We can’t deny that State Farm has done incredible things for the Central Perimeter submarket since its entry in 2012. The insurance giant has absorbed more than 1 million square feet of office space and has recently announced plans to construct a mega-campus as part of a regional consolidation at the intersection of Hammond Exchange and Perimeter Center Parkway. During the recession, Central Perimeter posted vacancy rates as high as 35% – the State Farm deals have cut that number in half to 17%.
The problem this submarket is now facing is that they are out of room. State Farm and Airwatch took the largest chunks of available space last year, and many leasing professionals are worried that companies that would have initially been most interested in locating their company in the Central Perimeter submarket will have no choice but to look elsewhere. City officials are doing everything in their power to ensure that the 2,400 Dunwoody-based businesses don’t vacate the area for less-crowded (and possibly less expensive) pastures.
And in five years, the submarket is going to have a whole new set of issues. State Farm has inked deals for large amounts of space in several buildings, but those deals were relatively short. Each of their major office leases was only for five years – meaning that in about 4 years we are going to have massive chunks of space being put back on the market. That could be a good thing if the economy is in good shape in a few years, but in the meantime, the thought of huge vacancy numbers making their way back into the submarket are making potential investors and developers nervous to sink their money into the Central Perimeter.Share