Metro Atlanta’s vacant office market brings to mind movies about hollow-eyed, brain-eating beings lumbering in search of the living.
Let’s call it “Curse of Zombie Buildings.” While they don’t stumble about like those on “The Walking Dead,” they are in desperate search of the living — tenants, that is. And they can become financially deadly to their owners.
Across the region, empty or mostly empty buildings dot the commercial real estate landscape, casualties of COVID and workers realizing they could work from home.
Last year, metro Atlanta had 50 commercial buildings without a tenant and another 126 with vacancy rates between 50% and 98%, according to an article by Scott Crooks, an exec with SK Commercial Realty. That was 22% of the region’s 791 office buildings over 50,000 square feet in size.
“It’s higher than that today,” he told me.
The largest zombie hovers near the Downtown Connector. It’s the old AT&T building, a 47-story, 1.4-million-square-foot concrete monolith without a living soul inside. It’s now called “Tower Square.”
Credit: JOHN SPINK / AJC
Credit: JOHN SPINK / AJC
Not only is it Atlanta’s largest empty building, it’s the region’s largest building (square footage-wise) overall, not the sleeker, taller, spire-topped Bank of America Plaza two blocks to the south. That one is 1.3 million square feet and about 35% vacant.
I came across the concept of zombie buildings while looking into the phenomena of empty office space. My colleague, Zach Hansen, last week wrote that almost a third of it in metro Atlanta — 32.4%, to be precise — was available. That analysis came from the real estate company CBRE.
It was the fourth financial quarter in a row where office buildings got emptier. And the lack of tenants means less people heading out to buy lunches at restaurants or merchandise from nearby stores.
The AJC story noted 40 million square feet of office space in the area is vacant, “or the equivalent of more than 30 Bank of America Plazas.”
That’s a yardstick used for years by real estate writers and analysts in Atlanta.
Crooks, the real estate exec, employed that imagery last year in his zombie analysis, saying there were five BOA Plazas worth of completely empty buildings. “It’s such an iconic building, you can see how massive it is,” he told me. “People can picture five Bank of America buildings.”
Or 30.
Midtown, with 34.8% of its office space available, according to CBRE, is in the top third of metro districts with available space. That’s because the frenetic pace of construction that’s occurred there in the past six years.
Credit: Midtown Alliance
Credit: Midtown Alliance
Last week, while attending an event about a road renewal on Juniper Street, Kevin Green, who heads the Midtown Alliance, handed me a schematic saying 7.4 million square feet of office space has been built in Midtown since 2018. That’s a bunch of space coming at a time when companies were shrinking their footprints.
“I don’t know if there’s a square mile in the U.S. that has had that amount of investment in that short a period,” said Green, who also serves as Midtown’s cheerleader. “Our theory is walkable, amenity-rich urban districts will fare better than others.”
The report shows Midtown carries the second highest rental price, with $42 per-square-foot. That’s below West Midtown’s $46.50. However, the latter has 47% of its space, much of it new, still empty.
Green notes Midtown would be pretty filled up without the old AT&T tower, a new empty building at 14th and Spring streets and a massive building owned by John Dewberry’s company at 14th and Peachtree that has been under reconstruction for years.
That’s what happens with averages: You get As and B-plusses all semester and then a couple of zeros on incomplete assignments will sink you.
John Heagy, an exec with the real estate firm Hines, remains optimistic, even though he doesn’t think there will be much building in the next three to five years. Heck, most everyone toiling in this business projects optimism. Otherwise, you’re roadkill.
There’s plenty of footage waiting to be rented when companies’ employees start to return, he figures.
Credit: Bill Torpy
Credit: Bill Torpy
“You’re seeing it happen across the board,” Heagy said. “Companies are saying, ‘We can’t go on like this. You can’t work here and live in Texas.’ “
(I’m typing this on my back porch. I’ve returned to the office maybe four times since 2020. Once was when there was pizza.)
Another optimist is Kirk Rich, a principal with Avison Young, who is tasked with putting bodies (again, live ones) in 47 empty floors of the old AT&T building.
In 2021, the lonely building saw a win when the Center for Global Health Innovation signed up to rent four floors. Andre Dickens, who was mayor-elect, showed up for the feel-good press conference. Later, citing finances, the health people backed out.
The tower, opened in 1982 by as Southern Bell, is famous for having almost demolished the Fox Theatre. That is until residents, tired of seeing too many buildings bulldozed, cried murder.
Rich said his firm is realistic and has — for now — backed away from trying to snag huge companies to fill up multiple floors. Instead, they’re trying to rent 5,000-, 10,000- and 25,000-square-foot chucks at a time.
So, you’re no longer trying to land a whale?
No, he said, “We’re looking for any fish who can swim and won’t go belly up.”
