Downtown to get 200-room Hotel Indigo
A new Hotel Indigo is coming to one of downtown Atlanta’s first office buildings developed by renowned architect John Portman.
Atlanta-based Portman Holdings LLC just acquired 230 Peachtree St., a 27-story tower built in 1965 by Portman. It was developed as part of Peachtree Center, one of the first mixed-use projects in Atlanta, at a time when downtown was rapidly growing.
Most recently, the building was owned by New York City-based mortgage servicer NorthStar Realty Finance Corp.
Portman plans to convert the first nine floors of 230 Peachtree into an approximately 200-room Hotel Indigo. About 290,000 square feet will remain offices for new and existing tenants.
The roughly $60 million project would become one of a handful of hotels with office space above. Similar projects include Midtown’s Four Seasons Hotel Atlanta.
Hotel Indigo will sit near the Atlanta Streetcar route. And, it will connect to AmericasMart Atlanta, also part of Peachtree Center, the popular venue that hosts many of the city’s largest events such as the Atlanta International Gift and Home Furnishings Market.
“What we are drawn to is the location,” said Ambrish Baisiwala, CEO of Portman Holdings. “We really wanted a hotel next to AmericasMart.”
The hotel could boost attendance at AmericasMart.
“As we continue to add markets, such as the VOW Bridal show introduced last year, the hotel infrastructure plays a pivotal role in our ability to house growing numbers of attendees from around the world,” Jeffrey Portman, vice chairman and president of AmericasMart, said in a statement.
It will be Atlanta’s third Hotel Indigo, a lifestyle brand from InterContinental Hotels Group Plc(NYSE: IHG), which has its Americas headquarters in Atlanta. The brand launched in the city 10 years ago and today there are 55 hotels in 11 countries.
The downtown Atlanta hotel market is heating up.
“I personally view downtown as the most active and dynamic [hotel market] in Atlanta right now,” said Charles Pinkham III, vice president of development at Portman Holdings. “Rates in downtown have been quite strong.”
Several new hotels are in the works including a Hyatt House near the Georgia Aquarium and Homewood Suites by Hilton along Marietta Street near Centennial Olympic Park.
Existing hotels are spending millions to upgrade their properties including the Westin Peachtree Plaza, which just wrapped up a $70 million renovation.
“We’re excited about Atlanta given that it was birthplace of our Hotel Indigo brand,” said Kirk Kinsell, president of IHG Americas. “I see the downtown market improving over time. I think the bright future is ahead.”
The downtown office market has been slower to recover.
The 230 Peachtree tower today is just 45 percent leased. Its tenants include consulting firm Booz Allen Hamilton Inc. and law firm Constangy Brooks & Smith LLP.
Even so, Baisiwala is bullish about downtown’s recovery and the ability to lease up the remainder of 230 Peachtree at higher rents. He cited one of the biggest relocations for downtown in years — The Coca-Cola Co.’s more than 275,000-square-foot lease in 2013 at SunTrust Plaza’s Garden Offices. The building is a joint venture between Portman and SunTrust Banks Inc.
“Downtown demand in the office sector has historically come from law firms and corporations and less so from technology companies, which go more often to Midtown,” he said. “But, there is more activity now. There is new entertainment. There is demand for hotels. And we do see even see the possibility for a new office tower before the end of the current development cycle.”
The project comes as new tourist attractions are opening downtown such as the College Football Hall of Fame and the Center for Civil and Human Rights.
It also reflects that more investors see downtown as an opportunity for adaptive reuse.
Paces Properties Inc., the developer of Krog Street Market, hopes to turn 250 Piedmont Ave., a vacant 20-story downtown office building, into a more than 300-unit apartment tower.
Another investor recently bought downtown’s well-known Flatiron Building, with plans to turn the property into an entrepreneurial hub.
Georgia State University is also a catalyst for downtown.
The school has acquired more than 1.2 million square feet of office buildings that it is converting to support its growth, including 55 and 25 Park Place.