Atlanta to buy aging tower from Georgia government for $39M

People enter the Two Peachtree Building on Friday, Oct. 21, 2022 in downtown Atlanta. The city of Atlanta is buying the 41-story office building for $39 million, aiming to convert it to a mixed-use development including affordable housing. (AP Photo/Jeff Amy)

The city of Atlanta will spend $39 million to buy a 41-story downtown office tower from Georgia’s state government, saying the city will redevelop the aging building to include mixed-income housing and other uses.

The state has owned the 2 Peachtree Street building for about 30 years. It was the tallest building in Atlanta when it was built in 1968 for the First National Bank of Atlanta, which eventually became part of Wells Fargo & Co.

The state has been emptying the tower of government tenants, moving some into vacant offices around the state capitol. Some state agencies downsized after concluding during the coronavirus pandemic that remote work meant they needed less office space.

The state budgeted $45 million earlier this year to move out of 2 Peachtree. House Appropriations Committee Chairman Terry England said then that it would cost more to renovate the building than it was worth. Georgia spent more than $100 million on an earlier round of renovations.

Dickens said the site is prime for affordable housing because it’s next to the the Metropolitan Atlanta Rapid Transit Authority’s Five Points rail station. He said housing would go on top, with offices and stores and restaurants on lower floors, and that redevelopment would “move us closer to our vision of a world-class downtown area.”

The sale comes as parts of Atlanta’s downtown office market struggle. Lenders took back much of the Peachtree Center office complex at a foreclosure auction in September. In 2021, real estate company Jones Lang LaSalle reported that users vacated 600,000 more square feet (55,742 more square meters) of office space than they moved into. The trend through the first nine months of this year is modestly positive, though.

German company Newport Re is redeveloping a number of buildings in the southern part of downtown. Los Angeles property investor CIM Group plans to spend $5 billion on office buildings, apartments, a hotel and restaurants atop a railroad gulch and parking lots near Mercedes-Benz Stadium.

Dickens said in a news release that city agency Invest Atlanta will seek a private developer for 2 Peachtree. The mayor said city money would create “dedicated and deeply affordable housing units.” Dickens said several hundred new housing units would be created overall, calling it a “huge leap forward” toward his goal to create or preserve 20,000 affordable housing units by 2030. The city says 5,800 units are finished or being built.

The money for the purchase will come from a special taxing district that includes parts of downtown.