Metro Atlanta commercial real estate is starting to get its groove back.
The office market in particular is a barometer of the broader economy. Companies typically rent what they need or expect to need in the near future. From office towers to retail centers, vacancy is diminishing.
Recently, some of the metro area’s top real estate minds spoke at a panel, presented by real estate publication Bisnow Atlanta, about the region’s office market. Below are some key points about the future of the office market, including where employers are going, how companies’ needs are changing and when the region could see another major skyscraper.
Where employers want to locate:
Large corporations are looking at the more urban metro Atlanta office markets, seeking connections to amenities like retail and transit. North Fulton, Central Perimeter and Buckhead are some of the top performers. “That’s what’s made these markets come back to life.”
— John Heagy, a senior vice president for developer and real estate manager Hines Interests
Corporations see the Central Perimeter area as one of the last markets where they can easily attract talent from other areas of the region like Cobb, Gwinnett, north Fulton and intown Atlanta because of its transportation network. The submarket is transitioning into a more walkable and urbanized area.
— Kris Miller, president of developer and real estate manager Ackerman & Co.
Young people increasingly want to live within the city of Atlanta. That is “changing the politics of the city” and changing where employers choose to plant their offices.
— David Allman, founder and chairman of Regent Partners, a real estate developer and investor and services firm
Transportation:
People beat up on MARTA, “but where would we be without it?” MARTA is the “key” to growth in companies moving into the Central Perimeter, Buckhead, Midtown and other office submarkets linked to the metro’s rapid transit line.
— Larry Gellerstedt, president and CEO of Atlanta-based real estate investment trust Cousins Properties
Metro and state leaders went public saying there was “no Plan B” when the regional transportation sales tax known as T-SPLOST was killed in a July 2012 vote. That initially set back the metro area in terms of recruitment, “but we’re winning again,” with successful pitches to companies like homebuilding giant PulteGroup and others to plant their flags in Georgia.
— John O’Neill, senior managing director in Atlanta with brokerage Cushman & Wakefield
The national rankings of Atlanta traffic are overblown, and other cities suffer from far worse congestion. “But we have to do better with the money we have.”
— Bob Voyles, CEO of development and investment firm Seven Oaks Co.
An idea worth exploring is a revised special purpose local option sales tax that would allow jurisdictions to band together to fund projects, potentially through “fractional penny” sales taxes.
— David Allman, founder and chairman of Regent Partners, a real estate developer and investor and services firm
On downtown Atlanta, a market that hasn’t rebounded as fast as others:
“I think one of the sleeper markets, if making a contrarian bet, is downtown.” Why? About $2 billion in new development, including the new $1.2 billion Falcons stadium, the Center for Civil and Human Rights and the College Football Hall of Fame, as well as the Atlanta Streetcar and the redevelopment of the former City Hall East as Ponce City Market not far from downtown.
— Larry Gellerstedt, president and CEO of Atlanta-based real estate investment trust Cousins Properties
Downtown benefits when Midtown’s capacity is squeezed. Georgia State University acquiring buildings and land has helped reduce some of the supply and refresh downtown.
— John O'Neill, senior managing director in Atlanta with brokerage Cushman & Wakefield
On needs of companies in the technology age:
Many companies are catering to millennials who want open floor plans and collaborative spaces, but others still want privacy. “I’m an optimist. We think as job numbers get better, in the war for talent, real estate will be a recruiting tool” to attract and retain workers.
— John O’Neill, senior managing director in Atlanta with brokerage Cushman & Wakefield
For technology companies in particular, “the culture is different.” Tech firms are offering full bars and provide catered lunches in an effort to keep employees happy and at work. Many of these firms also want to be tied to the city. Not everyone wants to be in the woods in a suburban office park.
— Bob Voyles, CEO of development and investment firm Seven Oaks Co.
On new speculative office towers in Atlanta, a market bitten when too many came out of the ground when the economic crisis hit:
There are few large blocks of vacant office space in popular submarkets like Central Perimeter, and the region’s next new office tower could start construction in 2014 and open in 2016. After several years of weathering the economic recession, many large corporations “are looking to go on offense.” That could mean companies look to expand after years of leaner operations.
— John O’Neill, senior managing director in Atlanta with brokerage Cushman & Wakefield
It’s very difficult for a developer to propose a skyscraper to lenders without half of it being pre-leased.
— Bob Peterson, CEO of Atlanta-based real estate developer and investment firm Carter
