Why Has CP Group Grown To Become Atlanta's Second-Largest Office Owner? 'Growth Solves A Lot Of Problems'

No firm has been more aggressive in its optimism about the Atlanta office market than CP Group, the South Florida-based investment firm that has become the second-largest owner of office buildings in Metro Atlanta.

In the last two years, CP Group, formerly known as Crocker Partners, acquired two aging Atlanta icons that had seen better days: Bank of America Plaza and CNN Center.

Those deals capped a buying spree that started in 2019 and has grown CP Group's regional portfolio to more than 6.5M SF of office space according to the Atlanta Business Chronicle's annual Book of Lists. That is more than triple the space in Metro Atlanta it controlled before 2019.

While the firm hasn't made any big buys in the last few months as capital and debt markets have seized up with higher interest rates, CP Group is looking to keep growing its Atlanta holdings given the metro area's economic prowess in recent years, CP Group partner Chris Eachus told Bisnow Tuesday in an interview.

“The growth in [Sun Belt] markets, including Atlanta, is still there. And in fact now it’s probably more important than ever to invest in growing markets,” Eachus said. “The city continues to make a lot of right decisions on just attracting and retaining businesses. That’s a great tailwind you really want to have, because it helps our buildings. Growth solves a lot of problems.”

CP Group has had a presence in Atlanta’s office market since 2006, when it purchased the 17-story Cumberland Center II office tower in Cumberland Galleria for $56M. CP Group sold the asset in 2018 to PCCP, but continues to lease and manage it.

It has steadily built up its Metro Atlanta portfolio since then, buying the 19-story Prominence Tower in Buckhead, the 23-story Regions Plaza in Midtown — which it sold in 2017 — the 300K SF Ashford Perimeter and Lakeside Office Park in Central Perimeter between 2006 and 2015.

But starting in 2019, CP Group hit the turbo button on purchases. Working with an array of joint venture partners, it has spent nearly $1B on office space in less than four years. Among its purchases in that period: 

• 5600 Glenridge, a 270K SF office building, for $17M.
• 3225 Cumberland Blvd., a 219K SF building acquired for $44.5M.
• The two-building, 652K SF Paces West campus in Vinings for a combined $119.5M.
• Three office towers at once — One and Two Ravinia Drive and One Overton Plaza — for $219.5M.
• CNN Center in Downtown Atlanta for $145M.
• Buckhead Centre, a two-building, 169K SF office complex, for $51.5M.
• Bank of America Plaza, which it bought for $380M.

Eachus said CP Group targeted Atlanta because of its growth story as one of the top in-migration destinations in the U.S. over the past few years for both new residents and businesses. The growth has helped insulate Atlanta’s office market despite the influx of new projects and changes in office demand, he said. Atlanta’s vacancy rate hovered at 20% at the end of 2022, a 10-point drop from the year before, according to Avison Young.

 “Atlanta really follows a broader theme we follow as investors, which is investing in Sun Belt markets,” Eachus said.

He acknowledged that the leasing market has grown tougher since last summer as the Federal Reserve began its war against inflation and larger companies continue to wrestle with hybrid work plans, causing many to downsize their office footprint. 

The dynamic continues to make corporate leaders skittish on making longer-term office decisions, which has helped CP Group increase the occupancy of its turnkey space, with its flexible coworking space program dubbed worCPlaces, which is operating in six buildings across its portfolio, including at Lakeside and One and Two Ravinia in Atlanta. 

Eachus said CP Group is expanding that platform at Bank of America Plaza, its largest property in Metro Atlanta and the tallest tower in the Southeast. The firm is poised to invest $65M to give it not only new public spaces and a refurbished lobby, but 100K SF across four floors of pre-built offices.

“The cost of construction to build out space has just skyrocketed,” Eachus said. “The space that we’ve seen [leased] the quickest is the turnkey space that everyone knows they’re not coming out of pocket and can move into right away.”

While Eachus said that he expects markets to adjust to a new normal with interest rates and hybrid work toward year’s end, the net result will likely mean the firm buys “significantly less” assets this year than in the past and instead focus on refurbishing buildings in its portfolio to make them competitive in an environment where tenants are gravitating toward newer, highly amenitized office projects.

He declined to comment on how the firm is faring with on some of its upcoming debt maturities — a $51M loan for Lakeside Office Park and a $44M loan for 3225 Cumberland, according to Reonomy.

But he said CP Group has no plans to sell any assets in Atlanta this year. Eachus also declined to talk about future plans for CNN Center, but said the firm is working on a redevelopment program that will be revealed in the future.

Eachus said investors continue to eye office assets in Metro Atlanta, despite the downturn. Even though some older, suburban office buildings are being looked at as obsolete, CP Group continues to shop for existing assets, including those erected in the 1990s that can be renovated and positioned to compete with newer projects, he said.

“It’s very clear who the absolute winners are. And it’s very clear who the absolute losers are,” he said. “Everybody is trying to isolate those.”