Downtown Atlanta Is Poised For Revival. Businesses Are Still Leaving

A handful of developers have spent billions of dollars to revitalize Downtown Atlanta. Those projects are now close to realization.

CIM Group is nearing completion on the first phase of Centennial Yards, a planned $5B entertainment and mixed-use district. CP Group last week unveiled its rebranded CNN Center, which is slated to draw World Cup spectators into its new food hall. And in South Downtown, two tech operators are turning a historic retail district into a mixed-use destination, with plans for a startup business incubator.

The projects aim to draw visitors and consumers back into Downtown Atlanta. But office tenants are still moving out, turned away by the city’s aging office stock, struggling owners and a perception among tenants of crime and vagrancy.

“Downtown is just hard,” said Scott DeMyer, a former office broker who is currently director of economic development for Downtown Atlanta Inc., the agency formerly known as Central Atlanta Progress. “I’m confident it’s changing now. We’re having people move in down here now. Unfortunately, we had bigger people move out.” 

Since 2020, Downtown Atlanta office tenants have vacated a net 2M SF, according to data compiled by Colliers. The exodus’ biggest beneficiary has largely been the neighboring Midtown submarket, which, in the same time frame, gained more than 315K SF of office tenant usage. 

In the past two years, at least half a dozen office-based firms have packed up and left Downtown for other areas of the city, including accounting giant EY and law firm Ogletree Deakins. Atlanta law firm Drew Eckl & Farnham said in May it was moving to Midtown, as did tech firm CallRail, which is moving to Cousins Properties’ 725 Ponce, the Atlanta Business Chronicle reported. 

“I used to spend time down there, but nobody does anymore,” Savills Managing Director Brian Day said. “There are people who are going to be Downtown and they’re going to stay Downtown. But if I’m reading the tea leaves, it’s going to be a hard sell.”

Surge Of New Development

Downtown is going through a sort of renaissance. Before the pandemic, it remained void of significant new developments, while nearby Midtown spurred to life in a reurbanization that saw tech companies populate new office towers.

But that began to change when CIM emerged on the scene. The first phase of the Centennial Yards project is expected to be complete in the third quarter 2027 and already includes a 5,300-seat Live Nation concert venue, a theater called Cosm, retail and Hotel Phoenix, according to The Atlanta Journal-Constitution. It is  planned to ultimately include 2,000 apartment units, 900K SF of retail, 1,500 hotel rooms and 1.2M SF of office.

The former CNN Center, now rebranded as the CTR, is opening its new food hall next month as it continues to eye further redevelopment of the more than 1M SF facility, including possible housing.

And tech entrepreneurs Jon Birdsong and David Cummings continue to transform a portfolio of more than 50 historic Atlanta buildings into their South Downtown revitalization project for $140M, with a host of new restaurants, apartments and office suites targeted to business startups.

Birdsong, who also operates Atlanta Tech Village in Buckhead, said his firm, Atlanta Ventures, is about to sign on its first office tenant among its lineup of 11 refurbished office suites. He declined to identify the company. 

Atlanta Ventures has a track record of incubating major tech companies. Some of the graduates of Atlanta Tech Village are Salesloft, Prize Picks and IO Education.

Birdsong said he believes Downtown Atlanta’s office ecosystem isn’t so much dying as transforming, with a new breed of corporate tenants likely to replace those that are leaving.

The companies that have left were what he described as “legacy tenants” that moved to seek greener pastures in nearby office submarkets and likely won’t be part of the future Downtown office environment.

For South Downtown Atlanta, the firm is targeting “urban pioneers” who want to be part of “an ambitious community of people attempting to defy the odds,” Birdsong said.

“I don’t know if that really resonates with a corporate accounting behemoth,” he said. 

Jonathan Koes, research manager at Colliers, said he expects more government and public service companies to expand into Downtown.

“Rents are quite affordable compared to Midtown, so it becomes a numbers game for some tenants. A couple of notable expansions should be announced soon,” he said.

Landlord Struggles 

Downtown’s older office buildings and struggling owners are some of the factors behind the ongoing departure of corporate tenants, according to Jodi Selvey, the vice chair of Colliers in Atlanta who represents office tenants. 

For example, Banyan Street Capital’s $80M loan on 191 Peachtree St. was recently flagged for performance concerns as the tower suffers a drain in tenants.

But Selvey also said Downtown is lacking a key component that has helped Midtown thrive: new housing. 

 “The No. 1 thing that's been missing from Downtown since its inception is housing,” she said. “You go to New York, you go to Dallas ... they all have very dense downtown populations. And Atlanta does not. The office follows the retail, the restaurants. You got to have living breathing people there 24/7, not 9 to 5. If there were 50,000 people living within one mile of Downtown, everything is different. But there’s not.”

Day said the homeless population also deters potential office tenants.

“I think part of it is perception, but part of it is also reality. We all heard stories of 'My associate left at 8 p.m., and there was a person in the parking lot screaming,'” Day said. “If I'm a senior person at a firm, that immediately kills the deal.”

T. Dallas Smith & Co. Chief Operating Officer Dexter Warrior also said housing will be critical to Downtown’s office recovery. But to get more housing, the city needs to make the sidewalks more walkable, he said.

“Why can’t we create sidewalks without holes in the sidewalks? Why can’t we take care of housing in Downtown Atlanta to make it attractive for everybody to be here,” Warrior said during a recent Bisnow event. “We got to deal with other issues facing our community that’s impacting the office environment.” 

DeMyer said he expects the investments in Downtown Atlanta by CIM Group and CP Group will eventually pay off with the Downtown office market. But there is a lagging effect to that.

“There are tenants who are interested in this Downtown environment,” he said. “Once a pop of industries starts popping and starts opening doors — and I’m not talking 100K SF, but 5K SF — I think you’ll start to see some stuff happening. I think we’re going to realize in five to 10 years, it’s just a different look.”