Prices for “creative” office properties in Atlanta are reaching new heights, driven by soaring tenant demand.
Converted industrial buildings and other properties characterized by brick-and-beam interiors, high ceilings and open floor plans are still a tiny portion of the market’s office inventory — but are far outperforming Atlanta’s average rent growth. That’s drawing institutional buyers and pushing up per-foot sale prices to rival those of traditional Class-A properties in the city’s top submarkets…
“Seeing the tenant demand and the rents that people are willing to pay for this product type has gotten the attention of institutional investors,” said John Robbins, a senior managing director with Dallas-based Granite Properties, which is partnering with Third & Urban on two office conversion projects in West Midtown. “These aren’t buildings that only locally based tenants are going to,” he said. “These are hip, cool, new-age buildings that Fortune 500 companies are going to, and investors are buying into that.”Owners of the city’s remaining properties that are suitable for adaptive reuse are in position to cash in — up to a point, said Robbins. “Before you could get them for a steal,” he said. “But now owners are . . . ratcheting up their prices to the point where, for some properties, it doesn’t make sense for a redevelopment play.”