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One of Midtown Atlanta’s newest office towers is for sale as its developer seeks to exit its investment in the speculatively built building without having secured any leases for its space.
Greenstone Properties and its financial partner Goldman Sachs have tapped JLL to market 14th + Spring, the 12-story, 324K SF office tower that was delivered in 2022 and has remained vacant since, the Atlanta Business Chronicle reported.
It is a striking move given the dearth of investment sales activity over the past year, especially for office space.
The development partnership's $75.8M loan from Santander Bank was set to mature on Dec. 27, according to the Reonomy database. A source familiar with the offering said Greenstone recently extended its loan for another two years, giving the firm more breathing room to market the property.
Greenstone partner De Little declined to comment for this story, and JLL didn't return calls seeking comment. While the firm is listing the property for sale, a source familiar with the potential transaction said Greenstone also continues to market space for lease.
The landlord has struggled to find tenants willing to pull the trigger on leasing space since its delivery, but 14th + Spring hasn’t been without tenant interest, the ABC reported. Still, Greenstone has been facing an uphill battle to lease the property as Midtown’s fundamentals have collapsed over the past year.
In the fourth quarter, tenants gave up 338K SF more office space than they leased in the submarket, bringing the vacancy rate to an all-time high of 23.4%, Colliers Atlanta reported. The negative absorption shot up from 5,400 SF in Q4 2022 to 150K SF in Q3 2023.
With another 1.5M SF of office space still under construction, there is little evidence to suggest demand will come back in balance with supply. Leasing activity dropped 40% from Q4 2022, making the last three months of 2023 the slowest for activity in Midtown since 2010.
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