Writer: Gabriela Enamorado
2 min read March 2023 — As the hybrid model of work continues to grow in popularity and remain a viable option, Atlanta-based companies are reconsidering and reevaluating their office space portfolios.
Atlanta currently has the second highest market for office vacancy, according to the Atlanta Business Chronicle. Major companies in the region are now looking toward minimizing their physical operations, such as consulting firm Deloitte who are likely to downsize their office space location at 191 Peachtree as they did not renew their lease. This is in line with the same thing the organization is doing in other locations across the country.
As leaders are reconsidering what the future of office space may look like, many have turned to mixed-use developments that offer amenities and walkability. The Atlanta BeltLine is an example of this and a hot spot for the office market because of the amenities it has to offer. The BeltLine has turned into a catalyst of change for the commercial real estate sector in the area.
Rents for office spaces in the BeltLine’s Eastside Trail have climbed 61% compared to the rest of metro Atlanta’s office spaces at nearly $50 per square foot.
The Eastside Trail micro-market is a highly amenitized area providing options for retail, entertainment, dining and greenspace. The Eastside micro-market has a 94.6% occupancy rate in 8,298 units across 73 multifamily buildings.
Leaders are taking the changing landscape into consideration when thinking of what employers and employees are looking for in a workspace environment.
“Currently, there has been a shift in focus from traditional office buildings to mixed-use developments, which are more aligned with the need for walkable and livable cities,” Janet Simpson, CEO of TVS Design told Focus:. “The market for traditional ground-up office buildings has not been performing well, due to difficulty in obtaining financing. However, our company has long focused on mixed-use developments, which have seen a shift in focus due to the importance of having walkable and livable cities. This shift in focus has been driven by various interconnected factors, not just one single reason.”
Many office spaces in the Atlanta area are also available for sublease, with the area having up to 6.1 million square feet of office space available to sublease, compared to the fourth quarter of 2022, where sublet vacancy was at 2,634,329 square feet.
Companies are looking at subleasing as a way to cut costs and help recover financial loss from non occupied space.
One company taking the sublease route is Cox Automotive Group. The company listed its 18-story Brookhaven office building in the sublease market earlier this year. This is due in part to the organization’s efforts to consolidate its workers into the corporate headquarters in Peachtree-Dunwoody Road and continuing with the hybrid work model that was implemented during the pandemic.