Commercial Real Estate in Macon, GA
Larry E. Crumbley, CCIM, CPM, SIOR, CRE
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Office Space Market Report - 2010
Choose from one of these market reports:
The Middle Georgia
Commercial Real Estate Advisor
2010 Office Market Overview
Macon, Georgia
In 2009, the Macon, Georgia downtown office market remained stable. The suburban office market occupancy decreased significantly over the period.
New “turn-key” construction costs, including building and land, range from $110 to $150 per square foot for projects under 10,000 square feet. This represents about a 20% decrease over the last 12 to 18 months. With the real estate downturn well underway, landlords are offering aggressive incentives to keep existing tenants and land new tenants. Tenant improvements for existing space vary significantly, but $10.00 per square foot seems to be the average. Tenant finish costs have decreased by about 20% during the last 18 months, but the lack of readily available tenant improvement funds has motivated owners and tenants to utilize creativity such as longer term leases, buy-out options and office configuration flexibility in order to make future tenant improvements more feasible. Since the first quarter of 2008 construction costs have trended downward. This is expected to stabilize in 2010.
The strongest Macon office submarket is the Zebulon Rd./I-475 area. Occupancy in that area has maintained above 95% for the past several years.
| OFFICE SPACE | Low Rental Rate |
High Rental Rate |
Effective Avg. Rental Rate |
Vacancy Rate |
| DOWNTOWN OFFICE | ||||
| NEW CONSTRUCTION | $16.50 | $18.00 | $17.50 | 16% |
| CLASS A | $13.50 | $16.50 | $15.00 | 22% |
| CLASS B | $9.00 | $13.00 | $11.00 | 17% |
| SUBURBAN OFFICE | ||||
| NEW CONSTRUCTION | $17.00 | $20.00 | $18.00 | 45% |
| CLASS A | $14.00 | $19.00 | $17.50 | 18% |
| CLASS B | $10.00 | $14.00 | $12.00 | 32% |
Note: The rents in the table above are based on Full Service. However, numerous combinations of services are quoted in the Middle Georgia market and the terms describing what is included are often confusing, so verification of what rent actually includes when getting quotes is important. Below is a summary of the type of leases, that may be discussed and what they are usually intended to include as part of Landlord obligations along with expected costs.
| Downtown Macon | Suburban | ||
| Property | Max Cont. | Property | Max Cont. |
| 606 Cherry St | 16,000 SF | 1655 Eisenhower Pkwy | 24,779 SF |
| 577 Mulberry St | 7,800 SF | 93 Gateway | 8,000 SF |
| 201 Second St | 8,600 SF | Highridge Center | 10,000 SF |
| 439 Mulberry St | 11,000 | 4885 Riverside Dr | 10,000 SF |
| 5400 Bowman Rd | 26,600 SF | ||
| Lakeside Commons | 18,000 SF | ||
| 3330 Northside Dr | 9,500 SF | ||
Downtown Market
The recent survey of over 900,000 square feet of profiled office buildings in the
downtown Macon area indicated that Macon’s downtown office market incurred a slight
decrease in vacancy rate in 2009. Occupancy for year end 2009 was at 82%. The
recent announcement that the Bibb County Courthouse will not relocate will help keep
the Macon Downtown office market stable. Additionally occupancy in that area is
expected to increase as an anticipated “reshuffling” of office businesses continues to
occur.
Suburban Market
The suburban office market vacancy rate increased from 21% in 2008 to 29% in 2009.
Fickling & Company’s recent survey, of almost 1,000,000 square feet of suburban
office space in Bibb County, shows a negative absorption of approximately 50,000 sf
from 2008 to 2009. Approximately 5 percentage points of the 29% vacancy in the
suburban Macon office market is attributed to the new 74,000 sf four- story multi-tenant
building, located at 4055 Lakeside Commons Drive. Phase I construction on a new
80,000 square foot office park, Northside Crossing, located at Northside and Forest Hill
Road, was completed in 2008 with construction of 6 new buildings. Phase 1 of the
project comprises over 25,000 square feet. Both build-to-suit lots and spec buildings
are available. This should further enhance the impact of the I-75/North Macon submarket.
Additionally, plans continue to move forward for a small office development
which is part of a multi-use project on Bowman Road. An 8,000 square foot spec
office building has already been constructed, and the development can handle up to an
additional 100,000 square feet. Bass Plantation Development has 3 buildings
complete or under construction totaling 100,000 sf with land available for an additional
190,000 sf. This has added to other choices of build-to-suit projects which include
Arkwright Landing, Elnora Drive Developments, 4931 Riverside Drive, Northcrest
Office Park, Preston Park and 5444 Riverside Drive. There are also several other
office developments that are in the planning stages.
Looking forward, the suburban office market is not expected to show significant signs
of recovery during the next 18 to 24 months. Most of the new office leases in both
suburban and downtown markets were from relocation and expansion of existing office
users.
| Explanation of Lease Terminology - Landlord Obligations | |||||
| Full Service Lease |
Gross Lease | 3 Net Lease | Absolute 3 Net |
Comments | |
| Janitorial service | $0.95 | $0.00 | $0.00 | $0.00 | Varies |
| Utilities | $1.75 | $0.00 | $0.00 | $0.00 | |
| Light bulbs, plumbing, electrical | $0.10 | $0.10 | $0.00 | $0.00 | |
| HVAC repairs | $0.08 | $0.08 | $0.00 | $0.00 | Varies |
| Taxes | $1.10 | $1.10 | $0.00 | $0.00 | |
| Insurance | $0.18 | $0.18 | $0.00 | $0.00 | |
| Common Maintenance | $0.25 | $0.25 | $0.00 | $0.00 | |
| Roof and Structure | Landlord | Landlord | Landlord | Tenant | |
| Office Occupancy History | ||
| Year | Suburban | Downtown |
| 2003 | 81% | 83% |
| 2004 | 83% | 84% |
| 2005 | 81% | 82% |
| 2006 | 82% | 85% |
| 2007 | 80% | 80% |
| 2008 | 79% | 82% |
| 2009 | 71% | 82% |
^ Top
Office Bldg with 927 to 3359 sf available. Class A.
A 23,000 sf building with 3,000 sf climate controlled storage available and approximately 300 sf office area and a restroom.
Publix anchored center with 2,300 to 15,000 sf spaces available. Some are easily converted to office use. Prices range from $12 to $22 psf. Second floor space is 3000 to 15,000 sf and is served by an elevator.