Employers clamor for ‘creative’ office space in metro Atlanta
It likely started on the West Coast in the 1990s. Silicon Valley dot-comers cobbled together offices with mismatched furniture in whatever space was available. No need or money for interior walls and doors—or desks. Entrepreneurs worked, ate and slept in common areas so they could easily collaborate and get to market before the next dot-com beat them to it.
These tech pioneers were building what we now call “creative offices” out of pragmatism. But “creative office” has become a deliberate design choice and development strategy in markets across the country. It suits companies in many industries, and it appeals to the much sought-after Millennial generation—although the Millennials certainly don’t have a lock on it.
Focusing on modern, retrofitted space
The Atlanta metro area has nearly 4 million square feet of this modern, flexible space—typically found in former warehouses and older buildings, with purposely exposed brick and ductwork, massive windows and large open floorplans that are more conducive to teamwork and unconventional work hours and styles than traditionally segmented workspaces.
Creative offices are more than just shabby chic trendy work places, though. They have become sophisticated, full-service developments, with everything from coffee shops, bars and fitness clubs, to spaces that host events like speakers series or bocce ball tournaments. “It’s about programming and activation,” says Brooke Dewey, vice president at JLL and a member of the agency leasing team. “People looking at taking these spaces place incredible value on recruiting and retention and overall culture as an organization.”
“Engaging employees in a modern, fluid, holistic way has long-term benefits”, says Craig Van Pelt, JLL’s director of research. Next-generation decision makers don’t want to work like their parents and grandparents worked. They co-work, work remotely and don’t watch a conventional clock. “There’s no reason to have space for people who aren’t there,” Van Pelt says. “They might not keep normal work hours. And when they are there it enables them to capitalize and collaborate in flexible, open workspaces.”
Buckhead’s creative space in high demand
Atlanta employers are gobbling up the city’s 4 million square feet of creative space quickly. Only 20 percent of it is available overall, according to JLL, which recently started tracking this subcategory. Midtown and Downtown have even less creative office stock available, with vacancies below 18 percent.
So when they can’t find a spot in these tighter submarkets, tenants are turning to Buckhead, which has twice the creative space vacancy rate, at almost 40 percent. Buckhead is home to some flagship creative projects, such as the redevelopment of Armour Yards by Third & Urban, which has attracted tech companies such as Coyote Logistics and GSMA.
Creative space may be more plentiful in Buckhead, but much of it is Class A, so it comes at a premium—rental rates average $35 per square foot. Class B space leases for closer to $20 per square foot, and developers are starting to take “newer” 1960s- or 1970s-era Class B buildings — some of which have obstructed views or more conventional ceiling heights — and turning them into what Dewey calls “classy conversions.” The $14 million 1776 Peachtree redevelopment, for example, is more of a mid-century modern building, so it doesn’t have that older warehouse look and feel but it’s still retro. And it includes restaurant space; common corridors; and showers and bike storage for eco-conscious commuters.
Class B projects are smaller, though, Dewey says. “So they aren’t huge needle movers when you look at the entire submarket, which has little room for new construction.” Maximizing Class A space and leveraging demand for creative office space are still key to the continued strength of the Buckhead submarket, where landlords are in a prime spot to benefit from high demand and low vacancies.
Capitalizing on the strong Buckhead market
Because there’s no ground-up building happening and there are only few sites available for redevelopment, landlords will be in a prime spot to benefit from high demand and low vacancies. However, Buckhead, historically home to traditional users such as financial services firms, will continue to grow as Atlanta’s new creative office hub. Investors looking to capitalize on the strong Buckhead market will likely be paying a premium on the assets that do go on the market.
To learn more, download our new report Why Creative Space is Growing in Buckhead