Atlanta Retrofitting Prominent Office Tower to Residential

Downtown Atlanta. (Source: Flickr/David.)

North American office districts still haven’t fully recovered from pandemic-era declines and subsequent shifts toward remote or hybrid work. Many American cities have a crisis of available or affordable housing. Atlanta’s trying to address both problems in one project, with an ambitious plan to convert a 41-story office building into a mixed-use property with several hundred residential units. Local housing advocates point out that the goals—encouraging downtown living and retrofitting existing buildings that have outlived their original purposes—are laudable, but question the timing and economics in a city with such urgent needs.

2 Peachtree Street was built in 1966, and for many years was the tallest structure in Atlanta, and the entire southeastern U.S. It had most recently been known as the State of Georgia Building and housed government offices. The city is buying the building for $39 million, using financing from a tax allocation district (Atlanta’s version of a TIF). The city hopes to select a developer partner by the end of 2023 and begin construction in 2024.

Atlanta Mayor Andre Dickens called the deal, negotiated between the city and state, an anchor for the revitalization of downtown, and says the project will create “long-term affordable housing and mixed-use space accessible to the heart of Atlanta’s transit system.” 

The midsize skyscraper lies in the heart of downtown Atlanta, in an area targeted for several improvement projects. There’s currently a $150 million renovation of the Five Points MARTA (the city’s transit agency) station adjacent to 2 Peachtree. 

The deal also reflects a political alignment, with the Republican governor Brian Kemp praising his dealings with Democratic Mayor Dickens. “This undertaking by the city will benefit a valued population in need of quality housing and I’m thankful the partnership between the state and Mayor Dickens’ Office was able to make this transaction possible,” said Governor Kemp in a statement. 

But, as often happens when you do the math, this feel-good story has a rub: “Converting offices to residential is a great idea, it’s just really hard and really expensive,” says Eric Kronberg, an Atlanta-based developer with Kronberg Urbanists + Architects. Kronberg points to numerous physical challenges with such a project. “The floor plates can be deep, so it’s hard to design units with bedrooms and living spaces that have glass. Building codes require ventilation, and people like to be able to open a window. That’s not easily achievable in most office building skins.” 

Even after a successful renovation, the economics of converting office to residential is still problematic. “As crazy as our rents are [in Atlanta], they're still not high enough to support this kind of development,” says Kronberg. For the 2 Peachtree Street project, the city hasn’t yet provided “any breakdown of price points for the rents,” according to Atlanta Civic Circle. Kronberg says many developers would struggle to make a profit with this type of project even if they were given the office building for free, citing another building Atlanta bought eight years ago that’s still vacant for want of a development partner. 

Kronberg would like to see the city work with developers to turn “a huge surplus of vacant land” into a greater mix of housing types, which would be more economical than the hefty expenditures for the Peachtree Street project. He also expresses frustration at how slow the permitting process is in a city with a “wretched housing crisis.”

Michael A. Rodriguez of Smart Growth America says empty office towers reflect zoning policies that encouraged offices over residential uses. “We have always had too many offices in our downtowns, that was by design,” says Rodriguez. He, too, points to the logistical and economic challenges to convert office space to other uses, including that many office buildings have centralized bathrooms and kitchens, requiring major work to bring full plumbing to every unit on a floor. Rodriguez says it would take an alignment of several factors to make such a project viable, with “the right conditions and an iconic building,” and even then only “with subsidies.”  

Downtown Atlanta already has several old office towers in flux from the recent foreclosure of Peachtree Center. The failure of its previous owners to keep the well-known property viable puts six buildings and a shopping mall back in the hands of its investors, at a time when many office tenants are scaling back. 

Local advocates say the bigger issue is that Atlanta is in need of a zoning overhaul to address housing needs in the fast-growing city, and should activate the land it already owns. Kronberg, whose firm advises local leaders on housing issues, is focused on two smaller-scale zoning changes: revising the city’s policies on accessory dwelling units and enabling a new zoning district as a tool to address affordable housing. With a major zoning rewrite 3–5 years away, “we just need to be focused on incremental fixes,” he says.

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