The Effect of Intra-City Relocations

[Andrea]

I am pleased to see a great new building like 1180 Peachtree come on line. At the same time, I'm not sure it really signals growth so much as relocation. A lot of what has happened in Midtown and Buckhead since the late 1980s as well as in the suburban areas has been at the expense of downtown. What happens to former crown jewels like 191 Peachtree as it empties out in the next few years? Are there other huge tenants like K&S and Powell Goldstein who will move back into the city to fill those gaps?

[atlmangum]

I am pleased to see a great new building like 1180 Peachtree come on line. At the same time, I'm not sure it really signals growth so much as relocation. A lot of what has happened in Midtown and Buckhead since the late 1980s as well as in the suburban areas has been at the expense of downtown. What happens to former crown jewels like 191 Peachtree as it empties out in the next few years? Are there other huge tenants like K&S and Powell Goldstein who will move back into the city to fill those gaps?

Andrea, I think so. I think as you start to see more and more residential developments spring up not only in DW but aslo in the surrounding areas like Midtown and AS, more businesses will want to move back DW. You have to remember that until recently, DW has not had much to offer not only for businesses, but also their employees. I think you will see DW becoming alot more like Midtown in the next 10 to 20 years where you actually have peole that live AND work there. What made Atlanta so attractive back during DW's initail boom back in the 60's and 70's was the hotel accomidations for conventions and quick acces to the airport. If you compare DW now to back in the good ol' days, there is alot more for going on.

[Andrea]

Andrea, I think so. I think as you start to see more and more residential developments spring up not only in DW but aslo in the surrounding areas like Midtown and AS, more businesses will want to move back DW. You have to remember that until recently, DW has not had much to offer not only for businesses, but also their employees. I think you will see DW becoming alot more like Midtown in the next 10 to 20 years where you actually have peole that live AND work there. What made Atlanta so attractive back during DW's initail boom back in the 60's and 70's was the hotel accomidations for conventions and quick acces to the airport. If you compare DW now to back in the good ol' days, there is alot more for going on.

Do you think it will be companies who've moved out to Midtown and Buckhead (or to the burbs) coming back into the city, or companies that haven't been in Atlanta at all before? Many of the law firms who moved to anchor the new buildings in Midtown, for example, seem pretty well ensconsced. And if they do move back downtown, what happens to Midtown? I suppose it's possible that they could shift back, in that the 191 Peachtree Tower which is now being emptied to fill 1180 Peacthree was only built in the early 90's, as I recall.

[Martinman]

Downtown clearly has work to do to fill its buildings but it does have momentum. DT actually has lower vacancy rate than most of the suburban markets but this is prior to the 191 exodus. I can't remember the company one of those taking space at Allen Plaza will be moving from Buckhead and saying that they won't miss having to get into the car at lunch time every day. That will be DT's selling point as it continues to redevelop and reawaken as well as competitive rates. I read occasionally about lease deals (albeit small) in DT buildings so there is positive momentum.

[atlmangum]

Do you think it will be companies who've moved out to Midtown and Buckhead (or to the burbs) coming back into the city, or companies that haven't been in Atlanta at all before? Many of the law firms who moved to anchor the new buildings in Midtown, for example, seem pretty well ensconsced. And if they do move back downtown, what happens to Midtown? I suppose it's possible that they could shift back, in that the 191 Peachtree Tower which is now being emptied to fill 1180 Peacthree was only built in the early 90's, as I recall.

I think it will be new companies either from out of state or in the burbs. I don't see compainies relocating back to DW, though (which is fine). I think DW is starting to get a new image to with all the development that is slated to go on and I think companies will want to associate ther business with that image. Again, it will take time. You saw Buckhead explode in the early 90's and now it is Midtown. Like I said earlier, I think 10 to 20 years downt the road, you are goint to see the joining of Midtown to DW. Not only only in skyline, but also in the way the areas will be developed and managed.

[atlmangum]

One other point of interest. One thing that makes Buckhead and Midtown so attractive is the amount of "young professionals" living there. That is what give those places such a vibrant feel. You currently don't have that DW. But again, with all the changes on the table for DW in the future (street level shopping, new condos, easy acess dining/drinking, safer streets) you will have younger people wanting to live DW. You can already see this tred in places like Midtown and even the Highlands.

[Andrea]

Wow, I just read in the Business Chronicle that 191 Peachtree has 800,000 sf of vacant space now that Powell Goldstein, Wachovia and King & Spalding have relocated to Midtown. They've hired Jones Lang Lasalle to try to lease it. The relocation of those three major businesses was a pretty massive hit for downtown.