Cousins Properties has teamed up with Town Lane in a joint venture to purchase an office building in Atlanta, Georgia - with the two real estate firms having further plans for it.
The deal worth roughly $83 million will be for the property Proscenium, located at the intersection of 14th and Peachtree streets, the JV announced in a statement. Town will be the majority owner, holding 80 percent of the equity, while Cousins will get 20 percent ownership. But leasing and property management services will be provided by Cousins.
Currently, the Class A office property is 74 percent leased. Also, the duo said that it will be “planning significant capital upgrades to modernize and reposition the building.”
“We are thrilled to partner with Town Lane who shares our enthusiasm for the opportunities emerging in leading Sun Belt office markets,” Colin Connolly, president and CEO of Cousins, said.
“We have exciting improvements planned for Proscenium which will complement its A+ location in the heart of Midtown Atlanta. We look forward to re-introducing a re-invigorated Proscenium to customers seeking a dynamic lifestyle office experience.”
Overall, the office market has struggled, as the work-from-home trend continues to create less demand. And the results haven’t been much better for Atlanta, either. A second-quarter report from Cushman & Wakefield shows that vacancy shot up in the city up by 30 basis points from the first three months of the year to 25 percent. Also, in the year-to-date through June, net absorption was over -1.1 million square feet.
Now, the JV could be banking on the Sun Belt market as a whole and might be bullish that the office sector in Atlanta will turn around, given the strong demand CRE has seen generally from the South. For example, population growth in the region has been outpacing other major markets including the Northeast and Midwest.
“We believe in well-located, high-quality office assets in growing submarkets like Midtown Atlanta, which can be acquired at a basis that allows us to invest in and attract great tenants,” Tyler Henritze, founder and managing partner of Town said.
The legal counsels for Town and Cousins are Simpson Thacher & Bartlett LLP, and Eversheds Sutherland (US) LLP, respectively for the Proscenium purchase.