A few years ago, it was a foregone conclusion that a new office building in Atlanta’s booming West Midtown neighborhood would quickly fill with tenants.
Tech firms, including giants like Microsoft, flocked to Atlanta’s Westside and Georgia Tech’s orbit like yellow jackets to nectar. But Echo Street West, which finished construction early this year, has yet to attract a single office tenant, prompting its developer to seek a buyer to reboot the building’s leasing efforts.
Silicon Valley-based Menlo Equities emerged as Echo Street West’s prospective buyer Tuesday, confirming during a Development Authority of Fulton County meeting that it is under contract to acquire the district’s 305,000-square-foot office footprint. A Menlo executive told the DAFC board that it has the money and strategy to attract tenants to the vacant buildings.
“With new capital, a new bank loan, (Menlo) is well-capitalized to pursue larger tenants,” said Javier Perez, a senior associate with Menlo. “We’re focused on traditional technology and creative tenants that have focused in this area of West Midtown, but we are going to pursue a multipronged leasing strategy.”
Echo Street West — near Northside Drive and the Atlanta Beltline’s Westside Trail — broke ground in 2021 and was developed by Texas-based Lincoln Property Co. The mixed-use district consists of three buildings: the Vibe at Echo Street apartments, a five-story steel-and-timber-framed 765 Echo office building and a two-story loft office facility at 745 Echo.
Credit: Courtesy/Lincoln Property Company
Credit: Courtesy/Lincoln Property Company
Neither office building has snagged a tenant, leading Lincoln Property in July to tap real estate services firm JLL to market the office buildings for sale at a “meaningful discount,” according to a report at the time by Bisnow.
Disrupted by the COVID-19 pandemic in 2020, office leasing across metro Atlanta slowed to a crawl as companies evaluated their workplace needs amid the rise of hybrid work schedules. Echo Street West also found itself competing with several new office projects in West Midtown.
Microsoft, which acquired 90 acres in Atlanta’s Westside, also paused its plans in 2023 to develop a sprawling campus with 15,000 employees, disrupting corporate investment in the area.
Office leasing activity has rebounded this year, although a glut of unwanted space remains available across Atlanta. At the end of September, 46% of office space in West Midtown was available to rent, according to real estate services firm CBRE. But the neighborhood also commands the most expensive average rent rates in metro Atlanta at $42.05 per square foot.
“We’re seeing a decent amount of large corporate leases coming back in Atlanta,” Perez said. “We’re confidence that we, with the right capital, can attract those tenants to this property to help activate this part of town.”
Because of rising vacancy and heightened interest rates, some office landlords have decided to sell their buildings at a steep discount or face foreclosure. Menlo Equities, which was first reported as a potential buyer for Echo Street West by the Atlanta Business Chronicle in September, did not disclose a sales price but expects the transaction to close before the end of the year.
DAFC, also known as Develop Fulton, previously approved nearly $7 million in tax savings over 10 years for Lincoln Property to help build the project, valuing Echo Street West at $154 million. The board granted a request Tuesday to transfer bonds linked to those incentives to Menlo, contingent upon the sale closing.
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