Tenants continue to sign leases at Peachtree Center despite uncertain future

The office market is struggling to recover from the upheavals caused by the COVID-19 pandemic, particularly in the city center. Peachtree Center had its appraised value reduced to approximately $155 million despite having $115 million in distressed debt. And the complex has a special new department, Torchlight Financial Services, to oversee the future of properties after foreclosure.

Despite the uncertainty, the Peachtree Center is beginning to chart a potential path forward. Chip Roach, senior managing director of Transwestern’s leasing offices in Atlanta, said his team is aggressively marketing available office space to potential tenants while leaving one tower, 225 Peachtree, vacant in case a developer wants to acquire it and convert it into apartments.

Credit: [email protected]

Credit: [email protected]

“Peachtree Center continues to shine as one of downtown Atlanta’s most attractive and dynamic office destinations,” he said in a press release. “We are pleased to see the strong interest from current and potential tenants. »

Converting aging towers has gained attention since the pandemic flooded many business districts with unnecessary office space. Removing one of the Peachtree Center towers from the office market could not only extend its viability, but also add life to the Peachtree Street corridor while concentrating tenants in the other buildings, thereby stabilizing the entire development. <<

Omitting 225 Peachtree, the complex’s office occupancy rate ended March at 52%, about the same as the entire six-tower complex had in early 2022 before its foreclosure. Last year, Transwestern closed nearly 154,000 square feet of leases at Peachtree Center, signaling some construction momentum for the skyline-defining towers.

Among the new signings, Burke Moore Law Group opened a new 7,742 square foot office within the Peachtree Center. Existing tenants, the U.S. Nuclear Regulatory Commission, Robert and Co. and Atlanta Neighborhood Development Partnership, renewed their leases for 54,303 square feet, 15,987 square feet and 5,049 square feet, respectively.

Credit: [email protected]

Credit: [email protected]

A record amount of unwanted office space is currently on the market in metro Atlanta, according to real estate services firm CBRE, and the downtown office market has been among the slowest to recover from the pandemic.

During the first quarter of this year, the Atlanta office market experienced about 1.5 million square feet of negative absorption, an industry term for whether a market is growing or contracting. Downtown accounted for more than half of this negative absorption.

Despite these challenges, some real estate analysts are optimistic about downtown’s prospects. Dale Lewis, senior vice president of CBRE in Atlanta, said downtown developments are starting to gain momentum, such as the $5 billion Centennial Yards project near Mercedes-Benz Stadium and a new cluster of owners taking over an initiative to revitalize 10 blocks of south downtown.

“Alongside all of these initiatives, the World Cup will take place in 2026, which will give us additional leverage and additional time pressure,” Lewis said. “Overall, I believe downtown has an exciting future. »