By Trey Dove and Annie Lewis, Associates – Office Tenant Representation
It’s no surprise that tenants seeking Class A office space in Midtown are hitting road blocks in terms of both price and availability. In the fourth quarter of 2016, Class A average asking rental rates reached $33.31 per square foot (psf), the highest in Metro Atlanta.
But what about companies that can’t afford these rates but still want to attract and retain top talent by offering a space that’s “cool” in a building that’s close to where millennials are living, with easy access to public transportation to boot?
During the last several years, there has been a significant shift of non-profits and creative firms moving Downtown again. By comparison, Downtown Class A average asking rental rates in the fourth quarter of 2016 were $24.87 psf, $8.44 psf cheaper than comparable spaces just miles away in Midtown, and many buildings offer the same amenities in terms of easy access to public transit and innovative spaces.
For example, the Georgia Center for Non-Profits, which deliveries a wide range of services and support to organizations, philanthropies, foundations and community initiatives, moved into the Equitable building in late 2010. They were able to achieve cheaper rents but still be easily accessible to the companies and people they are serving, which are primarily located in Midtown and Downtown.
Creative companies, like marketing analytics startup CallRail, have been able to expand significantly by moving Downtown, which allows them to lease more space while staying within their budget constraints. In 2015, the company moved from Midtown into 6,000 square feet at the Equitable Building and expanded its lease to 19,000 square feet in 2016 to add more than 70 jobs. As technology and startup companies begin to outgrow traditional startup spaces and co-working environments, they are likely to consider Downtown, where they can find old and creative spaces to fill their needs without the high-dollar rent that comes with loft office space in Midtown.
With lack of available space and tempered new speculative construction, rent growth for Class A space in Midtown is expected to continue for the foreseeable future. Creative and non-profit companies that are looking to make a move Downtown might consider doing so sooner rather than later – or risk the same vacancy situations that are occurring in Midtown.