Atlanta’s appeal as a destination for corporate relocations is helping to boost its economy and fill office space in locations ranging from Midtown Atlanta to the suburbs. Despite these large corporate move-ins, the office market in metro Atlanta has been showing signs of demand softening – with vacancies up by 2.7% over the past 12 months – as the market continues to grapple with the lingering impacts of the COVID-19 pandemic.
What will it take to keep and attract new tenants in today’s evolving office market?
This challenge was a big topic of discussion at Atlanta Bisnow’s “What’s Driving Atlanta CRE?” event held at the new 712 West Peachtree tower in Midtown Atlanta. Representatives from four Atlanta commercial real estate firms offered their perspectives on the latest CRE trends, with an in-depth discussion on the office sector.
Taylor Smith, Southeast Regional Director for Rubenstein Partners, said COVID-19 impacts have accentuated trends that were already taking shape.
“You can look at COVID as an accelerant,” he said. At a time when more space users are experimenting with hybrid in-office and remote working options for their employees, his team has arrived at a clear conclusion.
“I think the one thing that will stick is a concentration on amenities,” he said.
Cousins Properties EVP Kennedy Hicks agreed. “I’m not convinced that the new normal looks much different than where we were heading pre-Covid. This has given everybody time to reflect on the office space needs for their company.”
She added: “You’ve got to make the environment something where people want to come to work. Companies will continue to focus on using their office space to provide the amenities, the lifestyle and the conveniences employees want.”
These conveniences and amenities can increasingly be found at mixed-use developments offering a variety of both indoor and outdoor amenities.
Ackerman & Co. SVP Steve Langford told the audience about two Atlanta projects that are representative of this trend.
Lee + White, a 433,000-square-foot adaptive re-use development in the West End of Atlanta co-owned by Ackerman and MDH Partners, is home to popular breweries, distilleries, food manufacturers and retailers. In the next phase of the redevelopment now underway, the investment partners are adding 150,000 square feet of creative loft office space that has already attracted a new HQ location for an innovative nanotechnology company.
A major draw for office tenants is the project’s diverse mix amenities, including ½ mile of direct Atlanta BeltLine access and an abundance of outdoor patio and green spaces. The current phase of the development will add more amenities, including a food hall and a great lawn for events and community gatherings.
There is also Six West, a planned $1-billion mixed-use project in the shadow of Hartsfield-Jackson Atlanta International Airport. Steve Langford is the exclusive land broker for the project, designed to be a 24/7 work-live-play destination incorporating Class A office, stores and boutiques, hotels, restaurants, and single-family and multifamily residential.
Langford said the project’s location at the doorstep of the world’s busiest airport combined with the varied amenities – which also include the nearby College Park MARTA rail station and a recreational trail circling the project – should help Six West stand out in its efforts to attract national and international HQ operations.
Taylor Smith pointed to Alpharetta’s Sanctuary Park office complex as another development that has added an array of amenities. A multimillion-dollar capital improvement initiative went into opening the Clubhouse, which offers tenants a food hall, athletic club and training facility. A newly added perk is a micro-mobility program offering tenants e-scooters, e-bikes and traditional bikes to navigate throughout the campus. The property also offers two miles of walking and jogging trails.
‘Firing On All Cylinders’
Since the ‘What’s Driving CRE?” event was held in Midtown in the fast-growing Tech Square corridor, it was only natural that the panelists discussed the emergence of Midtown Atlanta as an increasingly important tech hub benefitting from the resources and talent of Georgia Tech.
High-profile space commitments in Midtown include Google leasing 500,000 square feet at 1105 West Peachtree Street and Microsoft occupying 523,000 square feet at Atlantic Yards, with future plans also calling for the software and technology giant to establish an East Coast headquarters campus at Quarry Yards on the West Side.
While these and other relocations to Midtown including MailChimp’s 300,000 square foot expanded headquarters in the nearby Old Fourth Ward neighborhood are impressive, the Atlanta metro area as a whole is benefitting from high-profile corporate relocations.
“Atlanta is firing on all cylinders,” said Kennedy Hicks. “It’s not just Midtown. Companies will gravitate toward amenities and mixed-use development, and you can find those in Alpharetta at Avalon, in Buckhead [among other submarkets].”
Steve Langford said the influx of corporate relocations is influenced in part by the COVID-19 crisis, which spurred organizations to investigate lower-cost locations for their business operations. “When Covid hit, a number of businesses, particularly in the Northeast, started looking at the Sunbelt markets, especially Atlanta,” Langford said.
He added: “Atlanta really stood out. We’re fortunate that Atlanta has an increasingly diversified economy. This will really bode well for Atlanta going forward.”
While Atlanta’s CRE sector faces similar challenges to other markets across the country, the panel agreed that the metro area’s advantages, including its lower business costs compared to gateway markets, place it in a healthy position to continue thriving.