Atlanta Project Thread IV

[shivtim]

Does anybody have insight on the seeming contradiction in feasibility of office conversions? I keep seeing articles, social media, etc that say it's impractical to convert old office buildings to residential, and it's not a useful solution for telework-era empty office buildings. I've even seen people claim it's more expensive to convert an office building than to just knock it down and build a new building, because the floor plans and requirements are so different. Yet here in Atlanta it seems to be almost common. I can think of office buildings of all types and eras that have been converted to residential. Maybe it's just something unique about the Atlanta market that for whatever reasons doesn't work in Seattle or San Francisco? I fully expect more and more downtown office buildings to be converted to residential.

"Since 2010, at least 3.3 million square feet of old office space in Atlanta has been removed from the market through conversion"

Why the Dream of Turning Empty Offices Into Housing Is a Bust

Why empty offices aren't being turned into housing, despite lengthy vacancies

[ATL Champion]

There are quite a few interesting articles in the ATL Business Journal.. Generally Atlanta lags FAR behind most cities in office-resi conversions. Even smaller markets like Nashville and Charlotte excel Atlanta in these conversion. The average age of the converted office buildings is 80yrs old, so most of the older northern cities lead the list (DC, Philadelphia, Chicago, NYC) These conversion represent only 2% of the overall, and in general the practice is still considered a "niche market". There is significant cost related to upgrading HVAC, water and plumbing systems, and some larger deep floor plates may not be easily converted. There is great value in keeping the really old buildings that have basically become part of the historic fabric of a city.

https://www.bizjournals.com/atlanta/news/2022/11/23/office-conversions-all-shapes.html

https://www.bizjournals.com/atlanta/news...partment-conversions-interest-rates.html

[testarossa50]

I think it's generally possible, but just not cheap. And by that I mean, definitely cheaper than tearing down the building and starting over (acquisition costs for even an aging Class B tower will dwarf underlying land value, let alone significant demo costs). I also have to believe it's significantly cheaper to do a conversion than building a new Class A greenfield apartment tower.

I don't work in this field (I do industrial construction) but for the sake of argument divide construction of a Class A apartment tower into three similar parts:
1. Core and shell
2. Mechanical/electrical/plumbing
3. Finishes

Repurposing an office tower, you basically get #1 and then half of #2. There will still be huge amounts of horizontal MEP but the vertical lines and services should roughly be okay. #3 you obviously need to do brand new.

Long and short, you could be looking at a 50% cost savings on construction. There could be other ancillary benefits (like an existing parking garage that needs little work). There's definitely the cost of acquiring the structure to contend with. Amenities will need to be re-thought and creative. All of these ridiculously variable and site-specific. So, call the project savings 25% accounting for construction, acquisition, and amenities.

Then, you end up with a tower that's...weird. Deep floor plates, weird location, weird parking, weird lobby, weird amenities. Not necessarily a Class A apartment tower, but close. There's profit to be had given the ~25% discount, as long as this actually comes through and you don't get screwed over by something along the way.

The other big problem is velocity. If you buy a random surface lot in Midtown, and get financing set up for a new tower, you can basically turn an architecture and construction team loose and move onto the next project. With office conversations? It's all in subtle crap like utility connections and parking and exterior cladding and asbestos and fire code interpretation--and you have to know all this stuff before you buy the actual building. Way stickier situation than a greenfield. You'll be sweating the project from beginning to end.

I think we can expect to see several (more) prominent conversion projects, but not enough to fundamentally change the economics of housing or offices in Atlanta. To be sure, we should cheer on these projects when they do happen though. There's not some single fatal flaw (given the floor-to-floor heights, pretty much anything within reason should be technically possible) but just a bunch of things that make this more of a boutique one-off proposition.

**Again, to disclaim, I'm not in this field of construction**

[shivtim]

Originally Posted by ATL Champion

Generally Atlanta lags FAR behind most cities in office-resi conversions. Even smaller markets like Nashville and Charlotte excel Atlanta in these conversion.

Are you sure? This article has Atlanta in the top 20 for number of apartments created from office conversions. And if it's by city limits (unclear), Atlanta is about the 37th largest city so we're way ahead per capita.

Edit - I'm not saying you're incorrect, just saying there doesn't seem to be a good data source, and contradicting information in articles.

[ATL Champion]

Basically I was just summarizing the earlier mentioned articles (paywalls) ... I think that the bizjournals are a reputable source (not perfect however) .. If you take a closer look at the article you referenced you will see that Atlanta is rated 27th out of 30 markets in terms of number of buildings converted (15) . Given the number of buildings in Atlanta inventory it should at least be 7th on the list. As far as number of apartments created.. yes..it barely makes the top 20.

[MarketsWork]

Originally Posted by ATL Champion

Given the number of buildings in Atlanta inventory it should at least be 7th on the list.

I believe the market knows what it's doing here. Where demand exists, markets will find the most feasible ways to satisfy it. In Atlanta, most of the old office buildings ripe for conversion are Downtown, while the demand for intown apartments over the last three decades has been concentrated in Midtown. As Midtown continues to fill in and growth returns to Downtown, I believe we'll see more conversions of those beautiful old buildings. As the saying goes, a rising tide lifts all boats.

[Street Advocate]

Originally Posted by shivtim

So, this could be big news for Midtown. …It would open up a prime space at 8th and Peachtree. We have a LOT of office space recently completed or coming soon to Midtown (CODA, Anthem, Norfolk Southern, Midtown Union, 1105 w peachtree, etc) so I'm not worried about the 300 jobs moving. The vacated land is big enough for a multi-tower development, hopefully bringing many new residents.."

From cheetah to Peachtree, 8th st could see 5 or 6 more towers. We would be fortunate if the FDA site was redeveloped.

[shivtim]

Midtown Alliance update

The Midtown Art Walk between 10th and 11th along Peachtree Walk is "45% complete."

Midtown Alliance advertised the Juniper Streetscape project for construction bids. Bids were received on November 3, 2022 and are under review.



Midtown Alliance has also advertised the Midtown Activity Center (Last Mile) project for construction bids. Bids are due January 12, 2023.

Midtown Alliance has also advertised the Midtown 13th Street New Traffic Signals project for construction bids. Bids are due January 19, 2023.

[smArTaLlone]

[shivtim]

^Uh, if I'm reading that right it will have a car elevator, for a 3 unit building? huh?

[Sojourner_Terminus]

It seems to be an actual luxury condo development from my reading. Its taking a lot that is currently a one story house snuggled between 4-5 story apartment/condo buildings.

I'm kind of curious what the renderings will look like. Could be an attractive little infill.

[shivtim]

9 parking spots for 3 units is a no for me

[Sojourner_Terminus]

Originally Posted by shivtim

9 parking spots for 3 units is a no for me

It is excessive lol... 6 will be underground thankfully and the 3 above ground will be obscured by the lobby.

On google maps, you can see the current structure has a semi subterranean level that i assume will make the dig cheaper.

[shivtim]

Planning permit filed for 404 Boulevard "combining multiple residential lots into one larger parcel to allow for the development of a proposed 6-floor apartment building with 2-level interior parking deck."

Planning permit filed for 646 Echo, "Rezoning lots 646, 648, and 652 Echo St NW from SPI-3 SA2 to SPI-3 SA3 for a missing middle residential development project by Westside Future Fund."

[Street Advocate]

Both Juniper & Piedmont complete streets are supposed to go under construction this year.

404 Boulevard will be a good addition. Honestly wish we were adding more residences and taller buildings on Boulevard, has some of the best views of the city.

[GeorgiaPeanuts]

It is doubtful the complete streets will. For instance Amir said Juniper was bid $5 mil over the budget and they are trying to find alternate revenue sources

[Libertarian]

Originally Posted by GeorgiaPeanuts

It is doubtful the complete streets will. For instance Amir said Juniper was bid $5 mil over the budget and they are trying to find alternate revenue sources

Yeah, when do they take bids on the BeltLine rail?

[clexmond]

Originally Posted by GeorgiaPeanuts

It is doubtful the complete streets will. For instance Amir said Juniper was bid $5 mil over the budget and they are trying to find alternate revenue sources

Juniper is just one of the most embarrassing failures. It's been nearly 15 years since we started talking about adding a bike lane and some parking on *1 mile* of a street.

[smArTaLlone]

Here is the revised proposal. Urbanize.

[jayden]

Nice infill I guess.