Shortly after he bought Underground Atlanta in 2020, Shaneel Lalani acquired a nearby downtown high-rise office building, 34 Peachtree St.
It took him years to figure out what to do with the 1960 building – convert 20 of its 30 stories to housing.
“I think we came up with the right mix for what downtown really needs,” Lalani said after giving a tour of the building. “Downtown needs housing. That’s what’s going to be the game-changer.”
Lalani, who is “self-financed,” is doing his part.
By next summer, he plans to finish phase one of the building – converting 10 floors that were once offices into 150 apartments. During a Sept. 3 tour of the building, Lalani showed me one of the floors with aluminum frames defining the spaces for the apartments, the hallways and a common gathering area.
A second phase would convert 10 additional floors into another 150 apartments. The residential part of the building will be sandwiched between five lower floors of retail and office and five upper floors for offices. The apartments – a combination of studios, one-bedroom, two-bedroom and three-bedroom units that will cost between $1,100 and $1,400. They will range from 500 to 1,000 square feet.
“Everything stops and starts with housing downtown,” Lalani said. “We want to bring people downtown 24-7. Downtown needs thousands of residents, tens of thousands of residents.”
But Lalani said not every office building can be easily converted to residential.
Just last week, Georgia-Pacific said it was discontinuing plans to convert the upper floors of its downtown tower to 400 residences.
“We have invested significant time, capital, and resources to bring this project to life, but higher construction costs and broader market headwinds changed the economic viability of the project at this scale,” Suzanne Maynard, Georgia- Pacific head of real estate development – Atlanta, said in a statement. “We will continue to focus on making sure employees are in an environment that helps us create value.”
A.J. Robinson, the outgoing president and CEO of Downtown Atlanta, formerly Central Atlanta Progress, said that for decades, leaders have understood the need to have people living in the central city.
But the economics are challenging, especially now when construction and real estate costs are rising. Converting office to residential is “more expensive than people realize.” Also, it’s often hard to get the financing to build residential downtown, observing that all the activity currently underway is being “self-financed” by developers.
“We need to make downtown more livable,” Robinson said. “I remain optimistic. For many, many years, downtown was kind of on an island. I do think we are making progress. We have exciting projects. The urban fabric of Atlanta continues to reinvent itself.”
David Cummings, a tech entrepreneur who acquired 10 contiguous blocks in South Downtown (SoDo), recently spoke to the Rotary Club Atlanta, outlining the quality-of-life challenges that exist downtown.
But even Cummings said: “Residential is the long-term answer.”
SoDo has developed 26 apartments, and they’ve been slow to lease up. “What we are trying to do is get Atlanta to discover historic downtown,” Cummings said. “It has an amazing tapestry of architecture, and some of the most beautiful buildings in Atlanta.”
The company recently decided to take a deep breath and “let the market marinate.”
Brian McGowan, president of Centennial Yards, a $5 billion project, is taking the opposite approach.
“We are full-steam-ahead,” McGowan said. “We have tremendous momentum now, and we believe in the future of downtown. We’re going to continue to build as fast as we can.”
As McGowan sees it, residential is the most important piece.
“Residential grounds a community more than anything else,” he said. “If we want to fix and revitalize downtown, we’ve got to get more people living there. That’s No. 1.”
Centennial Yards’ first project was converting the old Southern Railway headquarters into the Lofts at Centennial Yards. The 162 apartments leased out quickly and it is “essentially fully leased.”
Centennial Yards then developed “The Mitchell,” adjacent to Hotel Phoenix, with 304 apartments that are 80 percent leased.
“It’s an indicator for us that people do want to live downtown,” McGowan said. “We want to break ground on another apartment building as soon as possible. It would have 260 apartments and 60,000 square feet of retail.”
McGowan said building housing in today’s market is “incredibly challenging” because of high construction costs and interest rates. “But the demand hasn’t gone away, and neither has the need, so we have to all work together to keep finding creative ways to move projects forward,” he added.
The Atlanta Regional Commission just released its first regional housing study. The region needs 367,000 homes by 2035, and the greatest need is for affordable units.
“We want to make sure housing is located near jobs and transportation systems,” said Anna Roach, CEO of the Atlanta Regional Commission, at the Atlanta Regional Housing Forum on Sept. 2. “There needs to be better alignment of transportation investment to housing.”
Downtown Atlanta has the most transportation investment of anywhere in the city. It has the MARTA station hub at Five Points as well as several other MARTA stations. It is one place in the region where people don’t need a car to get around.
Egbert Perry, founder of the Integral Group, understands the value of downtown being the transportation hub of the region.
“You need housing downtown, but you have to wonder how do you get there, and why is it not happening,” he said. “The answer is not simple.”
“Downtown housing is only part of the answer,” said Perry said, adding that jobs, retail and quality of life all play a part in creating a vibrant community. But housing is a good place to start. “Neighborhood retail follows rooftops. If people live there, people will be shopping and eating.”
Here’s an idea. Maybe we can convert hotel rooms to housing, especially hotels that are older and in need of renovation.
At the Aug. 20 executive committee meeting of the Atlanta Convention & Visitors Bureau, President William Pate said hotel occupancy rates are soft.
“Our business is continuing to grow,” Pate said. But occupancy of hotel rooms has gone from “the mid-70s to the low 60s. There’s more demand, but it’s not keeping up with growing supply.”
Demand does exist for more housing downtown. There are thousands of students attending Georgia State University as well as government officials and office workers.
If converting offices to housing is too expensive, let’s explore ways to build housing on vacant or underused properties, such as surface parking lots.
We can bring new life to the central city by filling in the missing or disconnected pieces with residences. Yes, that may mean offering greater incentives or having more public-private partnerships developing downtown.
But with more people living downtown, everything else will fall into place. After all, you wouldn’t need robot dogs to police the streets if people are living there and have a stake in their community.
Lalani is committed to seeing more people living downtown.
“We are all in; we are not going anywhere,” Lalani said. “I’m so encouraged and enthusiastic that there’s momentum happening all around me. That wasn’t the case five years ago.”
