Coming Sunday: Why John Dewberry has taken so long to act on his broad quest to reshape Midtown Atlanta. See the Personal Journey Sunday in the AJC’s Living & Arts section.
A developer with office towers and lots of land in Midtown plans an engineering feat that may be a first in metro Atlanta: adding six stories to the top of an existing 21-story high rise.
The proposal at one of the busiest corners in Midtown seems audacious. It surprises some in the development community who doubt intown real estate is crowded and expensive enough for such add-ons.
But it highlights how much of a job magnet that Midtown has become, and it provides the latest sign of a rebound in the battered office market.
John Dewberry, of Dewberry Capital, told The Atlanta Journal-Constitution he hopes to start construction later this year or next that will turn the 21-story Campanile building into a 27-story building. The tower was erected in the 1980s at the corner of Peachtree and 14th streets and for years was BellSouth’s headquarters.
Several people tied to real estate and development said they could not recall another high rise addition in Atlanta.
Whether Dewberry, who played quarterback for Georgia Tech in the 1980s, can pull it off remains unclear. He’s proposed other Midtown projects that have yet to be built. He would need city approval for the project. And the Campanile building already has plenty of available space: it’s half empty.
Dewberry said he doesn’t have new tenants lined up. Though it can be more expensive to expand vertically than to do new construction at ground level, he said he is confident the project’s economics work, in part because he bought the building for a massive bargain during the recession. Dewberry is banking on Midtown’s long-term potential for more growth. He’s essentially doubled his holdings in the area during the last downturn.
He’s also gambling on marketing and the aesthetics of a heightened Campanile.
‘She is short and fat’
“I think she is short and fat, and I want to make her tall and slender,” Dewberry said. “We pride ourselves as a Tiffany developer, and she is ugly.”
His firm already has done millions of dollars worth of surgery on Campanile to make it more efficient and look less dated. Gone is the building’s original triangle top. Windows were re-glazed. The elevator system was replaced and lighting redone.
But making a tall building taller poses potentially costly twists.
Adding floors may require more elevator bays, consuming usable office space, said Benjamin Flowers, a Georgia Tech associate professor of architecture. The building’s foundation needs to be strong enough to handle the additional load. Crews might have to move or work around major systems that are often located on the highest floors. And keeping existing tenants happy during construction could be a challenge.
There is also the challenge of “how to avoid looking like a Frankenstein,” Flowers said. “You don’t want it to look like it was recently operated on with a random kit of parts.”
Dewberry’s vision comes as metro Atlanta’s real estate market emerges from a painful transition.
New office development stopped during the recession amid a glut of space. Now empty buildings are starting to fill up. Vacancy rates are at their lowest point since before the recession, and developers are talking again about speculative construction. Average rents being sought for top office space, like that in the Campanile, are up sharply in Midtown and in metro Atlanta overall, according to real estate service firm Cushman & Wakefield.
Companies are gravitating to Midtown — partly a function of companies wanting to be near transit and the student and faculty talent of Georgia Tech, and partly the filling of office towers in Buckhead and the Perimeter Mall area.
Ken Ashley, an executive director with Cushman & Wakefield, said Dewberry’s plans to go vertical atop Campanile might be a special circumstance, not a trend others will follow.
‘Entrepreneurial spirit’
“I see the entrepreneurial spirit at work and that’s encouraging, but we’ll have to see how the economics play out on the other side of this,” he said.
Dewberry began amassing land in Midtown nearly 20 years ago and now has about 25 acres along or near Peachtree Street, including at a prime corner at 10th Street. But in Midtown he has developed only two office buildings, one the 17-story tower that is headquarters to Invesco.
He said by the end of next year he will begin developing a 300-unit apartment high rise and perhaps additional parking, all on the site of the Campanile’s existing parking deck across Juniper Street. In the same time frame, he said he will add 50,000 square feet of space for restaurants and shops around the perimeter of the Campanile itself.
High rise additions are not new in some other big cites, but they aren’t common. They tend to be pursued in more densely developed cities with higher underlying real estate costs, said Flowers. He said he is surprised one would happen in Atlanta, where the real estate market is still rebounding.
But the price that Dewberry paid for the Campanile — $80 a square foot — during a distressed sale in the recession is so “crazy” low that it could give him latitude to take steps other developers wouldn’t, Flowers said.
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