Buckhead’s largest office complex was sold Tuesday at a steep discount through a foreclosure auction, joining a growing list of landmark Atlanta properties that are undergoing post-pandemic reckoning.
Florida-based CP Group purchased the 2.2 million-square-foot Piedmont Center in an all-cash transaction, according to a news release. The 14-building complex, spread across 46 acres along Piedmont Road, joins CP Group’s Atlanta portfolio that includes Bank of America Plaza, the city’s tallest office tower, and the former CNN Center — now known as The Center.
Credit: CP Group
Credit: CP Group
Development of Piedmont Center started in the early 1980s. It is made up of mostly low- and midrise buildings in a sprawling suburban-style office campus with floor space larger than Lenox Square mall. It was recently advertised as 63% leased, according to real estate firm JLL.
Piedmont Center sold at a foreclosure auction for $200 million, which is a fraction of the complex’s value from a few years ago, according to the Atlanta Business Chronicle. It’s the latest sign that office properties still face challenges after the COVID-19 pandemic in 2020 upended workplace habits, prompting loan issues and office values to plummet.
In the near term, tenants of Piedmont Center are likely to notice little change in operations.
Chris Eachus, founding partner at CP Group, said in a statement that his firm will pump new capital into Piedmont Center to reposition it for a post-pandemic world.
“Piedmont Center’s scale and iconic presence in the heart of Buckhead presents a rare opportunity to reimagine a legacy campus for the future,” Eachus said. “We’re excited to draw on our experience revitalizing landmark properties to reposition Piedmont Center as a connected hub that reflects the evolving energy of the Buckhead market.”
Atlanta-based Ardent Cos. acquired portions of Piedmont Center between 2016 and 2021 with plans to transform the campus to better reflect the wants and needs of modern office tenants. The complex in 2021 was valued at $657 million — more than triple what it sold for at auction Tuesday.
Morgan Stanley in January began to pursue foreclosure after Ardent Cos. defaulted on a $330.8 million loan tied to Piedmont Center. Foreclosure auctions were delayed multiple times, a common practice when involved parties behind the scenes are searching for a suitable buyer.
Credit: CP Group
Credit: CP Group
CP Group has carved a niche for itself in Atlanta by acquiring well-known buildings in need of a refresh. In a joint venture, CP Group in 2021 acquired CNN Center and announced plans to reposition it as a mixed-use project called The Center. It bought Bank of America Plaza in 2022 and initiated a $50 million capital improvement campaign to attract new tenants.
The company said it has similar plans for Piedmont Center. A specific investment figure wasn’t released, but CP Group will launch “a master planning and capital improvement program to reposition Piedmont Center as a highly amenitized, hospitality-driven campus,” the release said. That process includes new food and beverage options, reimagined lobbies, expanded fitness facilities and refreshed outdoor and common areas.
To attract tenants, CP Group also plans to convert some of Piedmont Center’s tired office floor plans into speculative suites that are ready for companies to occupy, mirroring a similar initiative implemented at Bank of America Plaza.
Office distress has starkly risen since COVID-19 upended the economy and changed the way many companies operate offices. Vacancy rates remain at near-record levels.
Earlier this year, data firm Trepp reported that nearly 23% of all securitized debt backed by office properties was delinquent in metro Atlanta, meaning its owner missed at least two payments. Loan issues and the threat of foreclosure has prompted multiple office building transactions at stark discounts in recent months.
Much of that distress is centered in older properties without the amenities of more modern, Class A towers.
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