Hines Teeing Up 500K SF Spec Office At Atlantic Station
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The first new office building in almost a decade at Atlantic Station is slated to get started early next year. And it will be all brick.
Hines is expected to go all-spec on a 500K SF office project called Atlantic Yards, connected to Atlantic Station. Hines senior managing director John Heagy said the developer will look to break ground in the second quarter of 2018 on a dual-building project that will use brick instead of the typical steel-and-glass towers seen at Atlantic Station.
“We're going full speed with our design,” Heagy said to a Bisnow reporter after our Atlanta State of Office event Thursday morning.
Atlantic Yards could be the first new office to sprout at Atlantic Station since the 25-story 271 17th St. delivered in 2009, becoming the marquee for BB&T. Between the 171, 201 and 271 17th St. buildings — Atlantic Station's office trifecta — the development has more than 1.4M SF of office, with just 106K SF vacant, a 92.6% occupancy rate, according to Colliers International data.
But with both NCR's headquarters and Georgia Tech's Coda project, more than 1.7M SF of other Class-A office space is underway in Midtown. Despite that, Heagy said demand in Midtown was strong enough to give the developer confidence to move forward. He did not identify any specific tenants being courted.
“There is still a very healthy amount of new business activity coming into the city right now,” he said.
Hines revealed plans last year to develop new office projects at Atlantic Station after buying a nearly three-acre parcel on the heels of purchasing Atlantic Station's retail village in a joint venture with Morgan Stanley for $200M in 2015. The firm also has T3 Atlantic Station in its pipeline, a 205K SF creative office project.
Developers going spec has begun to come up in conversations again in Atlanta as office rents continued to rise with limited new space coming online. Regent Partners is mulling the possibility of going spec in Buckhead with its 3354 and 3356 Peachtree Road project, a $400M, 45-story office tower topped by condominiums. That project goes with a second, 300-unit multifamily high-rise on a site behind Capital City Plaza in a joint venture with Batson-Cook Development. Allman previously told Bisnow that the project could deliver by 2020.
“Buckhead is probably the one submarket that probably justifies going spec today,” Allman said during Thursday's event.
Hines itself gambled on spec in a joint venture with Cousins Properties at the Avalon mixed-use project in North Fulton with 8000 Avalon. The 224K SF office building, now underway, is being anchored by Microsoft with average rents at more than $38/SF, Heagy said. A big reason for the interest was being part of Avalon itself, a highly amenitized development that is walkable for employees at the office project.
“At the end of the day, we just sensed when we made those early decisions ... that that was really where the consumer wanted to go," he said. "They wanted that walkability."