For more than a decade, a developer in Dunwoody was making big plans for a hotel across the street from Perimeter Mall.
The 11-story, 160-room lodge would have served the thousands of travelers that flocked to Dunwoody’s bustling business center. But after the coronavirus pandemic began and the travel industry took a hit, the developer was unable to get financing for the project. As a result, they redrew the hotel into a mixed-use complex with retail space and hundreds of apartments for seniors.
“If the pandemic wouldn’t have happened, there would be a hotel right now under construction,” said Michael Starling, the director of economic development for Dunwoody.
The pivot from hotel to housing illustrates the challenges developers are facing 10 months into a pandemic that has upended work and home life. Throughout metro Atlanta, development plans for a range of new office, residential, hospitality and mixed-use projects have been redrawn with the coronavirus in mind. Trends emerging now could influence how communities look and how residents work and live for decades to come.
Interviews with developers and planning officials reveal that more offices will have open floor plans, hands-free technology and better air filtration systems. Restaurants may become smaller as they rely on more to-go orders. Some hotel development might be placed on pause for the time being. And floor plans of apartments are changing to better accommodate working from home.
“The new development puzzle became much more difficult to piece together,” Garry Sobel, senior vice president at development firm Kaufman Capital Partners, said. “The pandemic added a layer of uncertainty to the development equation and caused most projects to effectively stop in their tracks.”
Glenn Aspinwall, executive director at commercial real estate firm Jones Lang LaSalle, agreed, saying, “There’s a lot of holding patterns across the board.”
“We’re just trying to react and adapt as we go.”
New look for offices
On Atlanta’s Westside, developers recently broke ground on a large, mixed-use project at the site of the old Atlanta Paper Company warehouse. The “Westside Paper” development will include over 210,000 square feet of office space and over 30,000 square feet of retail stores and restaurants. The first phase of the project could be completed by early next year.
Chris Faussemagne, a partner at Third & Urban, the development company behind the project, said that since last year, his team has put a larger focus on wellness and health as they design offices. That includes open-air corridors, windows that open, more outdoor space for colleagues to gather and hospital-grade air filtration systems.
“One of the things you’re going to start seeing is that the amount of square feet per worker is going to be a lot larger,” Faussemagne said.
Research nationwide has suggested that many companies will continue to allow employees to work remotely in the future. But some will ultimately want a return to office life — while making sure their employees are safe.
“I don’t think that you’re going to see offices completely just disappear,” Faussemagne said.
Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com
Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com
When a 16-story office tower opened last summer in Dunwoody, it was mostly empty. The owner of the Twelve24 building, developed by Trammell Crow Company and CBRE Global Investors, leased out about three quarters of the building to staffing agency Inside Global, but most of its employees have been working from home and not in the new building.
Brandon Houston, a Trammell Crow principal, said finding tenants has been a challenge.
“There’s certainly some deals out there, but I think overall everybody is on pause until everyone gets back in the office, and they figure out how much space they do need,” Houston said.
According to Dunwoody, about 23% of offices in the city are currently vacant — a high number for one of the Atlanta area’s fastest growing business hubs.
Despite the surge in businesses moving to a work-from-home plan, developers are still purchasing land in preparation for new office projects down the line. In Atlanta, Trammell Crow recently paid $17 million to buy property across from the Margaret Mitchell House, which will likely become the site of another office tower in a few years.
“If you look at the new construction across the city, it’s performed very well compared to the existing stock,” Houston said, citing projects like Atlantic Yards, where Microsoft is a tenant. “From a development standpoint, a lot of office developers like us are looking for new sites.”
Home sales steady
Despite the pandemic’s impact on jobs and the economy, home sales have soared in Atlanta.
JC Chi, a co-founder and principal at Atlanta-based Kuo Diedrich Chi Architects, said single-family homes are getting more traction in the market, especially in suburban areas.
“People are isolated now, and they’re making real estate decisions that isolate themselves further, like single-family homes and condos,” he said. “(Architects and developers) are reconsidering whether packing in urban city centers is over with for a little while.”
From May through the end of 2020, pending home sales for single- and multi-family homes in the Atlanta market were up about 30% compared to the same time period in 2019, according to MarketNsight, a firm that does residential market research for builders.
Georgia Power saw an 8% increase in new residential power meters in metro Atlanta from 2019 to last year. Meters installed for commercial projects experienced a small dip during that time. The state’s largest utility company added that the pandemic has not affected its long-term plans, including a $1.3-billion power grid investment plan to improve service reliability across the state.
With homes and apartments becoming office spaces for many workers, more millennials have looked to buy or rent larger homes with easier access to amenities, said John Hunt, the principal at MarketNsight.
“We do see folks that are in the building industry going back to the drawing board,” Hunt said of residential plans. Developers may be redesigning the layout of new apartments to better accommodate the pandemic lifestyle. What was initially designed as a living room or second bedroom could be turned into an office or flex space, for example.
In Midtown, the J5 luxury condo building opened at the start of the pandemic. Less than a year later, it is already undergoing an interior renovation “to ensure its viability in a post-pandemic world,” the CEO of development company Dezhu US said in a December press release. That includes more outdoor amenities, enhancements to the building’s shared spaces and expanded WiFi access. The upgrades “will better cater to the pandemic and post-pandemic buyer,” the press release said.
While data from the city of Atlanta’s planning department shows commercial and residential construction projects combined dropped nearly 30% during the first nine months of the pandemic, residential has held the most steady.
From March to November 2019, almost 7,400 projects were filed with the city, 31% of which were residential. Over the same time period in 2020, there were 5,310 projects, but residential developments made up a close to 40% of that total.
The number of commercial projects dropped from 3,210 in 2019 to 2,450 in 2020.
Looking forward
While it’s too soon to say that the pandemic has forever changed metro Atlanta’s robust development, companies and designers are working to perfect the “office of the future.”
Starling touted a set of office towers in Dunwoody as workplaces that provide a look into what the post-pandemic office could look like. While they were first developed in the late 1980s, the Terraces office towers and surrounding acres of greenspace recently got a makeover.
The 23-plus acre campus finished its renovation by the end of 2020 and incorporated lobbies with spacious seating arrangements and an expanded Wi-Fi network to allow workers to perform their jobs anywhere on the campus.
Credit: Jones Lang LaSalle
Credit: Jones Lang LaSalle
“In a post-COVID world, the ability to have flexibility to work in your office, down in the lobby or outside is going to be more important, especially for those employees who have become accustomed to working at home,” said Aspinwall.
While the pandemic was unexpected, evolution in office design is natural, Faussemagne said. He estimated changes brought on by COVID-19 could impact the work place for the foreseeable future.
“With COVID or the post-COVID world, I think you’re going to see things that are learned, and there are going to be things that end up in design that stay here for a period of time,” he said.
