If you’re anywhere near Atlanta metro and unfamiliar with what’s happening in the Perimeter Center area, I’ve got two words for you…GET FAMILIAR! Years ago, so much as the mention of Perimeter Center being the urban core of Atlanta would’ve earned the label of naive. Well, a lot has changed over the years, namely life in the area.
Take a look at what an international real estate advisory firm (Cresa) is saying about the Perimeter Center.
Is the Future of Central Perimeter the Emergence of New Urban Core?
Cresa Atlanta recently co-sponsored BisNow’s 3rd Annual Atlanta Future of Central Perimeter event. With Billy Hobbs, Managing Principal of Cresa Atlanta, as the moderator, the distinguished panelists included both real estate developers and local government representatives, including:
– Kris Miller, President, Ackerman & Co
– Bob Voyles, Principal & CEO, Seven Oaks Company
– John Heagy, Senior Managing Director, Hines
– Yvonne Williams, President & CEO, Perimeter Community Improvement Districts (PCID)
– Andrea Hall, Economic Development Director, City of Sandy Springs
– Mike Davis, Mayor, City of Dunwoody
The panel discussed the attributes that make the Central Perimeter area desirable for businesses, such as
– Access to four Marta stations
– Free parking at most office buildings
– Attractive office rental rates
– Relatively inexpensive housing
– Largest office building market in Metro Atlanta
– Home to Fortune 500 companies, including Cox, Newell Rubbermaid, UPS and First Data Corporation
With an estimated 135,000 employees working in the area every day at more than 5,000 companies and 30,000 residents, the panelists acknowledged that traffic congestion is an obstacle to attracting new businesses. Over the last ten years, the PCID has addressed traffic concerns by spearheading the Hammond Road Half Diamond Interchange, completed in 2011, and the Ashford Dunwoody Diverging Diamond Interchange, completed last year. The local governments are also working together to synchronize traffic lights during rush hour. The newest initiative of the PCID is to promote upgrades to the I-285 and GA 400 interchange and it is a top road priority of Governor Deal.
With no major office development in the past ten years and with large blocks of office space recently being rented, what is the plan for future development? Real estate developers on the panel forecasted rental rates of over $30 per square foot for any new construction, which is much higher than CoStar’s currently estimated $23 per square foot average asking rate for Class A buildings in this submarket. Parking may also become a concern with higher density employers needing up to six spaces per 1,000 square foot as opposed to the past four spaces per 1,000 square foot. (See our blog on parking here.) According to the developers, any new office construction will require pre-leasing of 70 to 80 percent of the building and the primary target for these projects will be tenants with businesses where occupancy expense is a small percentage of overall costs. The developers pointed out that other major markets in the Southeast already command rental rates in the mid $30s.
Representatives from Dunwoody and Sandy Springs promote Central Perimeter as a true live-work-play destination and expressed hopes of attracting Millennials, who will soon represent more than 30% of the workforce. To facilitate this perception, there has already been investment in streetscapes to make the area more walkable, provision of shuttle buses from the Marta stations, and plans for an inter-Perimeter circulator.
Mayor Davis pointed out that Dunwoody is now comprised of 53% single family homes, as opposed to 90% ten years ago. While it was acknowledged by the panelists that most cities do not favor construction of multi-family, the developers stated that high-end apartments are not like their former predecessors. The new institutionally-owned complexes currently being built in Metro Atlanta are better constructed and maintained and may command rates of up to $2 per square foot per month. These types of apartments are designed with younger workers in mind and have an edgy, modern, club room environment. The developers stated that Millennials prefer dense development, with a plethora of coffee shops, restaurants, bars, and health clubs within walking distance.
Taking care of the Baby Boomers who may continue to call Dunwoody and Sandy Springs home even after retirement, was a topic of conversation. Since Sandy Springs is home to three major hospitals and a huge network of medical practitioners, it has appeal to this age group. Given a large supply of 1950’s ranch houses, there are plenty of opportunities for housing with living areas all on one level. What Central Perimeter currently lacks is a transportation plan for elders that no longer drive.
One of the major advantages of Central Perimeter – as echoed by all the panel participants – is that the governmental entities are working together to solve issues. Having a “one stop shop” for businesses that want to relocate to this market is seen as a competitive advantage. The PCID has also been instrumental in addressing the traffic concerns and is working hard to make it a true live-work-play community. Perhaps Central Perimeter really will become the new urban core!