Atlanta is set to acquire a Downtown office tower and kick-start a redevelopment that will turn it into mixed-income housing.

Invest Atlanta is scheduled to close Thursday on the purchase of 2 Peachtree St., a 41-story office tower bound by Peachtree, Decatur, Forsyth and Alabama streets next to Underground Atlanta. The agency is voting in a meeting the same day to create an LLC to operate as the ownership entity.

The move comes almost four months after Invest Atlanta, the economic development arm for the city, agreed to purchase the 55-year-old tower from the Georgia state government for $39M using proceeds from the Eastside Tax Allocation District.

Atlanta Mayor Andre Dickens plans to send out requests for proposals to the development community to turn the office tower into a mixed-use tower with market-rate apartments alongside “dedicated and deeply affordable housing units” to “ensure the property does not sit vacant during a crucial time in Downtown’s redevelopment,” according to an October press release.

The Georgia Building Authority marketed 2 Peachtree and its neighboring annex building, which total 988K SF, for sale last year, the Atlanta Business Chronicle reported in September.

The building has been home to various state departments, including the Georgia Department of Community Health and the Georgia Department of Behavioral Health and Developmental Disabilities.

“This historic purchase is an investment in Downtown Atlanta and a huge leap forward in our plan towards 20,000 affordable housing units,” Dickens said in the release, adding that the tower “provides us with a unique opportunity to address both our need for mixed-income housing at MARTA stations and move us closer to our vision of a world-class downtown area.”

The state was able to shed the office space by consolidating the agencies in 2 Peachtree into other government buildings on Capitol Hill, which can absorb the hundreds of new workers because of hybrid work policies, the ABC reported.

It is unclear if 2 Peachtree is already vacant. The skyscraper would be one of the most high-profile conversion projects in Atlanta, but it is likely more are on the way. Cousins Properties CEO Colin Connolly said last week as much as 20% of Atlanta's office inventory is obsolete and ripe for redevelopment.