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Kaiser Permanente Inks Huge Renewal In Buckhead

One of the state's largest healthcare insurance providers is staying put at its longtime Buckhead home.

One of The Ardent Cos. Piedmont Center buildings that is home to Kaiser Permanente

Kaiser Permanente has renewed 185K SF at Piedmont Center, the first big office deal of 2018 for the Atlanta market.

The deal is a slight consolidation from its previous footprint, which spanned three buildings at the sprawling Piedmont Center office park in the heart of Buckhead for a total of 200K SF. Kaiser will now operate out of Buildings 9 and 10, The Ardent Cos. Managing Director Scott Werbel said.

Kaiser makes up nearly a third of the 550K SF at Ardent's portion of Piedmont Center.

JLL Senior Managing Director Josh Hirsh and Senior Vice President Nicole Littleton brokered the deal for Kaiser, while Transwestern Director Greg Frankum, Senior Vice President Matt Spickard and Vice President Jeff Taylor brokered for the landlord, according to Ardent.

"This has been the home of our regional headquarters since 1994, and we’re pleased with its location, amenities, and easy access to public transportation," a Kaiser Permanente spokesperson stated in an email.

Established in 1985, Kaiser Permanente is one of the state's largest healthcare insurance providers, with more than 300,000 members, more than 3,100 employees, 542 physicians and 26 medical office locations, according to company information.

Kaiser Permanente has been opening divisions across Metro Atlanta over the past few years. In 2015, the healthcare company announced plans to lease 157K SF for its IT division at Pershing Point Plaza in Midtown, a location where it plans to create some 900 new IT jobs by 2019. Last year, it invested more than $50M for a new 185K SF national call center facility in Duluth, which is expected to house more than 800 new jobs by 2020, the company previously announced.

Early last year, Kaiser Permanente began scouting the Buckhead submarket for new office digs, considering leaving Piedmont Center, according to the Atlanta Business Chronicle. The firm reportedly eyed both Three Alliance Center and Terminus 100.

Werbel said Ardent — which purchased four buildings in Piedmont Center in 2016 — had underwritten its investment with the expectation that Kaiser Permanente may vacate the complex.

“It was the single biggest risk that was in our deal,” he said.

Fundamentals of the Buckhead office market, according to Colliers International as of Q3

While details of the 10-year lease were not released, Werbel said the firm was given a significant tenant improvement package that would update its space. Recently, Ardent entered into a partnership with AT&T to roll out a total of 100-gigabit speed — bandwidth more often found in data centers than office buildings — at a handful of its buildings in Piedmont Center.

Kaiser Permanente also was facing a tight office market in Buckhead. While Three Alliance was the newest trophy tower in the submarket, its landlord, Tishman Speyer, has long since leased up a majority of its space. And while Buckhead's more than 17M SF of Class-A office vacancies exceeded 15%, big blocks of space were difficult to come by.

“There was a certain amount of confidence that we had a captive audience,” Werbel said, adding the only other real option at similar rents at Piedmont Center would have been in suburban Atlanta. If Kaiser Permanente elected to move to any of the suburbs, there was a real risk that a number of its employees in Buckhead would leave the company in response to a less centralized commute, he said.