This May Be It For ATL Office
The new office projects underway could very well be it for Atlanta in this development cycle.
That's the view of some of our panelists at our State of Office 2016 event this week at the InterContinental Buckhead.
Portman Holdings' Travis Garland (second from right) and New City's Jim Irwin (right) both say it takes very specific locations with some special features to justify going forward as an office project.
And that's been largely why we have not seen a deluge of new office towers in Atlanta despite historic fundamentals. Travis and Jim were part of a panel that involved DPR Construction's Chris Bontrager and Parker, Hudson, Rainer Dobbs partner Kenneth Kraft, who moderated.
With 1.5M SF underway in Buckhead and Midtown—submarkets with some 40M SF of office, rents surpassing $30/SF and vacancies about to dip below 10%—Travis says that could be about all we see.
And unlike last time, when five new office towers started just before the recession in Buckhead alone, leading to the infamous Buckhead office “bloodbath,” Travis says, “No one will ever see that again. I just don't know that there's going to be a lot more to come.”
Jim says developers are no longer willy-nilly in site selection for office. And that has kept rampant development at bay.
“There's not that traditional stream of investment where there's the next exit on the interstate to conquer,” he says, adding developers have largely been focused on the Peachtree Street spine with a big hurdle of pre-leasing needed.
Plus Jim says tenants are wanting what he sees as context and alignment with projects: alignment in that employees see the office as an integral part of their lives, and context in that the building is in a setting with a lot going on.
“You actually don't have to hate where you work. You can actually like your office space,” he says. New City, of course, is in the process of developing 725 Ponce, the redevelopment of the Ponce de Leon Kroger into a mixed-use facility capped by an office building and direct access to The Beltline.
