Which downtown Atlanta office towers would make good homes?

Developers and city leaders see adaptive reuse as a solution for oversupplied office districts that lack housing, A consultant will help find good candidates
The historic W.D. Grant Building was built in 1898 and is one of the oldest buildings in Atlanta. A Texas-based development team is converting its upper floors into apartments.

Credit: Zachary Hansen

Credit: Zachary Hansen

The historic W.D. Grant Building was built in 1898 and is one of the oldest buildings in Atlanta. A Texas-based development team is converting its upper floors into apartments.

Outdated office buildings litter downtown Atlanta, leaving floors of empty cubicles and corner offices that few tenants want.

The plight threatens the revitalization campaign of the city center and has prompted downtown’s leaders to hire a New York consultant to see which buildings might be good candidates for a second life as apartments or condos.

Downtown civic organization Central Atlanta Progress (CAP) and the Atlanta Downtown Improvement District (ADID) told The Atlanta Journal-Constitution they chose urban development consulting firm HR&A Advisors to analyze downtown’s infrastructure, architecture and regulatory environment to explore the viability of office-to-residential conversions.

“It’s a sign of the times,” CAP President A.J. Robinson said. “This is a subject that’s not going away.”

Adaptive reuse, where a building is changed from one use to another without being torn down, has emerged as a potentially widespread solution to injecting much-needed housing options within oversupplied office districts.

Atlanta has a history of adaptive reuse, but it’s less prevalent than older cities like New York and much of Europe. About 18% of downtown Atlanta’s housing units are in buildings that were previously another use, most often office or industrial, according to CAP.

Views of Peachtree Center in Downtown Atlanta as seen onTuesday, Dec.13, 2022. (Natrice Miller/natrice.miller@ajc.com)

Credit: Natrice Miller / Natrice.Miller@ajc.com

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Credit: Natrice Miller / Natrice.Miller@ajc.com

Marilynn Davis, a senior advisor at HR&A, said her firm has conducted similar studies in New York, Boston and San Francisco. She said it’s important to look at both the conversion capabilities of individual buildings as well as the surrounding area.

“You have to think about creating places where people want to live, no matter how lovely the building,” she said. “... It’s not just a building in isolation.”

COVID-19 upended the office market across the country, as some employees can work from anywhere or now enjoy the flexibility of a hybrid schedule. Downtown’s recovery has lagged behind other parts of the city, with amenity-rich newer buildings often demanding more interest than older offices.

After receiving 13 submissions to conduct the study, Robinson said HR&A’s experience set them apart, adding that they’ll receive assistance from Atlanta-based architecture firm Lord Aeck Sargent. The study’s first phase is expected to be complete by October.

Metro Atlanta is dealing with a record amount of unwanted office space. Nearly 30% of all office square footage in metro Atlanta was available for rent at the end of June, according to data from real estate services firm CBRE.

The lack of demand coupled with high interest rates and a wave of office debt set to mature in the coming years has spurred a new wave of financial distress and foreclosures in large cities.

In September, six towers and a mall within downtown Atlanta’s Peachtree Center were returned to their lender, marking the largest foreclosure sale since the fallout of the Great Recession. Other large buildings, such as the W Atlanta — Downtown hotel, Sheraton Atlanta Hotel in downtown and Tower Place 100 building in Buckhead, have also come on hard financial times.

Conversions are seen as a way to kill two birds with one stone by replacing unwanted office space with desirable housing.

But some buildings aren’t practical to convert into housing — after all, many people wouldn’t want to live in units without windows or with a wonky floorplan.

Scott Ziegler, senior principal with Texas-based Ziegler Cooper Architects, said extra elevator shafts and inflexible design aspects within office buildings are difficult to work around.

“Office building elevators are of no use to you, so what do you do with that dead space? The bones are bad,” he said during the National Association of Real Estate Editors conference in June.

Downtown optimism

Atlanta leaders believe many downtown buildings have good bones, such as 2 Peachtree Street.

The city’s economic development agency, Invest Atlanta, paid $39 million in February to purchase the 41-story building from the state of Georgia with the goal of turning it into mixed-income apartments. Five development teams are currently under consideration to tackle the project, which Atlanta Chief Policy Advisor Courtney English said represents the city creatively tackling affordable housing.

“The cheapest housing is the housing that already exists,” he said.

Views of Two Peachtree office building in Downtown Atlanta as seen on Tuesday, December 13, 2022. (Natrice Miller/natrice.miller@ajc.com)

Credit: Natrice Miller / Natrice.Miller@ajc.com

icon to expand image

Credit: Natrice Miller / Natrice.Miller@ajc.com

The city owns or is involved in several active adaptive reuse projects downtown.

Atlanta is redeveloping 104 Trinity Street into a 228-unit community on vacant city-owned land, and the city is working to build new affordable housing at 143 Alabama Street, where the city wants to preserve the former Atlanta Constitution Building. The city is also working with CIM Group on its $5 billion Centennial Yards project, which aims to transform the parking lots and railroad lines known as The Gulch into a mix of housing, office buildings, retail and hotels.

Davis, with HR&A, said the regulatory environment is a crucial, but often overlooked, step for adaptive reuse projects, since they often have to be rezoned and clear layers of red tape.

Some cities, such as Calgary, Alberta, have implemented hefty incentive programs for adaptive reuse projects. In response to the pandemic’s impact on the office market, the Canadian city began reimbursing developers at $75 per square foot for converting offices to other uses.

English said Atlanta aims to use every available tool to encourage conversions that make sense, whether that be offering developers ground leases for city-owned land or providing tax abatements through Invest Atlanta. He expects 2 Peachtree to serve as a bellwether for what could come to downtown.

“It will send a signal to the market that this is possible,” English said. “We can meet the need of affordable housing challenges that our residents need as well as plant a flag in the ground and say, ‘Look, downtown Atlanta is back.’”