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Another half million sq for midtown Atlanta?

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King eyes second Midtown building

Jarred Schenke

Staff writer

Atlanta developer Kim King last year completed one of Midtown's newest office buildings, Centergy One.

Now he is close to completing three separate deals that would fill 170,000 square feet, which would put the 487,000-square-foot structure at more than 90 percent leased.

As a result, King said, his company, Kim King Associates Inc., will "definitely" kick off a 500,000-square-foot sister building called Centergy Two later this year.

Although about 250,000 square feet in the second building will likely need to be pre-leased before construction can begin, King said, he is actively working on deals that would get the building to that point sooner rather than later.

"I believe very sincerely that sometime -- at the earliest late spring, the latest late fall -- we'll kick off Centergy Two," King said.

King declined to identify the potential new tenants for Centergy One, but said he has reached agreement in principle with companies to occupy space.

Sources familiar with the deals said that one of those tenants will be technology consulting firm Accenture Ltd., which is negotiating to take a significant portion of space at Centergy One. In turn, Accenture would vacate The Equitable Building in downtown Atlanta, where it uses about 90,000 square feet. Accenture's leases at Equitable expire this year, sources said.

Greg Kindred, vice president with Lincoln Property Group, who represents The Equitable Building, declined to comment on whether Accenture is considering moving from The Equitable Building to Centergy One.

Momentum in Centergy -- part of the Technology Square mixed-use project at Georgia Tech -- has picked up in recent months, especially after bank chain RBC Centura leased 40,000 square feet in the building. Centergy One is owned by The University Financing Foundation.

Potential tenants have warmed greatly to the project since its completion, King said.

Although Midtown's prestige has grown in recent months with the influx of some very high-profile professional firms, such as King & Spalding LLP, the area still has an office space glut. Currently, 24.6 percent of Midtown's 12.7 million square feet of office space remains empty, according to Dorey Market Analysis Group. There is another 681,000 square feet under construction, mainly in the form of the 1180 Peachtree Street building, the future home of King & Spalding.

Mike Shelly of Richard Bowers & Co. believes it is too soon to build Centergy Two. "It takes 15 [to] 18 months to build a 500,000-square-foot project. Somebody's crystal ball may be different than mine, but I just don't see the improvement in the office market."

King said the environment has to make him -- like other landlords -- very aggressive on rents. He is able to offer lower rents because of a financing method his company developed where portions of Centergy Two will be sold to investors, who then will lease the space at a discount to tenants, he said.

"That's our secret. That's why we're getting ready to do another building," King said, declining to name investors in Centergy Two.

"We blend this ... approach together in these condominium ownership structures and take the remaining space on a reduced basis," King said. "We can turn around and then offer very aggressive rents and do deals others can't do."

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