Cousins hits pause button on sale of part of 191 Peachtree tower
By Douglas Sams
Cousins hits pause button on sale of part of Downtown's 191 Peachtree tower (SLIDESHOW)
As an office market, Downtown Atlanta hasn't been as hot as Midtown, Buckhead or the central Perimeter over the past decade.
Lately, however, downtown is creating a lot of buzz about its tourism industry, new apartment projects and investment in incubator space. That momentum is spreading to the office market.
Late last year, Cousins Properties Inc. was exploring a joint-venture on its 191 Peachtree tower, and technically the Atlanta real estate company didn't take the option of selling the tower off the table either. Now, consider its new strategy for the 50-story tower — and what it says about downtown.
"We have decided to hit the pause button on the sale of a joint venture interest in 191 Peachtree," Cousins CEO Larry Gellerstedt said in a Feb. 13 earnings call with analysts. Why the change?
There certainly was solid interest from well respected investors, Gellerstedt said. But the company also liked what's happening across downtown — the momentum of projects such as the new Atlanta Falcons stadium, the launching of the Atlanta Streetcar, the expansion of Georgia State University and the success of the College Football Hall of Fame and National Center for Civil and Human Rights.
"We saw the Atlanta market and the [Central Business District] in particular quickly improving around us as evidenced by more than $2.7 billion in new economic development activity currently underway," Gellerstedt said in the earnings call.
He added, 191 Peachtree generated 103,000 square feet of new leases and renewals in 2014.
"We are confident that that momentum will carry into 2015," Gellerstedt said. "And so we became less willing to compromise on key joint venture issues like control and leverage, and quite frankly we got a little greedier on price. Ultimately we decided that we are in power here in Atlanta and the 191 still has additional upside."
Anchor tenant Deloitte LLP will no longer lease 52,000 square feet — it consolidated its space in the tower almost seven years ago — and the move dropped 191 Peachtree's leasing percentage to 89 percent.
"Deloitte remains a fantastic advocate of the building with approximately 260,000 square foot leased through May 2024," Gellerstedt said. "Overall activity at 191 is ... as strong as it has been in sometime, and we are optimistic that we will pushback north of 90 percent leased in a very short order."