In a significant reversal that could give hope to office owners nationwide, AT&T has signed a big new lease in Atlanta to accommodate its return-to-office mandate after previously cutting back its real estate footprint.
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AT&T has signed a deal for 120K SF at 1277 Lenox Park Blvd. on the northern edges of Buckhead, a source familiar with the transaction tells Bisnow. The deal spans most of the 152K SF office building in the Lenox Park office campus.
The move is a reversal for AT&T, which has emptied roughly 2.5M SF of office space in recent years. At one point, AT&T occupied all five office buildings at Lenox Park, but shrank its footprint there to occupy just two of the buildings: 1025 and 1055 Lenox Park Blvd.
AT&T's move to 1277 Lenox will see it return to a building it vacated more than five years ago, before the 1M SF campus was acquired by its current owner, Bridge Commercial Real Estate, in 2018 for $225M. Bridge renovated 1277 Lenox after the departure, and it backfilled 10K SF with accounting firm Tidwell Group last year.
AT&T also previously vacated the 1.2M SF Midtown skyscraper once named AT&T Tower, since rebranded as Tower Square, and the building at 575 Morosgo Drive.
Bridge officials declined to comment for this story. CBRE, which represents AT&T, also declined to comment. AT&T officials didn't return messages seeking comment.
The deal comes two months after AT&T CEO John Stankey announced that the company would require 60,000 managers to return to their offices three days a week. In the same announcement, Stankey said the company would be consolidating its office footprint to create major hubs in Atlanta and Dallas, where it is headquartered.
That followed a plan, announced in 2020, to slash $6B in operational costs, including through real estate, by the end of 2023. Managers in Atlanta, where AT&T is the 12th-largest employer with 6,000 workers, were required to return to the office this month.
“If they want to be a part of building a great culture and environment they’ll come along on these adjustments and changes," Stankey told Bloomberg Radio in May. "Others may decide, given the station of life they are in, that they want to move in a different direction."
While AT&T, like many other large companies, has contracted its office footprint as remote work proliferated, executives at the firm discovered that the Atlanta office space AT&T had left might not have been enough to house all of its employees in an office at once, a source told Bisnow. That led to the telecom giant’s decision to return to 1277 Lenox.
While most companies and real estate executives entered this year believing that office consolidations would continue, there has also been a concerted effort among many large employers to force their workers to spend more time in the office.
Tech giants Amazon and Salesforce have put return-to-office mandates in place in recent months. Another tech firm, Snap Inc., after mandating workers return to their offices four days a week, is searching for 30K SF of office space in the Bay Area after previously reducing its footprint, the San Francisco Business Times reported.
More reversals would be cheered by the office market, which is suffering through a stretch of muted activity and record vacancy. Office values are down 31% from their March 2022 peak, according to Green Street, and almost 1B SF of U.S. office space was vacant at the end of the first quarter, according to JLL.
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