Offices in Motion


Traffic is back with full force in Atlanta, especially on Peachtree Street near our offices in Midtown. Multiple high-rise construction projects attract a near-constant flow of deliveries, resulting in lane closures as cranes reposition oversized construction material. While Midtown is booming, open parking spaces at office buildings like ours remain abundant. A stark contrast has emerged locally between the low utilization of office space and the high volume of new construction. Following the relocation of one major tenant, we have heard that our building is currently only 50% occupied!

A little over three years ago, the onset of the pandemic forced office-based businesses across the globe to begin a collective experiment: enable work remotely from the office. Those remote work patterns are still partially in place. Many people have been grateful to be able to return to work regularly in close proximity to colleagues. At the same time, most office workers enjoy the flexibility to avoid a painful commute on some days.

Data reflect these hybrid trends. For the week of April 24th, Kastle Systems reported an average daily office occupancy of 49.6% in the top 10 US office markets. Unsurprisingly, Friday remains the least popular day averaging about 33% office occupancy. Tuesdays are the most popular and attract about 60% of workers to the office.

In Atlanta, Avison Young reports total office vacancy at about 23%. Downtown vacancy is highest at 25%, with asking rent 40% below that of Midtown. My wife’s employer, Deloitte, recently decided to relocate from downtown and signed a 92,000 square foot lease in Midtown in a building owned by Cousins Properties. Cousins’ CEO has been quoted recently stating, “The return to office has accelerated and is likely to continue.”

Despite insiders’ optimism about the office sector recapturing its former glory, uncertainty about the value of office high-rises is approaching levels that rival their height. This past week, 350 California Street, a 22-story tower in San Francisco received financial press coverage. Having been worth $300 million in 2019, the 75% vacant building is currently for sale, with bids anticipated to come in at just $60 million. Office vacancy rates in San Francisco continue to trend higher and are now near 30%.

With high vacancies and few office tenants expanding, office landlords may face further challenges ahead. Office property owners with loans nearing maturity may be squeezed first, especially as recent strains on the banking system may reduce credit availability. According to data from, Atlanta’s office market is the most exposed of the top US markets to office property loans set to mature by 2025. Nearly 30% of these loans come due this year and next. Dallas, Austin, L.A., Chicago, and Denver have 20% or more of their loans due by 2025.

It will be interesting to observe the ongoing impact of hybrid work on office properties and their values. I look forward to monitoring the situation – both from our Midtown office, and sometimes from my office at home.

Cam Simonds