Flatiron redevelopment Could Turn Downtown Atlanta into Startup Hub
The redevelopment of the historic Flatiron Building in downtown Atlanta could trigger a startup renaissance in the city's core.
A real estate developer plans to convert the 117-year old building into an entrepreneurial hub. Atlanta Business Chronicle first reported the plans Feb. 28.
If successful, the building is likely to have a gravitational pull, luring young companies to a marginalized office market.
There is well-documented precedent. The Advanced Technology Development Center, a tech business incubator at Georgia Tech has helped turn Midtown into ground-zero for tech startups. More recently, Atlanta Tech Village in Buckhead has drawn startups to nearby buildings including Tower Place and Piedmont Center.
Real estate investor Arun Nijhawan plans to buy and renovate the 40,000 square foot Flatiron into a “collaborative place” for Atlanta’s “makers, thinkers, and doers.” according to a document filed with Invest Atlanta, the city’s economic development arm.
Built in 1897 — five years before New York City’s better-known Flatiron — Atlanta’s English-American Building (commonly referred to as the Flatiron) is the city’s oldest skyscraper. The 11-story wedge-shaped tower straddles two of downtown’s most prominent streets — Peachtree and Broad.
Repurposing the mostly vacant Flatiron into a venue for startups reflects the new reality of commercial real estate demand.
Nijhawan refers to his planned redevelopment as “next-generation” office space — characterizing it as a “live, work, play” environment that would attract technology, digital media and advertising and design startups and entrepreneurs.
“It’s important to create an environment that promotes interaction and sharing of ideas,” he said. “We don’t sit in cubicles by ourselves and come up with great ideas.”
The development would include more than 36,000 square feet of collaborative workspace, and 5,600 square feet of boutique retail and entertainment space. Single desks and private suites would be rented on a monthly basis, giving tenants the flexibility to grow — or shrink — their office footprint as needed. Nijhawan hopes to team up with a local entrepreneur to help create industry specific programming for tenants.
For Nijhawan, former real estate chief of $5 billion hedge fund GMT Capital, the Flatiron project is strategic and opportunistic.
“Entrepreneurs are the growth engine of this economy,” Nijhawan said. “We need to create infrastructure to support them.”
Downtown has the bones to become a hub of company building activity.The area has 32,000 students at Georgia State University — offering a pool of potential entrepreneurs.
Downtown’s inventory of historic buildings offers workspaces with “stories” that startups and their millennial workforce covet. The Fairlie-Poplar Historic District and Woodruff Park offer a walkable environment.
Infrastructure improvements are better connecting Downtown with the rest of the city. The Flatiron is a brisk walk from two MARTA stations and the Streetcar will connect the building to the Beltline and its bike trails.
There have been several attempts to redevelop and repurpose the Flatiron Building, which is about 70 percent vacant. However, the building’s unique size and shape limits the financial viability of most alternative uses. The building, which has relatively small 4,000 square foot floor plates, had been considered for a hotel and condo.
Nijhawan, who has the Flatiron under contract, expects to close on the deal this month and complete renovations by year-end, according to public documents. Nijhawan has amassed $8.7 million, most of it in private equity.
Invest Atlanta has offered a $1.5 million loan to help offset acquisition and renovation costs, which are expected to top $10 million. The loan will be forgiven in seven years if the space is used for startups and a women’s entrepreneur center.
Backing the redevelopment made sense for the city, which is focused on growing and strengthening the startup ecosystem, Invest Atlanta CEO Brian McGowan said.
“Our purpose is to facilitate the creation of jobs in Atlanta,” McGowan said. “All net new jobs come from business startups.”
As technology invades every business function, corporations are doing more with fewer employees. That reduces the need for multiple floors of office space.
Landlords can no longer rely on landing a few traditional professional service firms as anchor tenants who will eat up multiple floors, said Scott Henderson, who until recently operated Hypepotamus, a tech startup-focused co-working space at the Biltmore Hotel.
The proposed Flatiron development is “a long-term play, embracing the atomization of office tenants,” Henderson said. “Developers need to create a business model that attracts small aspirational startups, some of whom can scale their company, and will need more space. Those tend to be technology based companies more and more now.”
If Nijhawan can pull off the the Flatiron project, it would extend south the startup corridor that now stretches from the northern edge of Buckhead to the southern tip of Midtown.
A startup culture renaissance in Atlanta is birthing several entrepreneurial hubs — a cross between incubators and co-working spaces, that include startup programming and events.
In late 2012, David Cummings acquired a 100,000 square foot office building at Piedmont and Lenox roads in Buckhead. Since then, the McLaren-driving serial entrepreneur has invested about $20 million to transform it into a tech hub, that houses 100+ software startups.
In Midtown, a former Sears Roebuck & Co. building being redeveloped into a $200 million mixed-use project called Ponce City Market, that has lured fast-growing tech firms.
Michael Tavani, co-founder of deal site Scoutmob, is planning an incubator aimed at building design and business-to-consumer (B2C) startups. Tavani, who had considered the Flatiron Building for his project, is expected to announce a Midtown site in a few weeks.
If Nijhawan can pull off the the Flatiron redevelopment it would extend south a startup corridor that stretches from the northern edge of Buckhead to the southern tip of Midtown.
Some argue the proliferation of entrepreneurial hubs around the city makes it harder to create startup density in any one location, preventing the serendipitous interaction that young companies need to grow.
Atlanta would be better served if these hubs were close enough to actually create a "real hub," techpreneur Don Brown tweeted, following the initial report. “There aren’t enough serious startups in Atlanta yet to saturate a single one of these hubs,” Brown quipped.
Atlanta does not have the startup density to support three, four hubs, said Rob Kischuk, CEO of PerfectPost, an e-commerce marketing automation startup.
“We are fragmenting faster than we can build a critical mass in any one place,” Kischuk said. “Very Atlanta.”
Nijhawan argues Atlanta — with its cluster of startup-creating universities and Fortune 1000 companies — has the entrepreneurial talent pool to support multiple hubs in different markets.
“I think Downtown, Midtown and Buckhead can become an integrated urban entrepreneurial corridor which feed off of each other, rather than separate hubs,” he said.
The Flatiron redevelopment could have ripple effects — driving demand for office space in surrounding towers.
“We expect 20 percent-to-30 percent of tenants will outgrow the space (at Flatiron),” Nijhawan said. “If they like the environment we’ve created, they are going to want to stay in downtown (and) that’s likely to drive demand for neighboring office space.”
Urvaksh Karkaria covers Technology.