Atlanta has chosen a team led by an influential developer to convert a downtown office tower into hundreds of new housing units.
Mayor Andre Dickens announced Thursday that a team led by Egbert Perry, the chairman of Integral Group, was the finalist selected for the 2 Peachtree Street conversion project. The Invest Atlanta board voted earlier in the day on the selection of Two Peachtree Partners LLC, an entity founded last year with Perry as its registered agent.
Long considered a money pit for the state, the 40-plus story office tower was purchased by the city last year for $39 million. Once converted, it will become Atlanta’s tallest residential building.
While project terms remain under negotiation, Thursday’s announcement is a pivotal step for one of the city’s most challenging projects — one that could serve as a blueprint for how aging office towers could be converted into housing.
“The transformation of 2 Peachtree Street is potentially our most ambitious affordable housing undertaking, providing connectivity between housing units and transit while breathing new life into Downtown Atlanta,” Dickens said in a news release.
Invest Atlanta conducted a six-month public search for developers, projecting 2 Peachtree could include 625 housing units, including 222 affordable units. The bottom five floors are reserved for other public uses. A 65-unit apartment building for seniors adjacent to 2 Peachtree is also expected to be included in the development plan.
Perry is credited with developing the mixed-income housing model in the mid-1990s — which would go on to be known as the “Atlanta model” — by replacing aging and dangerous public housing complexes with communities of varying economic status.
Credit: Jenni Girtman
Credit: Jenni Girtman
“The vision for 2 Peachtree Street is not just about building or repositioning structures but creating a community that resonates with the heart of Atlanta,” Perry said in a statement.
The development team also includes The Atlantic Companies, T. Dallas Smith & Co. and Lalani Ventures, the owner of Underground Atlanta. The city received four development team submissions.
AJ Robinson, president of downtown civic organization Central Atlanta Progress, said the 2 Peachtree project melds into downtown’s other revitalization projects, such as CIM Group’s $5 billion Centennial Yards and the transformation of South Downtown into a second Atlanta Tech Village location.
“The city is on a mission to really have a mixed-use place with affordable housing,” he said. “They picked a team that is well qualified to pull that off.”
‘Invested in downtown’
The 2 Peachtree project is trying to kill several birds with one stone.
The rise of remote work following the COVID-19 pandemic upended the office market, especially for older office towers. A lack of demand and leasing activity has contributed to a record-high amount of unwanted office space, with metro Atlanta ending 2023 with nearly a third of its office square footage available for rent.
Traditionally an island of offices and entertainment venues, downtowns across the country have scrambled in the wake of the pandemic to find a new life source, usually through getting more people to live in the city center. Atlanta leaders have made clear they want more downtown residents.
“We’ve planted a flag and said ‘we’re invested in downtown,’” Dickens said in December while touring 2 Peachtree. “Office-to-residential conversion is going to be a game changer across the country, and it’s happening right here.”
Credit: NATRICE MILLER
Credit: NATRICE MILLER
Located mere steps away from the Five Points MARTA station and Underground Atlanta, 2 Peachtree was built in 1966 as a home for the First National Bank of Atlanta. Since the 1990s, thousands of government employees have occupied with 890,000 square-foot-tower, but it’s been a persistent drain on the state’s budget.
If the gigantic empty building could be taken off the overflowing office market and turned into apartments, it would not only create new housing options, but it would breathe new life into downtown.
City leaders jumped on the opportunity, seeing it as a major step in the mayor’s goal of preserving 20,000 units of affordable housing within 8 years.
“What captivates me the most with the project is the commitment to equitable downtown revitalization, the promise of more affordable housing and the exciting potential for mixed-use spaces that will further the vibrancy of the area,” Invest Atlanta President and CEO Eloisa Klementich said.
Credit: NATRICE MILLER
Credit: NATRICE MILLER
Proof of concept
Office-to-residential conversions have become a popular topic when discussing obsolete towers, but real estate experts warn it has limitations.
It’s expensive to add bathrooms and kitchens to wide floor plates intended for corner offices and cubicles. Office buildings that lack windows are challenging to divvy into separate units can make for unappealing units.
“It’s not something that’s coming to save the office market,” said Lawrence “LG” Gellerstedt IV, Atlanta market leader at commercial real estate firm Foundry Commercial.
Despite the challenges, conversions are nothing new.
The former SunTrust bank control center at 250 Piedmont Avenue is now the Altitude apartment complex, more than 20 floors of rental units that feature 8-foot-tall windows. The 125-year-old W.D. Grant Building on Broad Street is being retrofitted into apartments. A Peachtree Center tower, 225 Peachtree, lies empty as its owner considers selling it as a conversion candidate.
Urban development consulting firm HR&A Advisors is conducting an analysis of downtown to find more office buildings that could have a second life as housing. Robinson, the head of that initiative, said 2 Peachtree will serve as a vital test of that initiative.
“If you can make 2 Peachtree work, these others should also work,” he said.
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