Bucking The Trend: Developers Building More Parking For Their Office Buildings
Two Atlanta office developers still see tenants wanting that most basic of all amenities: parking spaces.
Now, Preferred Office Properties and Seven Oaks Co. are building second parking decks onto their Central Perimeter trophy towers to accommodate companies whose employees still use their cars to get to work.
Even with a plethora of transit options in Central Perimeter — three MARTA stations, various shuttle services and Uber and Lyft — Seven Oaks and Preferred Office are pushing parking ratios beyond the market norms by adding second parking decks.
“When you're talking about the Central Perimeter market, you're not talking about decreasing parking in the near future,” Cushman & Wakefield Director Kyle Kenyon said.
Preferred Office, a subsidiary of Atlanta-based Preferred Apartment Communities, is finishing construction of a second parking deck at its Three Ravinia Drive tower that will add an additional 500 parking spaces. It is a move that will give Preferred Office the ability to offer tenant prospects a parking ratio of four spaces for every 1,000 SF leased, Kenyon said. Cushman & Wakefield leases Three Ravinia for PAC.
Current ratios in Central Perimeter's Class-A office market average 3.3 spaces for every 1,000 SF, according to Colliers International Atlanta. The increased ratio puts Three Ravinia on par with the kind of parking abundance that landlords offer in North Fulton County, a suburb more than 10 miles to the north, giving the landlord the ability to lure parking-hungry tenants once State Farm vacates 180K SF in the next few years, Kenyon said.
“I think this puts us at a competitive advantage,” he said.
Seven Oaks Co. won a sizable deal with Northside Hospital, which leased 180K SF at its 1001 Perimeter Summit tower, overlooking Interstate 285 in Central Perimeter. The office allows Northside to consolidate more than 1,000 employees there. The fact that Seven Oaks agreed to build an additional five-story parking deck to feed the 21-story tower — pushing ratios from an already abundant four spaces per 1,000 SF to six — was key to winning the deal, Seven Oaks principal Randy Holmes said.
The firm also is now offering a similar deal to prospects at its recently completed 4004 Perimeter Summit tower: a potential second parking deck that could offer even more parking spaces to companies, leaving up to six spaces per 1,000 SF.
“We are getting routinely asked for ratios higher than that, north of five per thousand,” Holmes said.
There is a dichotomy taking shape in today's office landscape. While tenants are increasing their interest in access to MARTA and transit alternatives when discussing office locations — and even willing to pay higher rents to get there — they also want to make sure there will be enough parking spaces to handle increased payrolls.
“The reason that the parking is becoming more important is because of the densities,” Colliers International Senior Vice President Jeff Kelley said. "They're packing more people in less space. That's the reason people need more parking."
Tami Pirkle, who works in the iconic Queen building at Concourse Corporate Center in Central Perimeter, sees that need for parking firsthand. Since she lives just 7 miles away, Pirkle drives to work.
But traversing Central Perimeter's congested corridors is only half the battle for her. The other is finding a parking space along with the hundreds of others who drive into work as well.
“We fight for space. In fact, I just go ahead and go all the way to the top floor. And that's not even covered,” she said. “I just don't want to have to fight or walk a country mile to the elevator.”
The need for more parking goes beyond Central Perimeter. It is a growing issue even with office buildings in the city, Kelley said, with landlords figuring out creative options for employee vehicles.
Tenants locating within submarkets like Buckhead, Midtown and even Downtown realize that parking will be nowhere near as abundant as they can find in the suburbs. But the tension between transit and commute-by-car is still there, Kelley said.
“We've had to get creative and find adjacent lots … to get long-term parking. I don't think the parking is going away until the metro transit system is robust enough to really service the employees,” he said. “Even if you're sitting on top of a MARTA station, the MARTA usage rate for a company is probably around 10%.”
Companies have been prioritizing access to MARTA when hunting for big office spaces in recent years. It was a big reason for State Farm developing its own campus connected to the Perimeter MARTA station. That need is in part due to how dense companies are making offices, which have thrown traditional parking ratios out of whack.
"Office tenants are being forced to get close to a MARTA station because there is simply not enough parking, that’s a fact," Colliers International principal Jodi Selvey recently told Bisnow. Selvey recently helped Insight Global ink a deal to anchor a new office tower connected to the Dunwoody MARTA station.
"MARTA has to be an option," she said. "Whether someone takes it, that’s a whole different story ... Adoption and office tenants wanting it are two very different things."