Cousins Seeing 30% Rent Premium In Buckhead Portfolio
Despite some tenant loss, one of Atlanta's largest office landlords is still seeing a big run-up in Buckhead office rents.
Cousins Properties CEO Larry Gellerstedt said rents in Buckhead, where Cousins commands a 20% market share of the more than 16M SF of Class-A space, are 32% higher than the average Class-A space in the market during a stock analyst call last week. Average Class-A asking rents in metro Atlanta were $27.52/SF and more than $34/SF in Buckhead, according to a recent Colliers International report.
Gellerstedt said those Buckhead rents are being achieved even though the firm is losing some tenants. Officials expect both CBRE and Bain & Co. will leave Terminus 100, vacating more than 100K SF there. Gellerstedt said Cousins itself is moving its headquarters from 191 Tower to 3344 Peachtree.
In many ways, Gellerstedt's assessment of Buckhead was similar to comments recently made by Highwoods Properties CEO Ed Fritsch to analysts.
“We continue to feel very good about Buckhead,” Gellerstedt said. ”We have got very good activity on the other floor there, the 17th floor. It’s one of the best floors you could find in Buckhead. So we are very optimistic about our opportunity there.”
Even with Three Alliance delivering on spec in Buckhead, Gellerstedt noted that it is at least half pre-leased at the moment.
“We think the supply demand fundamentals in Buckhead will be very attractive for the next few years,” he said. "There is really not another project that we could see actually kicking off and breaking ground over the next six months to 12 months."
Cousins officials were bullish overall on Atlanta activity.
“There are some several very large RFPs that are out there, multiple hundreds of thousands of square feet that are folks from the outside coming in,” Cousins chief operating officer Colin Connolly said. "And so we continue to see the high quality of life affordability, Georgia Tech, etc., that continue to be very strong draws for corporate America."
Other bits of news from the Cousins call include:
- Both the American Cancer Society Center and Emory Pointe mixed-use are under contract to undisclosed buyers.
- Its 8000 Avalon office project, anchored by Microsoft and being built in a joint venture with Hines Interests, is seeing between $8/SF and $10/SF rent premiums over any other Alpharetta office project. As Gellerstedt said, those are close to the rents seen in Buckhead.
- Cousins broke ground on 120 West Trinity, an $85M mixed-use project in Decatur in a joint venture with AMLI Residential that will include 330 apartment units, 19K SF of retail and 33K SF of office. The project is slated to deliver in the beginning of 2019.