Atlanta Mayor Andre Dickens is asking Microsoft for clarity on the future of a parcel of land in the city that was slated to become the tech giant’s main corporate campus.
Microsoft announced in 2021 that it will build a new complex on 90 acres in Atlanta’s Grove Park neighborhood, creating 15,000 jobs in the city. However, the project was halted last year before it could officially break ground as the company announced it was reevaluating its global real estate portfolio following the pandemic.
Dickens said he plans to reach out to Microsoft over the next week for an update on the project and whether it is still viable. If not, Dickens said he is willing to try to get the land back for the city or partner with a developer.
“We really want them to develop their own property or give it to us so we can develop it,” Dickens said in an interview at Bloomberg’s Atlanta office. he said. “Even if you don’t know what you want to do, please tell me what you know you can’t do.”
Microsoft declined to comment. The company previously said the Grove Park property was not for sale and that it would return to planning when the time was right.
The company has already opened a new office in the Atlantic Yards area in 2022, with 2,000 employees. The office, along with the Grove Park campus about eight miles away and his three new data centers, is part of Microsoft’s vision to make the Atlanta area one of its largest hubs outside its Redmond headquarters, with approximately 50,000 provides employment for people. The company has 220,000 employees worldwide.
The uncertainty surrounding Microsoft’s expansion reflects a broader trend of technology companies and other companies downsizing office space and employees as the pandemic accelerates the shift to remote and hybrid work. There is. This trend is also affecting major U.S. cities, with Atlanta having the highest office vacancy rate in the country at about 24% at the end of last year, according to brokerage Cushman & Wakefield.
More than 20% of Atlanta-area offices financed with commercial mortgage-backed securities are at least 90 days past due, the most of any metro area, according to data compiled by Bloomberg. A property owner uses his CMBS to finance a variety of properties, including offices, retail assets, and industrial assets.
Dickens said he is not concerned about demand for high-quality, amenity-rich Class A buildings, which still attract tenants and investment, especially compared to older, less desirable Class B and C buildings. Stated. He said CIM Group is working with backers led by Atlanta Hawks owner Tony Ressler to build projects including the $5 billion Centennial Yards project, a former railroad yard known as The Gulch that also includes a hotel. , cited the Skyline crane as a sign of new development. , restaurants and offices.
Still, Dickens said he is keeping an eye on how the decline in market values for office buildings will affect the city’s budget, which relies heavily on property taxes from commercial property owners. About 19% of the city’s tax revenue comes from the commercial real estate market, according to the Tax Policy Center, a nonpartisan think tank. That’s more than many other major U.S. cities, including Miami and New York, which derive about 10% of their revenue from such taxes.
While the office market has become more difficult, Dickens said Atlanta’s housing market remains strong. Robust job growth and a pandemic-driven real estate boom, fueled in part by people moving out of expensive cities, are driving up home prices in the region. Since the pandemic began in 2020, the average rent in the Atlanta area has increased 34% to $1,897, outpacing the national increase of 29%, according to data from Zillow Group.
Dickens said one of the biggest challenges to making housing affordable for city residents is the presence of institutional investors and corporate buyers who buy large numbers of homes for investment purposes. said. Atlanta is the largest market for such investors, with about 72,000 homes in the area, according to data firm SFR Analytics.
Dickens said there are individuals who “use large amounts of capital to buy up lots of real estate out of sight,” forcing prospective home buyers out of the market. “Those investors are also using other people’s money to invest. They are using pension funds and other types of investment vehicles.
Bloomberg’s Michael Sasso, John Gittelsohn and Amanda Albright contributed to this report.
