Suburbia in metro Atlanta has long featured countless cul-de-sacs, sprawling strip malls and clusters of corporate campuses all disconnected from each other. But that’s quickly changing.
Owners of suburban office parks are adding or looking to build apartments, retail, restaurants and other after-quitting-time elements to inject new life into their corporate campuses. Several of the region’s most prominent suburban infill redevelopments of office campuses are in Central Perimeter in Dunwoody and Brookhaven.
The developer of Park Center, the home of a huge State Farm campus, plans to build a high-rise hotel and luxury apartments on the site once planned for another office tower. Apartments and retail in the first phase of High Street along Perimeter Center Parkway are preparing to open. And just to the south, the firm redeveloping the former GoldKist headquarters into a project called Campus 244 are adding restaurants and a hotel.
The live-work-play trend was already beginning to spread into the suburbs before COVID-19, but the pandemic’s effects have only accelerated the shift to mixed-use development and amenity-focused building revamps along Atlanta’s edges.
As companies have cut office space post-pandemic, creating a glut of unused space, some developers are nixing office plans or pivoting to build residences, hotels or additional retail. That playbook is likely to continue until the office market improves.
“The last thing we need is a bunch of new office space being built without a tenant in hand,” said Michael Starling, Dunwoody’s economic development director. “We’ve got plenty.”
The Central Perimeter area, revolving around Dunwoody and Sandy Springs, has metro Atlanta’s highest concentration of Fortune 500 headquarters while boasting the most office space on offer of any of the region’s central business districts.
The pandemic’s impact on office demand has hit the submarket hard. Nearly 38% of Central Perimeter’s 24.5 million square feet of office space was either vacant or available to rent at the end of 2023, according to data from real estate services firm CBRE. That’s more than five percentage points higher than the metro area as a whole.
“A lot of that has to do with these corporations recognizing that they have too much space and need to shed a lot of it,” said CBRE Associate Field Research Director Scott Amoson.
For KDC, the Texas-based developer behind State Farm’s massive Park Center campus, the solution is to not overfeed a stuffed market.
The developer is scrapping plans for a fourth standalone office tower on the site located near Dunwoody’s MARTA station, pivoting to a 300-unit apartment tower along with a mixed-use hotel and office building with less than half of the originally proposed office space. The plan, which received an endorsement from the Dunwoody Planning Commission, goes before the City Council on April 8 for consideration.
Commercial real estate executives say it’s uncertain if an appetite for single-use office towers will return someday, but it’s clear that demand isn’t there now.
“There is little to no customer or capital demand for old and tall (central business district) towers or suburban commodity properties,” Colin Connolly, CEO of Atlanta-based real estate firm Cousins Properties, said earlier this month on an earnings call. “Many of these buildings will stagnate until they are repurposed or torn down.”
A sea of surface parking
Last year’s office market was a tale of silver linings.
The amount of unwanted space set multiple records in metro Atlanta, the construction pipeline for new office towers slowed to a crawl and office owners had to continually up the ante on concessions to woo tenants. But Amoson said a few areas outperformed their peers.
Last year, only one major submarket, Midtown, saw positive absorption, a measure of how much the office rental market is expanding or contracting. The Cumberland/Galleria submarket in Cobb County was the next best performer, even though its absorption was slightly negative, while Central Perimeter was the deepest in the red.
In Central Perimeter, a net 802,000 square feet of space was vacated last year, according to CBRE data.
“I wouldn’t say it’s all dire in Central Perimeter, but there’s a lot that submarket is dealing with,” Amoson said.
A lot of Central Perimeter’s office stock is self-contained in office parks or corporate campus-style developments, isolated by seas of parking from nearby shopping centers and residential or mixed-use projects. Redeveloping those underused lots into restaurants, apartment buildings or other elements is seen as a potential answer for underused space, Starling said.
Tim Perry, a managing partner at North American Properties and chairman of the True North 400 community improvement district, said developers and municipalities need to be careful about what is built on those parking lots. Unless the elements are intentional and connect to the office building, he said it won’t help a floundering building thrive.
“Building apartments in an office parking lot does not save the office,” he said. “It doesn’t create an amenity.”
Creating vibrancy
Suburban offices don’t only have an issue attracting tenants; they also have an uphill battle getting employees to use them.
Several projects in the North Atlanta burbs are trying to provide more reasons to entice employees away from their home office, often through incorporating mixed-use elements or adding outdoor amenities.
The Georgetown Co. and RocaPoint Partners announced this week its Campus 244 mixed-use district in the former GoldKist campus in Dunwoody will soon be home to new restaurants and a hotel called Element by Westin Atlanta Perimeter.
Credit: The Georgetown Co. and RocaPoint Partners
Credit: The Georgetown Co. and RocaPoint Partners
Spear Street Capital, which purchased the 1.3 million square-foot office campus Perimeter Summit in Brookhaven, last year for $278 million, also recently announced a series of amenity improvements, from walking trails to bocce ball courts for the development that hugs I-285 along Ashford Dunwoody Road.
In Johns Creek, Medley is a $350 million mixed-use office park redevelopment project by Toro Development Co. that will be similar to Alpharetta’s Avalon while also serving as the centerpiece of the city’s forthcoming 192-acre town center.
The area’s largest mixed-use district, the $2 billion High Street project, is moving forward with a steady stream of tenant signings. This week, the 36-acre project by GID Development Group announced several shops and three restaurants.
Credit: GID Development
Credit: GID Development
Starling said interconnectivity is here to stay in the suburbs, and future office projects will have to provide things for employees to do aside from just work, both inside and outside the office.
“We cannot ever expect to simply be an office market,” he said. “It’s got to be full live-work-play.”
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