Cousins Sees ‘Robust Demand’ For Midtown WeWork Area Amidst Bettering Workplace Demand

Two of Metro Atlanta’s largest workplace landlords, Cousins Properties and Highwoods Properties, are piercing the yearlong gloom over the workplace market with information that they’re fairly busy.

Actually, issues are so busy, Cousins has ended talks with embattled coworking big WeWork to renegotiate its lease at a tower in Midtown Atlanta, selecting as a substitute to take the area out to market, Cousins Government Vice President Richard Hickson mentioned throughout a Feb. 8 earnings name. 

“Relating to 725 Ponce in Atlanta, as a result of robust demand from a number of conventional workplace customers, we now have determined to not negotiate with WeWork at this location and count on the lease to be rejected,” Hickson mentioned. 

WeWork occupies 45K SF throughout two flooring at 725 Ponce.

Hickson mentioned Cousins, the town’s largest workplace proprietor at 8M SF, is in talks to change WeWork leases at Terminus in Buckhead and 120 West Trinity in Downtown Decatur, lowering the areas by about 26K SF every and reducing lease.

“I might word our negotiations with WeWork are ongoing and have been very fluid as we speak,” he mentioned.

The demand behind WeWork’s 725 Ponce area, positioned in one among Atlanta’s hottest workplace submarkets over the previous decade and subsequent to the long-lasting Ponce Metropolis Market, will not be an outlier in Metro Atlanta. Leasing exercise within the fourth quarter of final yr and to this point in Q1 belies the efficiency of the workplace market in 2023.

The workplace market posted unfavorable web absorption of three.8M SF final yr, pushing complete availability, each direct and sublet area, to an all-time excessive of 32.2%, in keeping with Avison Younger.

However Cousins leased 217K SF in This autumn, it reported throughout the earnings name.

“I believe the place we have seen the strongest leasing exercise thus far has definitely been right here in Atlanta, which advantages from a really diversified buyer base,” Cousins CEO Colin Connolly mentioned throughout the name.  

Cousins secured renewals for Wells Fargo at Terminus and Northpark, an almost 600K SF workplace complicated in Central Perimeter, for a mixed 105K SF. And, Hickson mentioned the agency has accomplished 200K SF within the first quarter of this yr, 70% of which have been new and increasing leases.

“We’re seeing some fascinating regional headquarters which might be transferring into specific markets, whether or not they be Tampa and Phoenix, as Colin talked about, additionally right here in Atlanta for sure. However we really feel like there are good, good optimistic issues occurring within the early-stage pipeline,” Hickson mentioned. 

JLL Government Managing Director Jeff Bellamy mentioned his agency is conducting extra excursions and seeing extra requests for proposals from tenants, a optimistic signal that exercise has picked again up, particularly as corporations start to implement a extra concrete return-to-the-office mandate, even when simply part-time.

“We’re all busy proper now,” Bellamy mentioned. “Extra corporations are within the place to make selections the place earlier than they have been placing actual property selections on maintain.”

These return-to-work mandates are a part of the rationale exercise has picked up within the Solar Belt workplace markets, particularly for Atlanta, Nashville and Raleigh, which mixed posted two-thirds of the practically 700K SF of leasing exercise Highwoods Properties inked within the fourth quarter, Chief Working Officer Brian Leary mentioned throughout a Feb. 7 earnings name.

Exercise in Atlanta included backfilling 50K SF of Novelis’ former 168K SF area at Two Alliance Heart in Buckhead, with prospects eyeing the rest of the area, CEO Ted Klinck mentioned throughout the name. Novelis moved to and opened its headquarters at One Phipps Plaza final yr. Highwoods additionally renewed the Georgia Division of Income for 110K SF at 2500 Century Parkway, downsizing the division from 255K SF and transferring it from 1800 Century Blvd., each of that are within the Century Heart workplace park simply north of the town.

Highwoods additionally has signed 150K SF of recent leases and 52K SF of expansions since January, Leary mentioned. 

“We proceed to see return-to-work packages and mandates elevate the tide on bodily occupancy with the popularity that Fridays would be the [rarest] days within the workplace, simply as they have been earlier than the pandemic,” Leary mentioned throughout the name. “Our prospects are telling us [this] one-on-one and by way of their lease exercise. They worth the bodily office, [where] their greatest and brightest can collaborate and resolve issues, the place expertise might be onboarded and mentored, and the place an organization’s tradition can thrive.”

Greenwood Industrial Actual Property principal James Pitts mentioned the flight to high quality for workplace area has been fueled by company efforts to get staff again to the workplace. Firms scrambling to safe spots in amenity-rich trophy properties is mostly the primary signal of a extra holistic workplace restoration, Pitts mentioned. 

“The very first thing you see coming again to life is within the trophy places of work,” Pitts mentioned.

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