Lincoln Property Offering Vacant Echo Street West Project At 'Meaningful Discount'
Roughly six months after finishing construction on 305K SF of office space at its Echo Street West mixed-use project in Atlanta, Lincoln Property Co. is looking for a quick exit.
Lincoln Property Co. tapped JLL to sell or recapitalize three buildings it developed at Echo Street West, according to an offering memorandum obtained by Bisnow. The buildings are being offered “at a meaningful discount to replication cost,” which the brokers estimate to be more than $700 per SF.
A JLL Capital Markets team of Mike McDonald, Ryan Clutter, Richard Reid and Huston Green has the listing, which doesn't include a listing price.
Lincoln is offering the 275K SF, five-story, steel-and-timber-framed 765 Echo office building, the two-story, 21K SF 745 Echo creative loft office facility, and the 9K SF restaurant and tenant amenity space at 755 Echo. All of the buildings were completed in the first three months of this year, and none of the office space is occupied.
Officials with JLL and Lincoln Property Co. didn't respond to requests for comment.
The commercial buildings were completed as part of a mixed-use project, including the 292-unit Vibe at Echo Street West apartments. Event facility operator Guardian Works has a lease at the property, and an eatery called Westside Motor Works is also open.
When Lincoln first broke ground on the 19-acre project in 2021, the firm hoped its location in a qualified opportunity zone near Georgia Tech’s campus would help brokers attract tenants, particularly tech companies.
That was the same year that Microsoft purchased 90 acres close by for what it said would be a large corporate hub. Microsoft scuttled those plans last year, and tech leasing in the city has yet to recover.
Lincoln funded construction with a $135M loan from Bank OZK. Its failure to garner any tenants to Echo Street was highlighted by Citigroup analyst Ben Gerlinger in May when he downgraded his rating on Bank OZK from buy to sell. He said that loan, plus Bank OZK's $915M mortgage to finance the construction of the $1.6B Research and Development District in San Diego, is a source of “newfound but substantial concerns.”
Bank OZK hasn't mentioned its Atlanta loan on earnings calls or in its filings, and it reported record profits in the second quarter. It also increased its provision for credit losses, a sign that it anticipates more weakening in its loan book, which is heavily concentrated in construction financing.
When asked to comment on the Echo Street offering memorandum, Bank OZK spokesperson Michelle Rossow wrote in an email that the bank has no comment.
“That’s a matter for the Sponsor,” Rossow said.
Ladson Haddow, who runs multifamily data firm Haddow & Co., said the Vibe at Echo Street building has also been slow to lease up since it opened in March 2023. As of March, the project was 36% leased, averaging seven leases a month, “which is not good,” Haddow said.
Developers typically strive to lease 15 to 17 units a month, Haddow said. Lincoln is asking around $2.30 per SF in rent for a Vibe apartment.
Haddow noted that the overall Echo Street West project is competing with other new developments in West Midtown, including Allen Morris Co.’s Star Metals and Atlantic Capital Partners’ 8West.
“I think that deal is on a little bit of an island for office and residential,” Haddow said. “The empty office building doesn’t help the overall — no pun intended — vibe for the overall community.”
