Deloitte Slashing Atlanta Office Space By Over 50% In Move To Midtown
A giant in the consulting industry is jumping from Downtown to Midtown Atlanta with a lot less office space.
Deloitte is moving its main Atlanta office from 191 Peachtree Tower to Promenade Tower, the 775K SF building between 14th and 15th streets off Peachtree in Midtown across from Colony Square, Bisnow has learned.
“As a longstanding member of the Atlanta business community, we’re excited to renew our commitment to Atlanta with our new office spaces at Promenade Tower and Northpark Town Center,” Deloitte Services spokesperson Alison Zink wrote in an email. “These new office spaces represent a further evolution of our previous human-centric model, while also providing our team with more choices in where to work.”
The company signed a 92K SF lease for more than 10 years at Promenade Tower, a source who was not authorized to speak publicly about the deal told Bisnow. It's leaving behind a 262K SF vacancy at 191 Peachtree. Zink declined to comment on the specifics of the office lease.
Deloitte failed to renew its space at the ornate, 1.2M SF landmark skyscraper by a May deadline, the Atlanta Business Chronicle previously reported, prompting speculation that the consulting giant would move out of the Banyan Street Capital-owned 191 Peachtree.
Deloitte signed a 25K SF lease at 400 Northpark in Central Perimeter in May, the ABC reported. That move, combined with the main relocation to Midtown, is part of a hub-and-spoke office model being initiated by Deloitte as the firm embraces a hybrid work schedule for its employees as it reduces office sizes with more collaborative office space, a source said.
Overall, Deloitte is chopping 145K SF from its Atlanta office footprint with the consolidation, a more than 55% reduction.
“The design of these new office spaces will be intentionally engineered to support sustainability and well-being as we foster community and collaboration, reinforce Deloitte culture, interact with clients, and develop our people,” Zink wrote.
Deloitte joins the ranks of major U.S. corporations reducing their office footprint. A survey of 250 companies last year indicated that nearly half would cut their square footage use in the coming year, Commercial Observer reported, citing data compiled by flex office software provider Robin. Atlanta’s office market has felt the brunt of that as well, with vacancy over 23% and sublease availability eclipsing the 5M SF mark last year, a record for the metro area.
JLL Market Director Tim McCarthy and Executive Vice President Gregg Metcalf represented Deloitte in the transaction but declined to comment. CBRE, which represents 191 Peachtree owner Banyan Street Capital, didn't return calls seeking comment.
Cousins, which owns Promenade, didn't respond to questions as of press time. Cousins senior vice presidents Thad Ellis and Bill Hollett and Vice President Jeff Dils are listed as the brokers for the 38-story tower.
Banyan Street, along with Oaktree Capital Management, purchased 191 from Cousins Properties in 2016 for $268M. Banyan officials told the ABC in March that the firm has financial reserves enough to backfill Deloitte’s space in its entirety.
Currently, the tower is 88% leased with its third-largest tenant, the law firm Ogletree Deakins, renewing its 52K SF lease through 2030, according to the ABC.
While Deloitte was by far 191 Peachtree’s largest tenant, other companies in the building include law firms Morgan & Morgan, with 52K SF, and Chamberlain Hrdlicka with 31K SF, design firm Cooper Carry with 50K SF and the Metro Atlanta Chamber with 25K SF, according to a CoStar report obtained by Bisnow.
Banyan Street has had other difficulties in Atlanta in recent months. After failing to make a balloon payment last April on a CMBS loan attached to Peachtree Center, SitusAMC — which represented the mortgage holders — yanked back the six office tower property through foreclosure for $127.5M in September.