EXCLUSIVE: Carvana Subleasing Nearly 600K SF From State Farm In Atlanta
A fast-growing online car dealer is driving major employment growth in Atlanta with a huge new office lease.
Carvana has subleased more than 550K SF of State Farm's Park Center Building 1, the 21-story, 607K SF tower overlooking Interstate 285 at the intersection of Ashford-Dunwoody Road, Bisnow has learned.
Carvana plans to start moving workers into the building on Feb. 1, a State Farm spokesperson confirmed. State Farm's employees have been operating virtually for more than 18 months, and the hybrid model has given State Farm “the experience and momentum to think differently about our facility needs,” spokesperson Roszell Gadson said in an email to Bisnow.
State Farm leases the 570K SF office component of Building 1 from a Transwestern investment fund that bought the building for $275.4M in 2017 from its original developer, KDC, according to Databank. Del Frisco's has a restaurant on the ground floor.
“While we did not actively market Building 1 for sublease, the opportunity presented by Carvana allows us to realize significant cost savings,” Gadson wrote in an email. “Our Hub and Bloomington [Illinois] workforce strategy has not changed. This opportunity to sublease space to Carvana exemplifies how our flexible real estate strategy aligns with and supports our new ways of working, and our efforts to lower costs for customers.”
The sublease is a gargantuan expansion for Carvana, with an Atlanta footprint that currently comprises 7,400 SF at Brickworks in West Midtown and 5,600 SF at Piedmont Center in Buckhead, according to Colliers, citing CoStar data.
Carvana opened a 12-story automobile vending machine in Midtown last year, the tallest of its kind in the country.
While Carvana CEO Ernie Garcia made no comments on the most recent earnings call about any office expansion plans, he did say the company was aggressively hiring employees. Given average square-foot-per-employee ratios of 200 SF per employee, Carvana could bring more than 2,500 employees to the State Farm campus.
“In July, we increased our average weekly hiring class by about 20% versus what we saw in the average of Q2,” Garcia said on the Aug. 5 call. “So I think you should interpret the increase in hiring to suggest that we're booking up across the sum of our operational groups and across our corporate and technology groups as well. But obviously, the vast majority of people are across the operational groups.”
Carvana launched a used car sales unit in Atlanta in 2013, which has seen rapid growth overall, the company stated in its earnings report for the second quarter. Carvana sold more than 200,000 used vehicles in the first six months of 2021, an 86% increase over the same period in 2020.
Carvana officials didn't respond to messages seeking comment. CBRE — which brokered the deal for State Farm along with Green Commercial Properties, a source said — didn't respond to requests for comment.
Park Center Building 1 is part of the larger 1.7M SF State Farm campus connected to MARTA's Dunwoody station. Bloomington, Illinois-based State Farm gradually occupied the new campus after announcing a plan to establish a major office hub in Metro Atlanta in 2014. The Dunwoody campus is home to 7,000 State Farm employees, State Farm previously told Bisnow.
"We are confident we have the space we need on our Park Center campus to meet our employee facility needs,” Gadson wrote. “The majority of our employees in our Hub locations like Park Center in Atlanta, and our headquarters in Bloomington, IL spend time working both at home and in the office.”
This isn't Carvana's first office deal with State Farm.
In 2019, Carvana subleased nearly 350K SF from State Farm for its headquarters in Tempe, Arizona, which was the largest office lease of the year for that market. This summer, Carvana filed plans in Tempe to develop a 650K SF office campus next to its current campus.