Midtown’s position as Atlanta’s hottest office market is about to be tested.
Pope & Land Enterprises has secured financing for Atlantic Center Plaza, a $95 million, 23-floor office tower on the lawn in front of Veni Vidi Vici restaurant at West Peachtree and 14th streets. The Cobb County-based developer will begin construction this week, partner Harry Morgan said Tuesday. “We’ve closed the loans,” he said. “Now we’re moving ahead full steam.”
Atlantic Center Plaza will compete head on with the Proscenium, a 23-story, 527,000-square-foot tower Trammell Crow Co. is developing less than two blocks away at Peachtree and 14th streets. The Proscenium is scheduled to open in March 2001.
With 35 percent of the Proscenium and 40 percent of Atlantic Center Plaza preleased, the buildings will add a total of about 640,000 square feet of uncommitted space to the Class A office market in Midtown. The submarket’s vacancy rate for top-notch office space is 6.1 percent, the lowest in metro Atlanta, according to CoStar Group. The overall metro vacancy rate for Class A space is 10.3 percent.
Pope & Land plans to complete its 500,000-square-foot building, designed by Smallwood, Reynolds, Stewart, Stewart & Associates, in October 2001.
The anchor tenant will be the law firm Alston & Bird, which signed a 12-year lease for more than 200,000 square feet, Morgan said. The law firm also will continue to occupy 10 floors in One Atlantic Center across the street, said Mark Rusche, chairman of the law firm’s space committee.
Trammell Crow Senior Vice President Mike Shelly said Midtown’s healthy office market should provide “a comfortable environment” in which to compete with Pope & Land for tenants.
“I don’t think that I welcome the competition, but the encouraging part of it is that the Midtown market is extremely strong and there is a pent-up demand,” Shelly said. “I’d just as soon be alone, but we ain’t.”
Midtown will be able to absorb the speculative space Trammell Crow and Pope & Land add to the market, Cushman & Wakefield branch manager Mike Elting said at a roundtable held Tuesday by National Real Estate Investor magazine. “People are not foolish,” he said. “They (develop space) based on the demand.”
The Proscenium is about 35 percent preleased, the same level as August 1999, when Trammell Crow received financing for the $93 million project. Tenants that have signed include advertising firm WestWayne Inc. and law firms McGuire, Woods, Battle & Boothe and Lord Bissell & Brook.
Bank of America is providing the construction loan for Atlantic Center Plaza, and Bouwfonds FV, a subsidiary of Netherlands-based ABN AMRO, also is providing financing. Individuals, including Pope & Land principals, will provide equity in the project, Morgan said.
It’s a healthy sign that groups financing new buildings are requiring developers to secure significant commitments from tenants, said Pat Hickey, a Robinson-Humphrey Co. analyst who covers real estate companies.
“The capital markets have acted fairly prudent with regard to requiring a high degree of preleasing … and this building is no exception to that,” he said. “The capital markets have acted in a way that is going to better regulate the supply of new space.
“How much (space) is too much? We’ll see.”
Credit: Wilbert, Tony. The Atlanta Constitution [Atlanta, Ga] 22 Mar 2000: ; F.1.