Troubled online used car seller Carvana appears to have scuttled plans to open a huge office in a glitzy Dunwoody tower.
Carvana has ended its 570,000-square-foot sublease for the 21-story Park Center 1 building within State Farm’s campus overlooking I-285 near Perimeter Mall, the Atlanta Business Chronicle reported Thursday, citing unnamed individuals.
State Farm ceded space in the tower to Carvana under a “sublease” deal, in which Carvana would take over space the insurer previously occupied. On Thursday night, State Farm did not mention Carvana by name, but confirmed in a statement to The Atlanta Journal-Constitution that “Park Center 1 will be available for sublease in the future.”
Arizona-based Carvana declined to comment to the AJC, with a spokesperson saying, “There’s nothing to share at this time.”
Office landlords have struggled amid plans by some companies to slash payrolls ahead of a potential economic downturn. Companies also are reassessing their office space needs in the wake of the COVID-19 pandemic and the rise of remote and hybrid work schedules.
Commercial real estate observers expect the office market to be squeezed by lower demand for office space and for battles over tenants to heat up as owners face increasing pressure to fill buildings to produce revenue to pay their mortgages.
In February 2022, Carvana said it would add 3,500 workers in the Atlanta area and occupy Park Center 1, giving it trophy office space on Atlanta’s northern perimeter. At the time, Carvana had roughly 1,500 Georgia employees, and Gov. Brian Kemp said the expansion “represent another step in the Peach State’s growth as a hub for forward-thinking companies.”
But Carvana backing out of Park Center 1 undermines what was the largest lease of 2021, which took place amid a time of soaring used-car demand and rapid expansion for Carvana. Since the expansion was announced, Carvana has seen its value sharply decline and has shed thousands of workers amid multiple layoffs.
It’s unclear how many of the promised 3,500 additional workers have been hired.
A company spokesperson told the AJC last September that “expansion plans announced earlier this year are still underway” and declined to provide an update in November, when about 1,500 employees nationwide were laid off.
Following a disappointing third quarter earnings report last year, S&P Global Ratings downgraded Carvana’s outlook to negative from stable. The following quarter also recorded larger-than-expected losses, bringing the company’s total losses last year to $1.6 billion.
Carvana’s stock, which peaked at more than $360 per share in mid-2021, bottomed out in December at less than $4 a share. The company’s share value ended Thursday at $9.37.
