Sumitomo Seeks to Offload Troubled Atlanta Financial Center Amidst Office Space Woes

Photo bySumitomo Corporation; Transwestern

In a stark reflection of the faltering office real estate market, Sumitomo Corporation of Americas is putting a significant loan tied to the beleaguered Atlanta Financial Center up for sale. This move signals deeper troubles within a sector struggling with plummeting values and shifting tenant dynamics.

The Atlanta Financial Center, a sprawling 915,000-square-foot office complex located at 3353 Peachtree Road Northeast, has seen its fortunes wane since Sumitomo acquired it in 2016 for $222.5 million. Now, the company faces the daunting challenge of offloading a loan with a remaining balance of $122.5 million—a stark contrast to the property's original valuation of $243 per square foot, now reduced to $134 per square foot.

Cushman & Wakefield, tasked with marketing the loan, has circulated materials hinting at the property’s identity without explicitly naming it. Despite the anonymity, industry insiders quickly identified the Atlanta Financial Center as the asset in question. The specifics of the loan's lenders remain undisclosed, but experts predict it will sell significantly below its current balance.

This loan sale is emblematic of a broader downturn in office property values nationwide, which have nosedived by approximately 35 percent from their peak, according to Green Street Advisors. The Atlanta market reflects this trend, as evidenced by the recent sale of the Proscenium building in Midtown for $83 million—a 30 percent drop from its value two decades ago.

Compounding these issues, the Atlanta Financial Center is grappling with major tenant departures. Long-standing tenant Morris, Manning & Martin, which had been at the center for nearly 40 years, is vacating the premises. Another key tenant, Truist Securities, is also planning to relocate. Although the building remains over 85 percent leased, the exit of these anchor tenants casts a shadow over its future prospects.

Cushman & Wakefield’s Southeast office investment team, led by Samir Idris and David Meline, is orchestrating the loan sale in conjunction with the firm's national loan sale team. Preliminary bids for the loan are anticipated in the coming weeks, with potential buyers weighing the options of foreclosure or holding out for an uptick in market conditions.

As Sumitomo looks to navigate these turbulent waters, the fate of the Atlanta Financial Center remains a critical bellwether for the broader office real estate market, highlighting the ongoing struggles and shifting dynamics of commercial properties in today's challenging environment.