When Bruce Johnson sought a new home for his growing tech company, he wanted the kind of place where employees would want to hang out.
The co-founder and chief operating officer of FullStory, which helps merchants improve customer experiences online, scouted the gleaming high-rises of downtown and Midtown as well as the trendy lofts popping up in older buildings across the city. Many offered the same sorts of features — open floor plans and customizable space as well as nearby restaurants.
Johnson’s office search reflects the current dynamics of finding space in metro Atlanta, where old industrial buildings revived as loft offices — known in the trade as adaptive re-use — compete with glitzy high-rises that define the region’s skyline.
Available space in metro Atlanta is historically tight, though new office projects coming onto the market have boosted vacancy rates a bit this year.
The third quarter vacancy rate of 15.8 percent, down from 17.3 percent a year ago, but up from 14.7 percent in the first quarter, according to data from real estate services firm Savills Studley.
At the same time, companies large and small are tapping into trends such as shared space and open floor plans at the expense of defined offices or cubicles. That’s driven partly by the costs — furnishings and lots of square feet in primo buildings can get expensive — but it also reflects current culture at many businesses.
“Work is not really distinct from life, but you want a really nice integrated work-life routine,” Johnson said. “We asked ourselves: Would we really want to come to a place like this for fun?”
FullStory chose the Armour Yards complex near Sweetwater Brewing Co. in a historically industrial stretch between Buckhead and Midtown. Like Ponce City Market and other re-use projects, the four-building complex is attracting interest not only from creative firms but also companies looking to mix up stodgy old workspaces.
Developer Third & Urban Real Estate has drawn food trucks and a walk-up Fox Bros. BBQ location, and they have plans for a coffee shop and a meal delivery service. The property also is along a future Beltline segment, and MARTA has an infill rail station planned nearby that could be funded by the recent sales tax referendum.
“It’s really diverse. This is a very competitive market,” said Brooke Dewey, vice president and real estate services firm JLL, which represents Third & Urban and Armour Yards financial partner JPMorganChase. “The majority of our activity is coming from companies that currently occupy glass towers.”
Rents at Armour Yards are a bit lower than traditional Class A or top tier towers, and there’s no charge for parking.
Ponce City sets pace
Ponce City Market, formerly a hulking Sears warehouse and City Hall East, is perhaps the city’s best-known adaptive re-use project and one of Atlanta’s most popular developments. Athenahealth, Cardlytics and MailChimp are among the companies housed at the project.
Other developers are trying to capture the vibe.
Paces Properties, which acquired the Atlanta Dairies site on Memorial Drive near Oakland Cemetery, is soon to start development on creative office spaces mixed with apartments, a concert hall and retail.
Development of new speculative office space, or space built without a signed tenant, has been muted this cycle. Adaptations of older buildings, often with a mix of other uses, has been more palatable to lenders who got burned during the boom when Atlanta was left with empty office towers, industry observers say.
Atlanta has been late to the adaptive re-use trend largely because of its tendency to knock old buildings down in favor of building new, said Peter McGuone, first vice president at CBRE, which is leasing the old Atlanta Dairies project.
“Atlanta has always been a newer city,” he said. “We’ve never had lots of landmarks to work with.”
But glass tower owners also are targeting creative firms. Bank of America Plaza just landed the software center for health insurance giant Anthem, where the company plans to put 1,800 tech geeks on about six floors of the city’s tallest tower.
BofA Plaza’s leasing team with CBRE also has designated its fourth floor for offices for what it calls “TAMI,” which stands for technology, advertising, media and information firms. In recent weeks, the building opened “The Block@BoAP,” with open architecture and exposed ceilings that’s a departure for a gilded tower built to maximize the amount of corner offices for bankers and lawyers.
GE Digital and Mercedes-Benz USA also are hopping on the open design theme.
Chris Drumgoole, GE Digital’s chief technology officer, said the company’s new tech hub in Buckhead has collaborative spaces and is close to restaurants and other amenities that should help draw up-and-coming tech talent. The company picked Prominence, choosing to build out space in a traditional Buckhead high-rise that could emulate the vibe of a loft office.
The GE Digital office will have shared work stations, rooms for video conferencing and polished concrete floors. But there has to be room for people to concentrate, he said.
“We want it to be comfortable,” he said. “We want people to have their space.”
Large blocks of space are hard to find, though there’s been a dip in the number of very large corporate prospects scouting for space, said John Flack, executive managing director in Atlanta for Savills Studley.
Corporate hiring has slowed, Flack said, while companies are using less space per employee, meaning there might be more workers in a building taking up less space.
Flack said the slight increase in vacancy is more of a pause and not necessarily a sign of overbuilding. He said Atlanta has actually been restrained in this cycle, unlike before the recession.
The trend is for “fewer walls and more internal communication,” Flack said.
No perfect set-up
But it’s not a perfect set up for all companies. For instance, many law firms and financial outfits still need space for confidential client meetings.
For Johnson, FullStory and its designers wanted a balanced environment where people can collaborate, but also have library-like silence when needed.
The company’s space at Armour Yards has a main area with a Starbucks-like feel, private huddle rooms that can fit two to three people at most and a shared area of desks that will allow people to be close, though they’ll be asked to work quietly. An outdoor patio will allow workers to get some fresh air, Johnson said.
A mezzanine level will be available for large group meetings. But FullStory is somewhat unusual. The company doesn’t have much in the way of paper files and its hardware consists mainly of laptops.
As a result, there’s little need for assigned offices or seating.
“For us to move, it’s literally moving eighty-dollar Ikea desks,” he said. “There’s no strong need to designate where people work.”
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