Morgan Stanley In Talks For Build-To-Suit Office Campus Outside Atlanta: Sources

A New York investment banking giant is in negotiations to develop a large new office building near Alpharetta, yet another out-of-town firm looking to expand in Metro Atlanta.

Morgan Stanley is in talks with developers for a 150K SF build-to-suit development in the North Fulton County submarket, sources familiar with the search tell Bisnow. The investment bank, which already has a sizable footprint in the region, has discussed eventually occupying an office campus larger than 500K SF, the sources said.

Pope & Land Enterprises and KDC — the developer best known in Atlanta for building State Farm's new campus in Dunwoody — are in talks with Morgan Stanley, which is evaluating Pope & Land's Northwinds Summit mixed-use project at Georgia 400 and Haynes Bridge Road and KDC’s Windward Park mixed-use project in Alpharetta.

A spokesperson for Morgan Stanley declined to comment for the story. Officials with Pope & Land and KDC didn't respond to messages seeking comment.

Morgan Stanley most recently leased more than 57K SF at the WeWork at Halcyon, RocaPoint Partners' mixed-use development off 400 in Forsyth County, the Atlanta Business Chronicle reported in August. But sources told Bisnow that space is viewed as a stopgap for the larger build-to-suit deal.

Morgan Stanley leases 216K SF in Metro Atlanta, according to CoStar data provided by Colliers, including a 119K SF office at Terminus 100 in Buckhead and nearly 26K SF at Concourse Corporate Center Five in Central Perimeter.

The bank's search comes a year after it purchased the consumer stock trading platform E*Trade in an all-stock deal. E*Trade has leased the 108K SF 3 Edison Drive office building in North Fulton since 2018.

Morgan Stanley is just another in a long line of firms that have decided to grow their workforce in Atlanta, a dynamic that made it one of the busiest office markets in the country.

Leasing activity in Metro Atlanta topped 2M SF in the third quarter, double what was signed during the second quarter, according to a recent Savills report.

“A lot of those big corporate [relocations] are going to start driving a lot of that demand,” CBRE Senior Vice President Peter McGuone said, adding that CBRE was tracking 90 office deals pending in the metro area. “Activity is robust and there's a lot of tenants out there. You got groups like Morgan Stanley looking to do a build-to-suit in Alpharetta."

Atlanta's leasing active is 99% recovered from the two-year, pre-pandemic average, second behind Los Angeles, according to an August CBRE report. It was behind only Boston and Dallas among cities with the most tenants still looking for office space.

Among the major deals that have recently closed in Metro Atlanta this year are Carvana's 550K-plus SF sublease of State Farm's Park Center Building 1, which Bisnow first reported, Global Payments' 207K SF lease at 5995 Windward Parkway in Alpharetta, Visa's 123K SF deal at 1200 Peachtree in Midtown, and FanDuel's 68K SF lease at Ponce City Market in Midtown, according to Colliers.

Morgan Stanley joins Cisco as deals that are close to being consummated; Gov. Brian Kemp scheduled a press conference Wednesday morning, The Atlanta Journal-Constitution reports, to announce a lease for Cisco. Bisnow reported last month the IT provider was in talks for roughly 80K SF at Portman Holdings' Coda tower.

Atlanta law firm Arnall Golden Gregory and financial services firm Atlanticus Holdings Corp. both secured major renewals during the past quarter as well: nearly 100K SF at 171 17th St. for AGG and 73K SF for Atlanticus at Concourse Corporate Center Five, according to Colliers data.

The rise in activity is evidence that companies are finally making longer-term office decisions despite the ongoing debate about working from home, office experts said.

“There are quite a few large companies out there with quite a few large requirements. I just think there's been pent-up demand when people were working from home,” JLL Executive Managing Director Jeff Bellamy said. “Now that companies are getting back to work, they are starting to make decisions and leasing office space again.”

“I think there's a desire for folks to get back to the office,” T. Dallas Smith & Co. principal Cedric Matheny said, pointing to rising vaccination rates and companies beginning to call more workers back to the office. “I think once that happens, it's just a wrap."

With pandemic-fueled changes to the workplace still up in the air, Atlanta stands to benefit from workers having more freedom to move away from higher-cost cities in New York and San Francisco. T. Dallas Smith is representing Airbnb in its search for a new tech hub in Atlanta, and Matheny said it has heard from workers who want to relocate to Georgia's capital.

“That's pretty consistent, not just with Airbnb, but other tech companies. It's a resounding 'yes' that, 'If we open an office in Atlanta would you be willing to come,'” he said. “Atlanta just has something for everybody as far as just the culture of Atlanta, the school system. It's just attractive.”

The activity hasn't been enough to lift every office district in Metro Atlanta out of the pandemic-fueled dislocation, Newmark Executive Managing Director Tom Miller said.

Miller is assisting RocaPoint Partners to land an anchor tenant to begin work on a potential new 150K SF office building at its Halcyon project in Forsyth County, just north of North Fulton, and he said Midtown and Alpharetta have been seeing the vast share of leasing activity.

Miller said the industry is waffling between jubilation and worry over tenant activity, especially as some tenants reduce their office footprint. State Farm, for example, decided it didn't need a 600K SF building it had just developed to its specifications when it subleased it to Carvana.

“It's kind of a weird market right now,” Miller said. “It kind of depends on what day of the week it is. On some days … it seems optimistic, and then other days it's, 'We better get what we can get done.'”