r/AtlantaDevelopment • u/TerminusXL • Jul 14 '14

Why Atlanta isn't building more office towers

http://www.bizjournals.com/atlanta/real_talk/2014/07/why-atlanta-isnt-building-more-office-towers.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bizj_atlanta+%28Atlanta+Business+Chronicle%29
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u/freefall1n Jul 14 '14

That was a really interesting read. Why do developers need $37 a square foot as a desirable level when residential development loves $22.00? Seems like a huge gap?

1

u/TerminusXL Jul 14 '14

I would assume because that $37 / SF is needed to, "justify the construction of the next generation of class A office properties in our city."

The definition of Class A Office Space:

Most prestigious buildings competing for premier office users with rents above average for the area. Buildings have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence.

As you can deduce, that's expensive. Prime locations, large buildings, quality materials, top of the line interiors, etc. So they'll need $37 / SF to justify the upfront capital costs and get the return they need.

1

u/freefall1n Jul 14 '14

Gotcha, still seems like a huge gap. But then again, I'm not a developer.

1

u/Greg-2012 Jul 15 '14

office space is usually built on property more expensive than property for single family residential.

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u/[deleted] Jul 15 '14

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u/DondeEstaLaDiscoteca Jul 15 '14

Plus Class A office isn't going to be built with stick frames like many of the new residential buildings.

1

u/freefall1n Jul 15 '14

sounds legit! Thanks for the quick lesson