Recession gives some firms a better view

HKS is one of several businesses that get new offices at a reduced price

Architecture firm HKS Inc., currently ensconced in a Buckhead office building, is moving to a top-floor perch above downtown. Employees can thank the recession as they enjoy the new views.

The firm is taking the penthouse space in the 191 Peachtree building, on the 50th floor of the prominent tower, at a time when landlords are seeking tenants for their vacant space.

HKS is one of several metro Atlanta companies taking advantage of better real estate deals to move into much nicer -- and often brand new -- space as landlords scramble to reduce vacancies.

The architecture firm's new floor – once the private dining room that served King & Spalding -- has been vacant ever since the law firm moved to a Midtown skyscraper. HKS will turn it into modern office space for architects, complete with an open terrace looking over Atlanta’s skyline.

“What are the chances of that? Getting the penthouse?” marveled Robert Farrow, a principal at HKS. The fact the building was designed by award-winning architect Philip Johnson also wasn’t lost on Farrow.

“We’re excited to have this opportunity,” he said. “We’ve been in Buckhead for 12 years.”

Atlanta’s office vacancy rate continues to hover around 20 percent – historically very high – according to various real estate research firms.

Colliers International reported that at the end of 2010, Atlanta’s vacancy rate was 19.3 percent, while the rate for Class A space -- the best -- was 20.6 percent.

Part of the reason is that new office buildings, such as Terminus 200 and 1075 Peachtree, that opened during the recession heightened competition for tenants at a time when businesses were shedding employees.

Cousins Properties bought the 191 Peachtree building in 2006, when it was was losing tenants such as King & Spalding and Wachovia Bank. Cousins has slowly filled the building to 80 percent occupancy.

The 16,500-square-foot penthouse space was difficult to fill, in part, because it has two large elevator bays and a smaller footprint. HKS will build around the infrastructure.

Farrow said he scoured Buckhead for space but didn’t find anything matching the architecture and space in 191 Peachtree.

He also believes being downtown – near MARTA, Georgia State and other amenities – will help him to attract young and international talent.

Brannan Moss, a senior vice president at Jones Lang LaSalle, represented HKS in lease talks.

Other examples of firms moving to new space are the Reznick Group, Turner Construction and Novelis, all moving into new Buckhead tower Two Alliance Center.

“The concessions have been so good, they’ve allowed relocations from other buildings while still maintaining similar economics,” he said.

John Lichtenwalter, general manager of Turner Constructions's Special Projects Division, said his firm had a lot of options, both inside and outside the perimeter. In the end, he wanted the prestige of staying in Buckhead, and he had his pick of newer buildings where prices were sometimes lower than in existing ones.

“You have a competitive advantage,” he said.

Ridge White, CEO of ad agency JWT in Atlanta, hit the market early last year and was thrilled to land a deal to move next month to 3630 Peachtree Rd. The firm has been in Sandy Springs.

The views from the 11th and 12th floors are "spectacular," he said, and the "cool factor" is really important in recruiting. He took a vote among employees, as well as looked at where everyone lives, and the result was 50-50 for Buckhead or the Dunwoody-Sandy Springs area. White broke the tie.

“There are a number of hungry buildings out there,” he said.

Still, the best deals might be in Atlanta’s rearview mirror, said Scott Amoson, director of research for Colliers International-Atlanta, because many newer buildings are filling up.

“A lot of people think those days are numbered and that rents aren’t going to be coming down much more,” he said. “So a lot of tenants felt like they needed to get the deal done now.”