According to two recent studies, millennials who are starting to form families are leaving higher-density urban areas and seeking to live and work in the suburbs. The Covid-19 pandemic has accelerated this trend, which is good news for the Central Perimeter market, which includes the cities of Sandy Springs, Dunwoody and Brookhaven, and the office-market-rich Perimeter Mall area.
“The millennial workforce is going to be living mostly in the suburbs, outside of the central business district,” said Michael Starling, director of economic development for the city of Dunwoody,” which puts Perimeter squarely in the center of where they want to be.”
This demographic shift is driving home sales in inner-ring suburbs, where submarkets such as Central Perimeter are poised to become the location of choice for companies looking to follow the workforce.
According to a Cushman & Wakefield report, “Suburban Boom: How Covid-19 May Accelerate the Trend Already in the Making,” The median age to buy a home is 33. Half of home purchases are in the suburbs , while 13% of all home purchases are in a central city.
During Covid-19, people are working and schooling from home, and therefore looking for more space. With the single-family market booming due in part to low interest rates, a larger house in the suburbs becomes more attractive than a compact intown condo.
“Remote work and higher taxes in large cities due to declining tourism and business tax revenue are contributing to the shift away from an urban core,” states the 2021 report, “Emerging Trends in Real Estate: U.S. and Canada,” a joint project of Urban Land Institute (ULI) and PwC.
Sarah Kirsch, executive director of ULI Atlanta, said she sees this occurring in the metro area.
“As the workforce evolves into some form of hybrid model, combining work from home and in the office,” she added, “that shift is going to change where employees want to live.”
Between 2020 and 2030, the report found, the population of young professionals (ages 20-29), will decline by 0.4 million while the population considered in “family formation” years (ages 30–49) will grow by 8.4 million. And a lot of those families will look to the suburbs.
For office developers and leasing managers, the advantages in the Central Perimeter market include less dense working environments near retail and entertainment.
The area “is located at the geographic center of the area’s employment base and includes just about every amenity in the world,” said Alex Chambers, senior vice president at KDC, which recently topped out the third of three towers at Park Center, a massive campus site developed for State Farm.
Wrapped around a MARTA station, Park Center encompasses some 1.7 million square feet of office space, an additional 41,000 square feet of retail and 6,000 parking spaces for more than 8,500 employees. Construction on the project began in 2013.
“The area is not as walkable as Midtown [Atlanta], but it’s getting there,” said Chambers, adding that a number of Park Center’s design elements coincided with concerns raised by the subsequent coronavirus pandemic. For example, open interiors allow for flexible spacing of workstations and offices. Wide walkways accommodate social distancing, while terraces and balconies provide outdoor access.
“We knew that State Farm wanted employees and customers to experience something different from the normal office environment,” said Bill Halter, principal at Cooper Carey and architect for Park Center, adding that those touches are even more necessary during a pandemic. “Fast forward six or seven years, and most of these things look good for a post-Covid world.”
The Terraces, the signature twin 11-story towers at the intersection of I-285 and GA 400, recently benefited from a $15 million renovation undertaken by MetLife Investment Management. A focus of the site and facility renovation was on creating a natural flow between indoor and outdoor spaces, and encouraging employees to work around the project’s three-acre lake.
“Even pre-Covid, markets like Central Perimeter were seeing leasing activity and tenant interest because of the access to MARTA, the walkability and mix of amenities,” said Brooke Dewey, executive vice president at JLL, which leases The Terraces. “The attractiveness of those components is reinforced by what’s going on with Covid.”
As the workforce pushes to live in the suburbs, they will want to work in these types of environments, Kirsch of ULI Atlanta said.
“In the post-COVID environment,” she added, “everything is going to come down to ‘location, location, safety.’”