Piedmont REIT Under Contract To Buy Third Galleria Office Tower
A prominent Atlanta office REIT has completed an acquisition hat trick in the Cumberland/Galleria submarket.
Piedmont Office Realty Trust is under contract to buy Galleria 100, an 18-story, 414K SF tower, part of the three-tower Galleria office park off Akers Mill and near the nexus of Interstate 285 and I-75 in Cobb County. Terms of the deal were not disclosed.
When the deal closes later this month, Piedmont will control three buildings in the Atlanta Galleria Office Park, totaling 1.3M SF. Piedmont acquired buildings 200 and 300 — each of similar size to 100 — in 2015 and 2016, respectively.
“The Galleria is the only Class-A office there with direct access to [SunTrust Park at the] Battery, the entertainment, retail and residential mixed-use center in northwest Atlanta, which includes SunTrust Park, home of the Atlanta Braves, and the Coca-Cola Roxy Theatre,” Piedmont President Brent Smith told stock analysts during a conference call last week.
The Galleria purchase is part of a larger acquisition strategy by Piedmont that is focusing on infill urban environments.
“Really, the strategy behind that again, focusing on where large corporates want to be: pro-business environment[s], walkable amenities and also getting scale, which certainly Galleria 100 helps us to continue to drive scale in that Northwest submarket of Atlanta,” Smith said. “We're still seeing more opportunities in our pipeline in Atlanta, Boston, Dallas [and] Minneapolis as well.”
The firm also reported two significant leases in Atlanta, including with IG Design Group, which renewed and expanded its footprint to 28K SF through 2025 at Glenridge Highlands One, and Continental Casualty Co., which renewed 16K SF at Glenridge Highlands Two for five more years.
Piedmont was not the only publicly traded real estate company to report positive Atlanta news in the first quarter. For Summit Hotel Properties and Host Hotels & Resorts, Super Bowl LIII was the start to a strong streak for their hotel properties in Metro Atlanta.
Summit saw revenue per available room among its four Atlanta hotels — including AC Hotel and the Courtyard, both in Downtown Atlanta — skyrocket by 33.7% for the quarter, CEO Dan Hansen said on last week's earnings call.
“Super Bowl-related demand of these hotels more than offset the demand from last year's Super Bowl in our Minneapolis hotels, despite having fewer rooms in the market,” Hansen said. "Strong convention calendars in markets such as Atlanta, San Francisco and Louisville drove an overall 15.4% increase in group revenue for the portfolio."
Host Hotels, which operates both the Grand Hyatt and the Westin Buckhead, saw similar boosts during the Super Bowl that carried over into the rest of the quarter, Executive Vice President Michael Bluhm told analysts May 2.
“Atlanta's RevPAR improvement of 16% exceeded our expectations, primarily driven by the strong average growth rate of 17% due to the Super Bowl,” Bluhm said. “In addition, we were able to capture stronger group demand the week following the Super Bowl and throughout March.”
Bluhm also said RevPAR in Atlanta, on Florida's Gulf Coast and in Philadelphia will likely outperform its portfolio due to strong corporate and leisure demand and citywide events.