By Chad Koenig, Senior Director, Office Tenant Representation
For several years, the hottest office submarkets in Atlanta have primarily been ITP – or “inside the Perimeter” – meaning they are core CBD such as Midtown and Buckhead. But submarkets just outside the Perimeter, like Cumberland, are gaining interest of office tenants again and experiencing a resurgence that no one saw coming.
If you would have asked any seasoned commercial real estate broker five years ago which submarket would be likely to experience a significant amount of demand that would drive new construction in 2018, Cumberland would likely have been toward the bottom of the list. Although located perhaps best among “outside the Perimeter” submarkets thanks to its easy access to I-285 and I-75/85, Cumberland experienced little to no rent growth for years.
However, the sleepy submarket has awoken. During the past year several newly constructed office buildings, most already fully leased, have popped up in Cumberland. Comcast built a nine-story tower at The Battery for its Central Division headquarters, which includes more than 1,000 employees. Early this year HD Supply will open its 220,000-square-foot $100 million headquarters near the intersection of Cumberland Boulevard and Interstate 75. Synovus is anchoring 1100 Overton taking 100,000 square feet, and Bennett Trasher joined Riverwood 200 with a 64,300-square-foot lease.
“Prior to SunTrust Park and The Battery, Cobb county lost a significant amount of projects due to our lack of walkability, after-hours options, night life, and most of all, the appeal to young talent,” said Brooks Mathis, Executive Vice President of Economic Development, Cobb Chamber. “Now, we have had the pleasure to work in the recruitment and expansion of strong corporate investments including Genuine Parts Corporation, Comcast, Home Depot, RaceTrac, Aaron’s, Vonage, Synovus and HD Supply.”
Developers are creating experiences within these new buildings like green space, areas for food trucks, tenant events and more, but the experience goes beyond the building to the greater surrounding area. Office developers are taking a play from multifamily buildings and offering more hospitality and concierge services. Just like tenants flocked to Alpharetta to be near Avalon, companies are aggressively seeking space that’s near The Battery. It’s new for a submarket that’s OTP to offer an experience that extends beyond the building, but it’s necessary and it’s a tremendous driving force in office leasing.
“As a tenant that moved into the 200 Galleria building since 2004, we have been extremely excited to see the positive impact in the market,” said D. Greg Morgan of Mauldin & Jenkins, LLC. “We use the pedestrian bridge frequently during game days. The Battery’s entertainment value has been significant. Clients, prospects, and potential new employees happily come to the area to join us for lunch and after work activities.”
Scott Fletcher, Vice President of Enterprise Relationship Management at Ultimate Software, added, “We make extensive use of The Battery for lunches and after work events. The ball park has been a great upgrade to the area.”
Without a doubt, the hard work that the Cumberland CID and Cobb County have put in laid the groundwork for the market to attract the Atlanta Braves, and ultimately to return the office market to its once red-hot state. Cumberland is incredibly easy to navigate thanks to the 4.2 mile Cumberland Boulevard which loops the submarket and offers access to perhaps one of the most diverse workforces in the city. Additionally, it features a relatively low cost of housing compared to the hottest CBD submarkets and the high quality of life in the nearby Smyrna/Vinings area.
“Investment in the market has exploded during the past couple of years which has driven commercial and residential values from $4.4 billion in 2013 to $5.5 billion in 2017,” said Malaika Rivers, Executive Director of the Cumberland CID. “If you add the value of the The Battery and SunTrust Park, as well as other publically owned facilities, the value comes closer to $6.1 billion.”
Asking rental rates for Class A space in the fourth quarter of 2017 in Cumberland totaled $26.54 psf, significantly cheaper than the lofty rates found in Midtown ($33.69 psf) and Buckhead ($34.06 psf). As rental rates continue to climb in CBD submarkets, Cumberland is poised for continued success as tenants seeking an experience without the price will flock to the market.
Chad Koenig is a Senior Director with Cushman & Wakefield Atlanta’s Office Tenant Representation Services group, with more than 18 years of experience in commercial real estate. He provides strategic occupancy consulting and representation for tenants with regards to office relocations, renewals, consolidation, sub-lease dispositions and other requirements.