sf of positive absorption during the fourth quarter. Urban submarkets absorbed 105,873 sf, while the suburbs had negative absorption of 30,573 sf. Average rental rates across all Atlanta submarkets increased modestly from $21.09 in the third quarter to $21.15 in the second quarter.

According to a Grubb & Ellis Q4 office market report for the metro area, the office market is feeling the effects of the housing credit crunch with several related operations being downsized or terminated. Case in point, HomeBanc Mortgage Corp. defaulted on a lease of 160,000 sf at Perimeter Summit upon filing bankruptcy. Home Capital Inc. also vacated three floors at Palisades. With a need for capital, Century Pacific Mortgage Corp. sold its multi-tenant, 51,000-sf building at Century Lakeview Park in Norcross but still occupies a portion of the building.

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