Portman To Build 500K SF Spec Office Tower In Midtown Atlanta
Portman Holdings is planning to break ground on a new Midtown Atlanta office tower without any tenants in tow.
Portman aims to start construction on 1020 Spring St., a 500K SF office tower at the 4.1-acre site of H.M. Patterson & Son Spring Hill Chapel funeral home by the spring of next year, Executive Vice President Travis Garland said. Garland said by developing the tower speculatively, Portman hopes to benefit from a trend of technology companies moving into Midtown to be close to a nexus of talent emerging from major colleges and universities, especially Georgia Tech.
Over the past decade, Midtown has been the hottest office submarket in Metro Atlanta, with landlords capturing a number of marquee corporations into newly built office space, including Microsoft, Google, BlackRock and Anthem Blue Cross Blue Shield.
“Everywhere is seeing a level of activity that people feel good about,” he said. "Atlanta is seeing a level of activity of big tech users that is a long time in the marking and is here."
Portman plans to develop a 17-story office building atop a 13-story parking deck with more than 1,600 vehicle spaces, according to plans submitted to the Midtown Alliance Development Review Committee.
The office building is one component of the planned mixed-use project on the site. Garland said its sister company, Portman Residential, is breaking ground in July on a luxury apartment tower. Portman also has a pad site that is tentatively slated for a future hotel. The developer is preserving the historic H.M. Patterson & Son funeral home and converting it to another use, Garland said.
H.M. Patterson & Son was built in 1928 and was the site of many prominent funerals, including those for Gone With the Wind author Margaret Mitchell and former Atlanta Mayor William B. Hartsfield.
Portman has been one of Atlanta's most active developers, especially in Midtown, where it developed the $375M Coda high-performance computing tower with Georgia Tech and two towers occupied by Anthem Blue Cross/Blue Shield.
While the developer has yet to receive construction financing, Garland is confident his firm will obtain it, given the strength of the Midtown market and Portman's past successes. While Portman is making a bet on the health of Midtown by going spec, real estate pros say it is an easy bet given the historic performance of the submarket.
“In my humble opinion, I believe that there is enough velocity in the market. We've seen that with Microsoft not only leasing space at Atlantic Yards but then doubling down on the land on the Westside,” Colliers Senior Vice President Jodi Selvey said. “As long as no one is expecting they lease 500K SF when they turn the first spade of dirt, I think everything will come to fruition. I believe that, Field of Dreams, if you build it, they will come.”
Portman isn't the only active developer in Midtown. Developers are underway with 3.8M SF of new office projects as of the first quarter, according to Colliers. Projects include Selig Enterprises' 1105 West Peachtree, which Google has leased, Midtown Union, Star Metals District and 650 West Peachtree St., the headquarters for Norfolk Southern.
Developers also have a string of potential office projects in the pipeline, including a future Microsoft office campus next to Westside Park Atlanta, a planned second phase to Selig's 1105 West Peachtree and 901 West Peachtree St., a 472K SF office project planned by Cousins Properties just a block from Tech Square.
“I think if you're betting on Atlanta, you're certainly betting on Midtown,” Viente said. “You'll continue to have corporate relos large and small look at Atlanta. I think it's going to be a factor for a while to come. Microsoft fell out of the sky. Google fell out of the sky. Big credit tenants fell out of the sky. Unless Atlanta dries up ... I don't think Midtown will.”
Garland said tenants want new office projects as corporate home bases, especially in a world where working from home and hybrid schedules could become the norm. Newer projects have to offer a third dimension for tenants other than helping them recruit and retain talent: to get people to want to come to the office, Garland said.
“We saw a huge wave of flight to quality previously. I think this next wave of flight to quality is going to be even bigger,” he said. “If your option is work from home or work in some shitty office space, what are you going to do? There is going to be some level of desire with buildings that serve the purpose of bringing people together. And we don't believe that's old shitty space.”