What happens to office space in a post-pandemic world has often centered on what to do about high-rise workplaces in the downtowns of major cities, such as Atlanta.
But there is an awful lot of office space in the suburbs, much of it built in the 1980s and 1990s as developers planted office parks far from central business districts but closer to growing bedroom communities.
Just as many big cities are rethinking what to do with aging office high rises, empty suburban office parks have prompted communities and landlords to reapproach their suburban office stock to figure out how to lure workers and corporate tenants.
“People are trying (to entice workers) with bean bag chairs and Ping-Pong tables, but you can’t do it. You’ve got to have enough energy,” said Mark Toro, a developer who helped build the popular Avalon project in Alpharetta. “Our stock and trade is human energy, and we literally do anything and everything we can to capture it.”
That coveted energy may be buried beneath the suburbs’ outdated office parks, waiting to be unearthed.
Toro’s development company held a ceremonial groundbreaking Jan. 15 in Johns Creek to christen the construction of Medley, an Avalon-style mixed-use project atop a former State Farm office campus. The $560 million project promises to anchor Johns Creek’s new town center, providing a sense of place to the affluent bedroom community north of Atlanta.
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
The project’s first step was razing a 350,000-square-foot office building to make way for new construction. Another existing office building will be renovated and incorporated into the new development. Plans for Medley also include a 175-room boutique hotel, 110,000 square feet of office space, 750 apartments, 133 townhomes, a more than half-acre plaza and about 150,000 square feet of retail, restaurant and entertainment space.
“This is sorely needed,” Johns Creek Mayor John Bradberry said at the ceremony. “It’s a missing puzzle piece, not having a town center for a city of our size. Medley will be the linchpin that brings all of these different pieces together.”
Credit: Courtesy Toro Development Co.
Credit: Courtesy Toro Development Co.
Atlanta’s northern suburbs have evolved in recent years to find their own form of urban vibrancy through mixed-use developments like Alpharetta’s Avalon and The Battery at Truist Park.
Medley is among the largest attempts to re-create those successes, but the post-pandemic woes of office parks has spurred other revitalization efforts to start.
From Alpharetta to Brookhaven, struggling workplace campuses have been scooped up for cheap and positioned for redevelopment. Some aim to become mixed-use destinations. Others may focus more on housing. But few seem destined to remain the suburban office parks of yesteryear.
“It’s not oversupplied. It’s under-demolished,” Colin Connolly, CEO of Atlanta landlord and developer Cousins Properties, said of the region’s office market. “The reality is there are too many older vintage, not functional office buildings.”
A suburban surplus
A record-setting 32.9% of all office square footage in metro Atlanta was available to lease at the end of December, according to real estate services firm CBRE.
A lot of that availability is concentrated in older buildings with fewer amenities, often called Class B, while new buildings called Class A have better endured the COVID-19 pandemic’s disruption of the office market. Areas like downtown with large concentrations of Class B buildings have struggled more than other Atlanta submarkets, but the suburbs have faced their own challenges — namely yawning acres of isolated office parks.
About 8.8 million square feet of office space is available to sublease in metro Atlanta, meaning the buildings’ current tenants are trying to tempt someone else to use their unwanted workspace often at a discount. The suburbs are awash in sublease space at a time when companies are often downsizing their office footprints, not increasing them.
Metro Atlanta’s largest suburban submarkets — Central Perimeter, north Fulton and Cumberland/Galleria — ended 2024 with the most office space available to sublease, highlighting the glut of unused space flooding the market.
“If you’ve got an office building that’s obsolete, there’s no money to buy it and there’s hardly any debt to refinance it,” said Michael Tucker, CEO of tenant representative firm Scotland Wright Associates. “You’re kind of stuck selling it for a cheap rate to an all-cash buyer or holding onto it and just hoping you can rent it out.”
A healthy office market is important for government budgets, which rely on commercial real estate property taxes to bolster revenue. Many suburban cities that boast low residential property tax rates rely on their office, retail and hospitality sectors to remain robust.
Atlanta-based developer Third & Urban, best known for intown revitalization projects including Armour Yards and Westside Paper, senses opportunity in redeveloping underperforming suburban office parks. In October, it announced plans to redevelop the 32-acre Corporate Square office park in Brookhaven into a mixed-use campus with thousands of residences, a hotel, new shops and medical office space.
“There’s an enormous amount of obsolescence out there,” said Pierce Lancaster, a managing partner and Third & Urban co-founder. “Frankly, we view ourselves as a problem solver in that we’re contemplating deleting a chunk of the inventory from the office market.”
Credit: Courtesy Third & Urban
Credit: Courtesy Third & Urban
‘Stars have to align’
A development without a target audience is a nonstarter, Toro said. Mixed-use projects have to attract several audiences to the same place.
Toro said the first step when considering a new project is to search for a suitable site in a market that is underserved by what you plan to build. For example, a grocery store should go within a food desert or a shopping center within an area starved for retail options.
“The way we used to do it was you take a map of Atlanta, plot all the targets, put a 5-mile ring around it and where there was a hole, go find a site in that hole,” he said. “(With mixed-use), you’ve got to do that same analysis for all the uses: retail, multifamily, single-family, office and hotel.”
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
In nearby Alpharetta, there’s only about 400 acres of undeveloped land, according to Kathi Cook, the city’s community development director. She said lack of land in conjunction with the 22 million square feet of office space in the city means redevelopment of existing property is likely.
“A lot of these office parks that were built back in the ’90s were built in fantastic locations,” she said. “ … They’re some diamonds in the rough.”
Atlanta developer Portman Holdings, known for its skyline-defining high-rises and glitzy hotels, recently revealed plans to revitalize part of the Brookside office park near Old Milton Parkway in Alpharetta. Mike Greene, Portman’s vice president of development, said an office building will be demolished and another preserved, similar to Medley, to make way for nearly 450 new homes and commercial spaces.
“You can’t just take any suburban office building and redevelop it into a successful mixed-use project,” he said.
Credit: Courtesy Portman Holdings, SK&I Architecture, Core Landscape Architects and Kimley-Horn
Credit: Courtesy Portman Holdings, SK&I Architecture, Core Landscape Architects and Kimley-Horn
Once construction costs, zoning, tenant acquisition and other logistics are factored in, Toro said the “stars have to align and the timing has to be right” for a large mixed-use project to be a success. But the potential for some projects like Medley is massive, with Toro saying Johns Creek has the highest income levels of any place he’s identified for an Avalon-style development.
Medley is being financed by a mix of equity and debt, including an undisclosed equity investment from Denver-based real estate private equity firm Ascentris and a $158 million construction loan from Mexico City-based Banco Inbursa. The project is also supported by a $13.4 million tax break from the Development Authority of Fulton County, which was approved in 2023.
As for outdated suburban office parks in areas that aren’t primed for redevelopment or revitalization, Toro is less optimistic.
“I think a lot of it is going to sit and rot on the vine,” he said.
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