BYLINE: WALTER WOODS
DATE: September 5, 2004
PUBLICATION: Atlanta Journal-Constitution, The (GA)
EDITION: Home; The Atlanta Journal-Constitution
191 Peachtree tower, the Peachtree Street temple from the city’s “It’s Atlanta” boom years, has hit the skids.
The twin-crowned, 50-story downtown landmark, widely touted as the Southeast’s finest office building, is losing three signature tenants.
Five hundred Powell Goldstein Frazer & Murphy attorneys will move out in November. Banking giant Wachovia and law firm King & Spalding, the building’s earliest tenants, will shortly follow. The building will be 75 percent empty when they leave.
Their exits leave accountants Deloitte & Touche as 191 Peachtree’s last big tenant. And Deloitte’s lease is up in 2008, not too far into the future for the shifting real estate industry.
It’s a curious position for the 191 building, a widely praised, opulent skyscraper famous for an echoing 102-foot lobby, marbled elevators and a wing-back executives’ club. What’s more, the building’s owner is the largest real estate company in the country, Chicago’s enormous Equity Office Properties.
Observers find multiple culprits for 191’s troubles: corporate mergers, beggars on Peachtree, even bad luck.
But Atlanta’s business center has been on a steady march northward since office buildings at Five Points began to empty out in the 1980s. Trackers of real estate trends watched the magnetic pull of new skylines rising in Buckhead, Dunwoody, Cumberland/Galleria and Alpharetta.
Downtown’s nemesis in this case isn’t the suburbs, however. It’s Midtown.
When 191 opened in 1990, Midtown, centered on the blocks of Peachtree Street from the Fox Theatre to Brookwood Station, was a sleepy, disheveled district that still looked like the hippie hangout it was in the ’70s, despite repeated attempts at revival.
In the last few years, a community group called the Midtown Alliance has cleaned up Midtown’s sidewalks, put more police on its streets and enticed residents, cafes and shops to the district. The alliance has capitalized on local assets like the Woodruff Arts Center.
Midtown’s new vitality has encouraged developers, who are snapping up its neglected lots to build office and condo towers.
“I hate to see it happen, [but] the center of gravity … it’s moving north to Midtown,” said Herman Vonhof, a former officer at the European pension fund that financed 191. “See what’s happening in Midtown, the Atlanta Symphony … fun things are happening there.”
But a lot of observers have been predicting for years that the center of gravity would settle north of I-285. Every company new to town that landed in a suburban office park, every downtown enterprise that edged north, was evidence. Newell Rubbermaid, which made a splash in 2003 when it lengthened Atlanta’s list of Fortune 500 headquarters, settled in Sandy Springs. GE Energy settled in Cobb in 2001, and Rayovac Corp. chose Sandy Springs this year.
Midtown’s revival may be seen as interrupting that flow, but it’s still at the expense of downtown.
“You want to know why 191 is going empty, at least for a time? Go up [Ga.] 400 and see what’s happening, see where [the trend] is going,” Vonhof said.
Three decades ago, “downtown was where you wanted to be for a national or an international company,” Vonhof said. “It didn’t sound good then to be in Dunwoody and have people ask, ‘Where is that?’ … I think that has changed.”
It has changed for lots of reasons, among them things downtown can’t control, like proximity to suburban schools and acre lots. Many things determine how a business chooses office space, including rents, traffic, even where the CEO lives.
But the personality of a business center can make a difference, too. Midtown’s artsy nightlife has a different draw than Alpharetta’s pastoral approaches.
Downtown always has cachet for some, but even after years of trying, Atlanta’s core hasn’t been able to quite capture the mix of residents, cafe society, tourists and workers that are now mingling in Midtown. There are too many homeless people in downtown’s street life mix for many.
“One Ninety One has been the victim of a circumstance of people just deciding they don’t want to be downtown anymore,” said Clark Gore, executive vice president at developer Holder Properties.
At the same time, other office centers have developed and taken on their own personalities, Gore said. “They won’t replace downtown, but they give people very viable options.”
Bob Voyles, formerly with developer Hines, which built 191 with Cousins Properties 14 years ago, sees the metrowide dispersal of business as positive. The city has grown large, “like Los Angeles, and the power base has spread.”
As it spreads, it is inflicting huge changes on downtown.
As late as the 1980s, prominent CEOs hobnobbed at downtown cloisters like the Commerce or Capital City clubs and their staffs ran out at lunchtime for shopping.
Decision-makers at the biggest companies sniffed at suburban offices in Cobb and DeKalb, said Vonhof.
But the suburban centers prevailed and grew, and downtown shops and department stores closed — Macy’s departure in 2003 was the last act. Underground Atlanta and the condos that filled some of the empty offices struggle. City boosters look for innovative ways to fill the gaps and bring back the street life.
Downtown is improving, said Don Huffner, senior vice president of Equity Office Properties, with the Georgia Aquarium and new World of Coca-Cola under construction near Centennial Olympic Park — itself a boon to downtown.
Last week, the Savannah College of Art and Design created hope it might bring students and vitality to the empty Macy’s building across Peachtree from 191. The art school, which plans to open an Atlanta campus in 2005, is looking at both Macy’s and the former Equifax building in Midtown as possible locations.
Voyles is responsible for some of the momentum toward Midtown.
Before he left Hines, Voyles headed development of 1180 Peachtree, a 41-story tower now under construction at 14th and Peachtree streets, adjacent to a new hall for the Atlanta Symphony Orchestra. As part of the deal, he persuaded King & Spalding to relocate there, from 191. The firm will move in 2006.
At 1180’s groundbreaking last fall, Voyles declared to the crowd that 14th and Peachtree would be Atlanta’s new Five Points. Ironically, 191 had the same distinction when it opened 14 years ago, Vonhof remembered.
King & Spalding, Powell Goldstein and Wachovia (then First Atlanta) all abandoned long-occupied Five Points headquarters for 191.
Other old-line Atlanta companies that had competed across Woodruff Park for years — C&S, Alston & Bird and SunTrust Banks — made the same decision, most of them moving into a new crop of huge skyscrapers planned farther up Peachtree in the late 1980s.
Huffner, who is charged with filling the empty space in 191, pinned Atlanta’s current center at the nexus of 1-285 and Ga. 400. The Dunwoody junction is the metro area’s largest office district.
“That’s the center right now,” Huffner said. “But that does not mean the vitality of other markets is impugned. [Corporations such as] Georgia-Pacific, Southern Co. are committed to downtown.”
Huffner and his team at Equity Office, after a recent war-room-style meeting, are responding aggressively to reverse the tenant drain.
Equity has scrapped plans to sell the building, decreased 191’s premier rents, and is furiously courting the few big local tenants on the market, among them law firm Troutman Sanders, now residing at Bank of America Plaza.
“One Ninety One is probably the finest finished building in all of Atlanta,” Voyles said. “And that part of downtown is going through a slow but steady revival — you could almost treat it as an emerging market.”
When 191 was built “the question that came up was, did Atlanta want the best? … And we proved it,” said Vonhof, the tower’s financial backer. “That piece of real estate will stand the test of time.”