Downtown Poised for Big Office Comeback
Kay Younglove knows the Atlanta office market. Along with David Horne and Michael Warner represent the JLL leasing team for Peachtree Center, which is located at 225 Peachtree Street NE.
JLL has handled the Peachtree Center assignment for the last 10 years. Younglove came on board in December 2014, offering a unique perspective to the leasing strategy since she had the assignment in the late 1980s when she worked for its developer, Portman.
GlobeSt.com asked Younglove what she sees in Atlanta’s office market. She tells us with the rebound of the commercial real estate market and little new office supply in the development pipeline, the Atlanta market is tightening—especially in certain submarkets.
“We expect asking rents to continue to increase,” she says. “We expect class A and trophy buildings to remain occupied. And we expect companies to start eyeing class B space for value opportunities, especially in the urban markets where mass transit lessens the parking required for today's higher density, collaborative work environments.”
Let’s dive into the submarket question. Clearly, Buckhead and the Central Perimeter are among the most active. But what impact is that having on the broader Atlanta office market? For one thing, Younglove says, it’s pushing demand to Midtown, the Northwest and Downtown Atlanta.
“From our perch at Peachtree Center, we believe that downtown is poised to re-establish itself as a prime market,” Younglove says. “A large percentage of today’s workforce prefer city living, wanting to be close to peers, shops, restaurants, cultural activities, and are less inclined to drive to work every day, preferring to use public transit, walk or bike.”
As Younglove sees it, Downtown Atlanta can appeal to all worker preferences. With some of the most aggressive asking rents of any office market in the country, she says it is becoming more attractive for tenants looking for unmatched amenities at an excellent value.
“Metro Atlanta class A and B office absorption has totaled over 2.6 million square feet since the start of 2014 and this absorption has caused rental rates to increase by an average of approximately 8% in the same period,” she concludes. “However, rates have jumped by as much as 20% at the most desirable properties in certain submarkets such as Central Perimeter and Buckhead. Downtown rates have held steady, but are expected to increase in the near future.”