Underground Atlanta Owner Plans Resi Conversion Of 30-Story Downtown Office Tower
Lalani Ventures, the owner of Underground Atlanta, is planning to pursue a major redevelopment of 34 Peachtree St., a 300K SF office tower two blocks from its signature property.
“Sometime next year we should start construction, depending on if the financing markets are getting better and stabilized,” Lalani said at Bisnow's Atlanta Urban Core event Wednesday at the Crowne Plaza Midtown Atlanta.
Lalani told Bisnow after the event that the project has the support of Invest Atlanta — the city's economic development arm, which has the power to grant tax breaks and other incentives to help fund developments — for the conversion, which is also close to CIM Group's Centennial Yards, the $5B development replacing the Gulch.
"We’ve actively been talking to Invest Atlanta on this project and they are supportive of our efforts," Lalani wrote in an email. "We’re also planning to have affordable units in the building."
Lalani plans to convert floors five through 25 of the tower into apartments, as well as add 2,700 SF of street-level retail and preserve 45K SF of office space. The apartments would range from studio spaces to one- and two-bedroom units and a smattering of three-bedroom units, according to a presentation Lalani gave at the event.
Lalani Ventures — which also runs coin-operated game machines and has amassed a real estate empire of convenience stores and gas stations — purchased 34 Peachtree, also known as One Park Tower, for $12.75M in 2021. Office tenants in the building include Atlanta Downtown Improvement District, the data center operator Windstream, Verizon and a host of smaller tenants.
Lalani rose to prominence in Atlanta's real estate community a year prior when he purchased Underground Atlanta from WRS for $31.6M after the South Carolina developer failed to deliver on its plans to bring the Downtown tourist icon back to its former glory.
When Lalani bought One Park Tower, it was two-thirds vacant and had previously been acquired for $9M in a foreclosure auction, The Atlanta-Journal Constitution reported.
When the 439-foot One Park Tower was constructed in 1961, it was the tallest building in Atlanta, holding that title for five years. It lost that title to 2 Peachtree St., a 41-story office tower next to Underground Atlanta, which the city is buying for $39M with plans to transform it into a mixed-use development with an affordable housing component.
Lalani and the city are not alone among entities looking to turn underused office space in Atlanta into much-needed housing.
Since 2015, developers have converted office space into more than 600 apartment units in Downtown, according to real estate advisory firm Haddow & Co., including 100 Edgewood, which Paces Properties transformed into the 320-unit Altitude luxury apartment tower in 2015, and CIM Group's conversion of 160 Trinity Ave. into the 162-unit Lofts at Centennial Yards South.
Texas-based Wolfe Investments and Bluelofts are underway with converting 41 Marietta St., the former 13-story home to the Standard Federal Savings and Loan, into a 120-unit, Class-A apartment complex. The Grant, a historic building at 44 Broad St. in Downtown, is being converted into a residential and hospitality project that will be leased to short-term rental provider Sonder.
Lalani said the firm is in the "value engineering and design exercise phase" of the project, adding that the support of Invest Atlanta is key to getting it to move forward.
"We haven’t begun to talk to lenders yet," Lalani wrote in an email. "Today’s interest rates and construction costs are definitely making it challenging to pencil in a deal, and without the support of Invest Atlanta, it would be nearly impossible to pencil in any deal in today’s environment."
Lalani said onstage Wednesday that, as for Underground Atlanta, the firm has pulled plans for office and hotel in the first phase of the project and is focusing on developing two apartment towers and a student housing project on the east side of the property.
“We’re under [an] LOI stage with a developer, a well-known developer, to deliver a tower,” Lalani told Bisnow after the panel, adding that a second phase of Underground’s redevelopment on its west side would be a mix of office and residential.