Arby's Is Interviewing Brokers For A Potential 150k SF Headquarters Search
It's a question that could be answered soon: Which of Atlanta's brokerage houses has the meats?
Atlanta-based Arby's Restaurant Group has been interviewing area brokerage firms for representation on a search for possible new headquarters space, numerous sources said.
Among the firms in the running are CBRE, Savills Studley, JLL and Cushman & Wakefield. Sources said Arby's is expected to issue an RFP for office space for up to 150k SF, possibly leaving its current HQ at 1155 Perimeter Center West in the heart of Central Perimeter.
Arby's could be one of the larger office requirements to hit the market this year. Certainly, Arby's performance as a company could make it a hot catch with Atlanta landlords. According to the Franchise Times, Arby's CEO Paul Brown said the chain recorded a 25% jump in average store unit volume (AUV) and 3.8% same-store sales growth, which more than doubles what was typically seen in the quick-serve restaurant category last year. That caps 25 consecutive quarters of same-store sales growth.
On top of that, Arby's announced in March plans to develop 138 new restaurants with franchisees. The search also comes in the wake of other Atlanta-based corporate headquarter moves within the metro region, including NCR's banner new Midtown campus development, consulting firm Crawford & Co's move to Peachtree Corners and Weather Co's big deal at 1001 Perimeter Summit.
Fairlead Commercial Real Estate's Jeff Shaw said Arby's is just among the tide of office activity he's potentially seeing for 2017.
“We're seeing good activity, and in a lot of places, great activity,” Shaw said. Fairlead owns nearly 6M SF of offices, including 1.8M SF in Atlanta. This activity is shaking off the vestiges of a slowdown in the second half of 2016, Shaw said, when companies got cold feet due to the contentious U.S. elections. Now that that's over, companies are again discussing growth and expansion.
Arby's will be hitting an office market when rents are hitting levels, in some cases, never before seen in Atlanta. According to a recent Savills Studly report, average Class-A office rents rose to more than $27/SF, and are "now nearly 9.5% above the peak mark of $24.86 [per SF] attained in 2008.”
“Companies requiring quality space options in excess of 25k SF have limited options, particularly in Buckhead and Midtown,” Savills Studley officials stated in the report. “Rental rate growth is slowing, but tenants who last negotiated at least five or 10 years ago are running into a much different market than they are accustomed to. Landlords are standing their ground on asking rents and a few are pulling back on concessions. These trends are expected to prevail in 2017 as well.”
JLL's Adam Viente — who represents various office landlords throughout metro Atlanta — said there should be more options for larger office users this year than last, especially as projects like Three Alliance Center and 4004 Perimeter Summit deliver.
Plus, as State Farm's new campus delivers, its leased space around Central Perimeter in the meantime will start to free up, most notably at The Terraces. But Atlanta's office market is still as tight as it's ever been.
“Good times and bad times, you can always find 5,000 feet,” Viente said. "But the market is tight enough now that, if you're a 100k SF user, there are not a lot of options."