One of the largest sublet availabilities in the country has just hit the Atlanta market in the aftermath of the tenant's corporate split.
NCR listed for sublease the second of two Midtown towers housing its global headquarters, a footprint that totals nearly 700,000 square feet of contiguous space. With the listing, the company is now offering all of its space at the Eighth on Spring campus for sublease after putting the 13 floors it leases in the South Tower at 858 Spring St. on the market two years ago.
The financial technology company's listing at the 20-story, roughly 500,000-square-foot North Tower at 864 Spring St. NW creates one of the largest availabilities in the United States at a point when tenants are slowly shedding their residual pandemic-era hesitation and committing to increasing amounts of space.
"We're seeing a noticeable uptick in demand for larger and larger blocks of space, especially as companies are solidifying their return-to-office strategies," Cresa Vice President Kaleigh Schlosser, one of the brokers marketing the space on NCR's behalf, told CoStar News. "Atlanta doesn't often see availabilities on this scale, especially in Midtown, and what makes this extraordinary is that it's completely ready for any quickly growing company to plug right in."
The total amount of available office space across the Atlanta market has gradually retreated from its pandemic-era peak. Over the past year, it has dropped from nearly 19% to its current rate of about 17.5%, according to CoStar data.
Landlords and brokers nationwide seem to agree that the market has bottomed out and is on track for higher rents, fewer availabilities and far less favorable terms for tenants. However, Atlanta's office vacancy rate of 16.5% and the nation's rate of 14.1% remain at historic highs, and tenant space requirements remain well below pre-pandemic averages, presenting headwinds to backfilling such a large block.
Ready for takers
NCR, which is expected to remain based in Atlanta, continues to occupy some of its Eighth on Spring footprint. The company plans to evaluate options to relocate elsewhere once it lands one or more subtenants to take over its Midtown space, where it has been headquartered since landlord Cousins Properties completed the two buildings in 2018.
Formerly known as NCR Corp., the company separated into two independent public entities in late 2023, prompting the initial decision to adjust its corporate real estate portfolio.
Last year, the company landed a deal to sublease out about 82,500 square feet to agriculture and food processing giant Cargill. The rest of the Midtown campus' 686,765 square feet of available space, however, is up for grabs.
The demand for office space has been building since the start of the year as corporate heavyweights such as Amazon, Starbucks, Dell and Salesforce push for more stringent in-person requirements. The number of CEOs who thought their companies would adopt a full return to a five-day workweek has climbed to about 85% from the 64% reported in 2023, according to a KPMG survey.
Some landlords have boosted their outlooks for the remainder of the year as tenant demand for space continues to build, pointing to longer-term and larger deals.
Part of the still high vacancy rate can be attributed to tenants flocking to certain types of property: new and modern buildings are still outperforming their older counterparts, or those without the fancier bells and whistles like high-end gyms and rooftop bars.
While NCR's initial attempts to offload its Atlanta space went largely unfulfilled, Schlosser said the expanded listing faces an entirely different demand landscape.
"Companies are looking for an environment that has an amazing workforce, livability and quality of life, and Atlanta perfectly fits that mold," the Cresa broker said. "The city has emerged as a market that's attractive for employees and companies that are focused on the cost of doing business as well as access to talent."
'Unicorn event'
Schlosser acknowledges the myriad hurdles associated with filling not just one, but two office buildings in the post-pandemic era.
Many companies have spent the past year downsizing or altogether eliminating large portions of their corporate real estate footprints, helping to drive the national vacancy rate past a record 14%, according to CoStar. Spatial requirements have shrunk by about 15% compared to averages reported in the years leading up to the pandemic, with many tenants pointing to the impacts of flexible work policies or a smaller workforce on declining office-space needs.
"There are going to be several challenges to filling that large of a space at once," she said. "There aren't many single tenants in the market looking for 600,000-plus square feet at any given time. So we're focused on flexibility and keeping the campus intact while also structuring it for multiple potential users."
By touting its "move right in" nature and top-tier amenities such as a fitness center, dining outposts, media studio, zen garden and existing lab infrastructure, the brokerage team marketing the campus is aiming to satisfy the laundry list of demands among tenants currently shopping around for space.
"There's not a lot of volume for deals of this size, which makes them a unicorn event," Schlosser said. "But these buildings are well positioned and poised for that unicorn."