SK Commercial Eyes Expanding Hartsfield Centre With Up To 3 Office Buildings, Hotel
One Hundred Hartsfield Centre was one of the first and few Class-A office buildings in 1990 in Atlanta's southside, an area known more for warehouses and distribution centers given its proximity to Hartsfield-Jackson Atlanta International Airport.
Since then, Atlanta's luxury office market has grown from 50M SF to more than 105M SF. But Class-A office in the airport area has remained scant by comparison at less than 950K SF, according to JLL.
Now, an Atlanta developer is looking to change that by adding up to three new Class-A office buildings, as well as a hotel, at Hartsfield Centre.
“It's a different market, it's an evolving market,” SK Commercial Realty President Tom Parker said. "It's kind of where Alpharetta was 20 years ago."
Parker's firm owns 100 Hartsfield Centre, a 150K SF office building off Interstate 85 south of Atlanta, looking directly over the north runway of the world's busiest airport. Parker will be among the panelists at Bisnow's Future of Aerotropolis Atlanta event July 18, where topics will range from the growth of Aerotropolis to the struggles with Fort McPherson's redevelopment plans.
SK is marketing the second phase of Hartsfield Centre, attempting to lure corporate stakeholders to be the debut tenants in a 125K SF office building on the site. It would be the first new office project at Hartsfield Centre since its inception nearly 30 years ago. The firm also plans to build a 125-room hotel on the property, Parker said.
“We have a hotel agreement tentatively in place,” Parker said.
Future phases of Hartsfield Centre could include another 500K SF of Class-A office. SK purchased 100 Hartsfield with joint-venture partner Ravinia Capital Group in 2018.
Through much of its history, the South Atlanta office market has been an afterthought among corporate tenants. There is 7.2M SF of office in South Atlanta, most of which is found in the flexible office market where small and midsized companies would locate if they need quick access to the airport, or their business focused on it, such as the offices for logistics firms, Transwestern Director of Research Keith Pierce said.
But the demand has shifted in recent quarters to the market's highest-end space. According to JLL, all of the office leasing growth in the first quarter — 69K SF — was in Class-A space.
Momentum appears to be building, Pierce said, especially with Porsche's plans to expand its Hapeville corporate campus and the U.S. Food and Drug Administration moving regional operations to Fort McPherson.
“South Atlanta has not been seen as a very strong office market, but we are seeing that change in recent quarters,” he said.
Parker said his firm is seeing an attitude change toward Class-A office space in South Atlanta as well. After ExpressJet Airlines vacated 100 Hartsfield Centre, SK Commercial backfilled the space with the Airline Pilots Association and Oliver Wyman, a division of the consulting firm Marsh McLennan.
“I think that Porsche drove a stake in the ground and said that this is a viable corporate location,” Parker said. “I think you're really seeing a paradigm shift in how people perceive the Southside.”
CORRECTION, JULY, 16, 2019 3:30 P.M. ET: A previous version of the story misidentified the tenant that left 100 Hartsfield Centre as well as the tenants that backfilled the space. The story has been updated.
