Office Options: Tour of Ponce City Market

I recently toured the Ponce City Market construction site (here are my pics). It looks like it will be a great office option for a specific type of business. If you’re

• looking for more than 5,000sf;
• comfortable paying top-dollar rent;
• interested in making a move in Q4 2014 or Q1 2015;
• seeking an in-town, walkable, vibrant location,

then you should definitely check it out. As we think about the next home for GuildQuality, here are some of the things we put in the “Pros” column:

• Showers/lockers on every floor (great for bike commuters and runners);
• Bike valet;
• Shuttle to the North Ave Marta station every fifteen minutes;
• Great coffee shop (Dancing Goats);
• Lots of existing restaurant options (Chipotle, Whole Foods, Eats!, Cameli’s), and plenty more to come within PCM;
• Lots of outdoor space;
• Great natural light;
• Adjacent to the Beltline;
• Accessible rooftop with impressive views.

Here are some of our “Cons”:

• It’s a ways from either Marta or the highway, so we’d be adding 15 to 30 minutes of daily commuting time for our non-intown team members who come into the office every day.
• It’s expensive.

Almost anything would have been an improvement over the decaying void that was City Hall East. Even so, Jamestown & Green Street (the developers) look to be doing exceptional work with the site. Touring their progress really makes you appreciate how amazing Atlantic Station could have been in the hands of a well-capitalized developer who understood urbanism and place-making, and who valued design and execution.

As great a job as I think they’re doing, and as strong a potential fit as this is for my business, I would love to see more options for smaller tenants. At present, they are heavily favoring very large offices, and have no offering at all for businesses that want fewer than 5,000 square feet. I can understand the economics of this strategy, but I’ll single out PCM for criticism here specifically because they are projecting a vibe of vibrancy and diversity.

Why target smaller tenants?

1. The market is there. As David Cummings and his team have demonstrated with Atlanta Tech Village, there’s clearly a market for small office spaces. And if you’ve ever searched for 500sf to 3,000sf, then you absolutely appreciate how few great options you have.
2. They’ll end up with a very low crazy-person density. The overwhelming majority of their office space will be occupied by tenants with over 50,000 sf. That means their ratio of crazy people (i.e. independent creatives, startups, freelancers, micropreneurs, and entrepreneurs) to normal people will be very low. All innovation occurs on the fringe, and Ponce City Market could be stronger, and add more to Atlanta, with a significant contingent of small offices.

With the ATV, David has started filling a great void in Atlanta and created something very special for our technology community. But there’s still huge holes left out there for those who 1) don’t want to commute to Buckhead, 2) aren’t in software, and 3) are looking for less than 5,000sf.

There are institutionalized impediments to someone filling those holes: Buildings are bought, sold, and financed and brokers are paid based on the lengths and sizes of their leases. Fewer, bigger, and longer is better. As a business owner who sees it as a virtue to have no single customer representing greater than 2% of our recurring revenue, I have trouble wrapping my head around this tendency toward fragile dependence on only a handful of tenants. Nevertheless, that’s my understanding of how commercial real estate finance works.

I’d love to see the PCM developers carve out 100,000sf for small businesses and independents looking for either a coworking space, or dedicated offices that are under 3,000sf. I think it makes great business sense and would also add tremendously to the vitality of the place. They clearly see this with the retail tenants they’re recruiting, and I’d like to see them extend this strategy to their offices.

Update: In the “Pro” list, I neglected to add that PCM is an “Opportunity Zone,” which can bring significant tax credits to growing businesses who lease there. Of course, with only larger businesses being eligible to lease at PCM, this amounts to yet another institutionalized advantage that big businesses have over small companies.