Health and future of Atlanta’s office market are factors in proposed sustainability code

By David Pendered

Editor’s note: This story has been updated with additional information from CBRE about its definition of the central business district.

The health of Atlanta’s office market is central to the debate over the sustainability legislation that’s slated for a vote April 20 by the Atlanta City Council.

The 100 Colony Square building, built in 1967 and owned by Tishman Speyer, is  an Energy STAR rated building, with a rating of 76 in 2014, according to energystar.gov. Credit: tishmanspeyer.com

The 100 Colony Square building, built in 1967 and owned by Tishman Speyer, is an Energy STAR rated building, with a rating of 76 in 2014, according to energystar.gov. Credit: tishmanspeyer.com

A healthy market would provide landlords with the financial capacity to meet the requirements included in the pending legislation, and the financial security to face the code’s potential expansion. A market that’s less than healthy results in a greater level of skepticism and push-back against such proposals.

Reports issued by CBRE in the past two weeks show Atlanta’s office market has rebounded from the impact of the great recession and its aftermath.

Atlanta’s submarkets of downtown, Midtown and Buckhead have leased 2.5 million square feet since 2006, tying the city’s central business district for fourth place nationally with the downtown submarkets of Dallas/Ft. Worth and Orange County, according to CBRE. The market leaders were Manhatten, followed by Houston and San Jose.

The rebound of the Midtown submarket is expected to continue in 2015 as more tech companies lease space to be near the burgeoning number of millennials residing in Midtown. Companies that have signed deals, or are considering deals, include NCR, Twitter, RIB Software, MailChimp, Cardlytics, and AthendaHealth, according to CBRE.

What is missing from these and other reports, however, is a reliable sense of lease rates. Quoted prices for Atlanta’s submarkets have mostly returned to the pre-recession range. But these prices don’t reflect actual negotiated rates, or the value of incentive packages utilized to get tenants into a building.

Georgia World Congress Center

The Georgia World Congress Center was awarded Silver LEED certification in 2014, making it the world’s largest LEED-certified convention center. Credit: gwcc.com

Some landlords think they are just regaining their equilibrium, after the impact of the great recession and its aftermath, said Brandy Mitcham, government affairs director of the Building Owners and Managers Association of Georgia. Leasing activity is up, as are sales and acquisitions, after years of difficult financial times.

“They are starting to get back on their feet and starting to have a little more money for capital requirements,” Mitcham said. “This legislation would dictate how those capital budgets will be spent.”

Southface and other advocates say the time has arrived for Atlanta’s public policies to steer commercial buildings toward greater sustainability. The step is needed to maintain Atlanta’s prominence as a business hub, as well as to promote the growth of the sustainable industry.

“If we’re going to be competitive in national marketplace, we have to have this,” said Robert Reed, director of Southface’s Urban Sustainability Practice.

Reed said the sustainability sector made, “a lot of concessions,” to reach a compromise with the commercial sector. One involved retrocommissioning, which Reed describes as a review of mechanical systems to ensure they are operating at peak efficiency. The proposed legislation does not require retrocommissioning, but it could be added.

“There is a section in the ordinance [on retrocommissioning], and we’ll be working toward finding incentives,” Reed said.

Mitcham said BOMA has its own set of incentives it hopes to see included in the legislation. These financial incentives would encourage landlords to make sustainable improvements at a faster rate than they could afford to do with their existing resources, she said, without deploying mandates that presume the government knows better than landlords how to reduce buildings’ consumption of water and energy.

For a complete description of the proposed legislation, please see a column published in SaportaReport.com that was written by Denise Quarles, director of Atlanta’s Office of Sustainability.

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

3 replies
  1. Burroughston Broch says:

    If sustainability were financially sound and generated an attractive return on investment without tax incentives and grants, there would be no need for legislation on any level. The mere fact that legislation is required tells us that it is not.Report

    Reply
  2. EveryoneIsAnExpertNow says:

    Burroughston Broch Please don’t comment on subjects you know nothing of.  Atlanta is the last major city that hasn’t passed this legislation.  We are always behind the times because of our demographic.Report

    Reply
  3. Burroughston Broch says:

    EveryoneIsAnExpertNow Burroughston Broch  Since I am a consulting engineer and participate in many LEED efforts, I know about this subject. I have shot holes in a number of greenwashing stampedes.
    I am confident enough to call those other cities wrong.
    If other people break their noses, do you feel obligated to break yours?Report

    Reply

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