One of the most high-profile planned office-to-residential conversions in Downtown Atlanta has been killed over project costs.

Georgia-Pacific Inc. has decided to discontinue plans to redevelop part of its headquarters, Suzanne Maynard, head of real estate development at the paper and packaging maker giant, told Bisnow in an email.

The company had planned to create 400 apartment units on the upper floors of the 51-story skyscraper, as well as convert 125K SF into retail and entertainment space and add a 35K SF central plaza. The tower stands at 697 feet as Atlanta’s seventh-tallest building, so the planned apartments would have been among the highest in the Southeast.

“We have invested significant time, capital, and resources to bring this project to life, but higher construction costs and broader market headwinds changed the economic viability of the project at this scale,” Maynard said.

Georgia-Pacific had not disclosed the cost of the planned conversion, and Maynard did not answer questions about what specific costs scuttled its conversion plans.

When asked whether the Koch Industries subsidiary would continue to operate its headquarters from the 1.3M SF tower at 133 Peachtree St., Maynard said, “We will continue to focus on making sure employees are in an environment where they can create value.”

She added that the company is now “focusing our resources on critical infrastructure improvements, modernized building systems, and upgraded amenities — including dining options, outdoor workspace and upgrades to our workplace technology.”

Georgia-Pacific announced the conversion in the fall of 2024 and said completion was scheduled for the fall of 2027. The company had planned to preserve 600K SF of the tower as offices that would include its headquarters and the Atlanta offices of Koch.

The project was one of 10 proposed office-to-residential conversions in the metro area, a number that placed Atlanta among the cities in the U.S. with the most announced conversion projects, RentCafe previously reported. A wave of office-to-residential conversions across the U.S. has pushed the pipeline above 90,000 units, a fourfold increase since 2022.

In a separate project, Invest Atlanta, the economic development arm for the city, tapped a consortium of local developers to convert the 44-story 2 Peachtree St. into affordable housing. An Invest Atlanta spokesperson told Bisnow last month it intends to move forward with the project.

“Invest Atlanta remains steadfast in its commitment to redevelop 2 Peachtree Street and deliver at least 200 affordable housing units in downtown Atlanta,” a spokesperson said via email in August. “While individual projects and timelines continue to evolve, our objective remains clear: to expand access to quality affordable housing, support downtown revitalization, and create lasting opportunities for Atlanta residents.”

But some analysts have cautioned that those aspirations may not survive the reality of the bottom line. Brookings found in a study earlier this year that in most places, office-to-residential conversions do not make economic sense.

With conversion costs ranging from $150 to $400 per SF or more, many projects likely need a hefty amount of subsidies and other financial support to make the costs pencil out to reasonable rents, according to an Apers study. 

Those costs can vary by building and its features. In some cases, offices constructed in the 1970s and 1980s make poor conversion candidates due to their large floor plates and instead are more often better suited for demolition to make way for housing, CBRE reported last year. 

Georgia-Pacific Center, with its distinctive pink granite exterior and stair-step-like design, was opened in 1982.

Other conversion projects around the country have faced financial strain this year.

One conversion project in Denver was canceled earlier this year when the lender for Harbor Associates’ Symes building foreclosed on the eight-story tower that was planned to become 116 apartment units, despite a $17M loan awarded by the Denver Downtown Development Authority, The Denver Post reported.

In Boston, Dinosaur Capital had to scramble to move forward with its repurposing of a downtown office building into 110 apartment units after a previous general contractor’s projected costs jumped by $10M. 

Dinosaur had to piece together a capital stack that included Boston city tax abatements, a federal historic tax credit and a $4M grant from Massachusetts, Bisnow reported. And it had to find a new GC before landing a $40M construction loan.

"They got all those subsidies, and they barely got the deal financed," Marvin Lahoud, a partner at construction firm Tocci who is working on the project, told Bisnow last month. "They were about to give up, and then they overturned every stone and looked for every potential way to reduce cost and do stuff to make it work."