The 10 Atlanta CRE News Stories That Defined 2024
From big law firm moves and office buildings selling at steep discounts to developers’ love affair with data centers and a notorious investor getting charged with fraud, there were several big stories that caught the collective attention of Atlanta CRE in 2024.
This year saw the office leasing market start to awaken from its deep slumber, while retail real estate went on a tear. It was also a time when many of the investors that gobbled up apartment units in 2021 faced difficulty with higher interest rates and debt maturities.
Not every story that hit the Bisnow Atlanta page managed to make our list. Some notable runners-up include CP Group’s reveal of its plan to revitalize and rebrand CNN Center, Shorenstein Properties snagging engineering firm HNTB as its debut tenant at the empty tower it purchased from Greenstone Properties earlier in the year, and Portman Holdings heading out to the suburbs for the first time in decades with plans to revamp an Alpharetta office complex into the area’s next mixed-use destination.
Here are the 10 stories that most had CRE tongues wagging around the office water cooler this year — assuming you’ve been going into the office at all.
Y’allywood’s Big Slump
Buoyed by years of riding high on film and television content, Metro Atlanta developers rushed to build more production capacity in the form of new studios.
The bull run ended this year. The first record scratch was in February when Atlanta media mogul Tyler Perry iced plans for an $800M expansion of his Tyler Perry Studios after telling The Hollywood Reporter he got spooked by the ability of AI to generate film.
The second shoe to drop was in the wake of actor and writer strikes. Instead of production ramping back up, studios chopped planned productions and shifted production of some films and series overseas for cheaper labor and production locations. Spending by studios in Georgia for film and TV productions cratered by 37% from 2023.
The drop in business came at a bad time for studio owners who pumped the local market full of new supply. Developers added 1.5M SF of dedicated studio space in Georgia from 2022 through the third quarter of 2024. The slump has some studio owners converting facilities into warehouses, while others are attempting to sell or find investment partners.
Morris, Manning & Martin’s Big Move
In a year with quite a few companies playing office musical chairs in Atlanta, the esteemed law firm Morris, Manning & Martin LLP’s deal stood out. The firm leased 100K SF at the 30-story Two Alliance Center in Buckhead, including getting its signage on the building's facade.
The law firm’s previous home was 130K SF at Atlanta Financial Center, the nearly 1M SF complex straddling Georgia 400 through Buckhead where it had resided since 1987.
That building is at the heart of the scandal in the next item. While its owner said in June that it extended the term of its loan that matured this year, it also had agreed to sell the building in 2022 at a steep discount, raising questions about its commitment to the property.
Morris, Manning & Martin was one of many law firms scouting the market for space. Eversheds Sutherland inked a lease for 94K SF at CP Group's Bank of America Plaza, a deal that means the firm is shedding nearly half its office footprint at 999 Peachtree.
Elie Schwartz Charged With Fraud Over Failed Atlanta Financial Center Deal
Speaking of Atlanta Financial Center, the man who is accused of fleecing hundreds of individual crowdfunding investors in a failed bid to buy the office complex finally had his day in court in 2024. At least, his initial appearance.
New York-based real estate executive Elie Schwartz was charged with one count of wire fraud in federal court in Atlanta earlier this month, the first move by the Department of Justice after it had been investigating the CEO of Nightingale Properties for more than a year.
The charge represents the latest in a saga that has become colloquially known as the case of the missing millions. Schwartz raised $54M from accredited investors on CrowdStreet to buy the Atlanta Financial Center. Instead, Schwartz made off with nearly all of the money he raised, allegedly to pay for other investments, luxury watches, and business and personal expenses.
While federal prosecutors acknowledged the extent of Schwartz’s alleged misdeeds, the single count of wire fraud centered on a $30K wire transfer from an Atlanta-based JPMorgan Chase account to a Bank of America account in California. While the charge carries a maximum of a 20-year prison sentence if convicted, it is likely Schwartz eventually reaches a plea deal with the DOJ.
Offices Trade At Big Discounts
Interest rates have been higher for longer than most expected, which has led to big problems for landlords whose property values have dropped as a wave of debt maturities hit.
Numerous properties — mainly in the office realm — traded or were returned to lenders at double-digit declines in values, including a portfolio of Adventus suburban office properties foreclosed on by a CMBS trust this month.
But two sales stood out, buildings that not long ago were considered among the cream of the crop.
Tyler Henritze's Town Lane and Cousins Properties purchased the Proscenium, a 526K SF tower at the corner of 14th and Peachtree streets, for $83M from Manulife Financial Corp. in August. The roughly $157-per-SF sale means Town Lane and Cousins picked up the 24-story office tower at around a 30% discount to the $118M Manulife paid in 2004.
The other notable sale was when an affiliate of 28th Street Ventures purchased Pershing Park Plaza, the nine-story, 160K SF building at the junction of Peachtree and West Peachtree streets in Midtown, for $34M from Franklin Street. The sale price was a 25% haircut from the $45.5M price tag Franklin Street paid in 2016.
The Data Center Surge
There wasn’t a month that went by in 2024 without new plans being drawn up for a data center development in Metro Atlanta. The region has been buoyed by demand for data storage due to AI and its plentiful land and cheap power.
By the middle of 2024, developers were building new centers that would add 1.3 megawatts of capacity to the metro area, a 76% increase from 2023. The deluge of new projects means Metro Atlanta is on track to become the second-largest data center market in the U.S., according to CBRE.
But there has been some municipal and lawmaker resistance to the boom as some question where the right place for a data center should be — and the amount of energy needed to power the facilities.
This past summer, Atlanta instituted a data center development ban on sites surrounding the Atlanta BeltLine, the 22-mile pedestrian path that has become a magnet for new and revitalized real estate projects. In May, the state legislature passed a bill to pause a sales and use tax break for data centers until 2026, although Gov. Brian Kemp vetoed the pause.
Rivian Hopes Reignite
It was a year of ups and downs for upstart electric-vehicle maker Rivian.
The Irvine, California-based company first announced plans for the $5B factory on a 2,000-acre site off Interstate 20 straddling Morgan and Walton counties in 2021. It was granted a $1.5B Georgia incentive package, but struggles to ramp up production and softening EV sales nationwide pushed Rivian in March to announce that it was halting development of the plant as it shifted production to its existing Illinois facility in an effort to save $2.2B in costs.
But hope sprang eternal when in the final months of the Biden administration, the Department of Energy agreed to grant Rivian a $6.6B loan to restart construction on the 9M SF plant near Social Circle.
Atlanta Apartments Do A 180
For much of the decade, multifamily in Metro Atlanta — and throughout the Sun Belt — was a cash cow for investors and operators. Rents reached record levels, people moved en masse from the Northeast and the West Coast, and there wasn't enough supply to keep up.
But investors became too aggressive in the zero-interest-rate environment of 2021 and early 2022, saddling their buildings with short-term, floating-rate debt.
While interest rates were kept steady for the first three quarters of the year and started to come down in September, in many cases, borrowers' rates are still double or triple what they were.
That has created a wave of distress in the metro area. Some properties fell into foreclosure, such as the 623-unit Lofts at Twenty25 building, which Harbor Group International took back. And many more still face the prospect of default.
The supply of new apartments also impacted fundamentals. Over the past 12 months, developers unleashed 5,200 new units inside the Interstate 285 perimeter as of the third quarter, according to multifamily consulting firm Haddow & Co. Developers are underway with nearly 7,000 more.
The deluge, plus slowing demand, pushed the vacancy rate up 12% and rents down 2.8% year-over-year, according to a Lee & Associates report.
But what’s been a boondoggle for apartment owners is a boon for renters, as landlords, along with lowering rents, pumped up concessions to lure renters who are suddenly finding it easier to land an apartment — at the higher end of the market, at least.
Partners Real Estate Makes A Big Splash
This year saw quite a few veteran commercial real estate pros change jobs, either with other major firms, like Dan Granot joining Savills, or starting their own, such as former Centennial Yards Co. executive Keith Mack and Greenstone Properties partner Harvey Rudy.
But the biggest move came with the entry of Houston-based Partners Real Estate into the Atlanta CRE brokerage market. It began when the firm announced in March that it had tapped John O’Neill, former Cushman & Wakefield U.S. multifamily capital markets president, to head up its Southeast operations.
By September, seven other Cushman & Wakefield brokers jumped ship as well: Will Porter, Aileen Almassy, Andy Sumlin, Porter Henritze, John Zintak, Caroline Nolen and Melanie Garlock-Wolfe, in what has been one of the biggest transfers of talent between two firms in Atlanta this year. Soon after, Shea Meddin joined Partners from Cushman & Wakefield, and Brooke Gothard became an equity partner with the firm, moving over from JLL.
Atlanta Still Has Some Inbound Office Mojo
While many office owners felt the pain this year, some big deals did get signed, including a couple of surprise new-to-market occupiers, demonstrating that Atlanta continued to be on corporate radars.
In September, agribusiness giant Cargill subleased roughly 100K SF from NCR at its Midtown headquarters to open a 400-employee tech hub focused on data engineering and generative AI. A month later, insurance giant AIG revealed it leased 180K SF at 2002 Summit Blvd. in Central Perimeter for an innovation hub that will employ up to 1,600 workers over the next five years.
Also this year, AT&T continued to reexpand its office footprint in Buckhead, taking a combined 205K SF at 1055 and 1057 Lenox Park Blvd. in the Lenox Park office complex. Those were buildings the telecommunications giant previously occupied but gave up as it began to consolidate its metro area office presence in 2017.
They might be on the lookout for more space in the future: The company has asked all employees to start coming to their offices five days a week, Fortune reported this week.
Retail Reigns Supreme
It was a good time to be a retail landlord in Metro Atlanta, though. During the height of the pandemic, there was heavy bleeding. Some of the region's most prominent retail properties were taken over by lenders.
But the recovery is now complete. Retail has become one of the healthiest asset classes for landlords, with rents rising to record levels and vacancies falling to record lows. But retailers are struggling to find new spaces to expand. Because of the sector's doldrums even from before the pandemic, new projects have dwindled, allowing landlords to take a hard line with tenants.
Some retailers say they are having trouble operating at all with the rents landlords are commanding. That may force landlords to finally deflate retail rents in the coming year, a major retail broker predicted.
