July 16, 2013
Spanx Gives Atlanta a Lift With New Headquarters
The Wall Street Journal
Apparel Company Gets a Custom Rooftop Garden and Loft Layout, Reviving a Stalled Project By MAURA WEBBER SADOVI Developers tailored Spanx's new Atlanta headquarters, in rendering, to the company's specifications. Spanx Inc., the apparel company whose underwear has spawned a cult following among fashionistas, is getting a sexy new Atlanta headquarters with a rooftop garden and loft-style floor space, in a deal that is helping kick-start a long-stalled project. Last month, Spanx signed an 11-year lease to occupy 86,000 square feet of Atlanta office space in a three-story glass and stone building now under construction by San Diego developer OliverMcMillan. The building is part of a larger project now known as Buckhead Atlanta that had been stalled since 2008. It is in Atlanta's tony Buckhead community. The lease is the latest hint companies are starting to feel enough confidence in the economy to begin taking on new office space and spending money to relocate. "We've hired a lot of people, and we are out of space," said Laurie Ann Goldman, chief executive at Spanx. "We've been on an incredible winning streak." Spanx, which has expanded from its signature underwear line into bathing suits and men's undershirts, expects to relocate from its existing headquarters when its new space is ready next year. Ms. Goldman declined to discuss terms of the deal, but people familiar with it said Spanx will pay an average rent of about $30 a square foot annually, or about the same amount the area's priciest existing buildings are fetching. That still is less than the $40 a square foot brokers say some tenants paid for buildings tailored to their specifications at the height of the market, before the recession. The move comes as a growing trickle of companies are expressing confidence by signing long-term leases for new spaces. GroupM, a subsidiary of London-based advertising giant WPP PLC, reached a tentative deal earlier this month to move to developer Larry Silverstein's planned 3 World Trade Center in New York. In Austin, Texas, construction workers are building a 13-story office tower that will be anchored by a division of International Bancshares Corp. In Mahwah, N.J., a headquarters also is rising for global retailer Ascena Retail Group. Some real-estate analysts are watching such deals to see whether a rising appetite for new properties will act as a drag on existing office space. "If you're only filling space that's been added to the market, it's not going to move the needle on vacancy," said Ryan Severino, a senior economist with Reis Inc. For the Atlanta office market, the Spanx deal marks another step toward recovery in Buckhead, once one of the country's most overbuilt office markets. Office vacancy rates in the Buckhead market have fallen to 24% in the first quarter, from nearly 30% in 2010, when a surge of towers were completed, according to Reis. As large blocks of new space have filled up, tenants like Spanx that want to be in the trendy market have had fewer options. That shrinking supply has helped OliverMcMillan win over Spanx. This summer OliverMcMillan secured construction financing for the Buckhead Atlanta mixed-use project. The developer gained control of the property after the project formerly known as the Streets of Buckhead stalled, becoming a local symbol of boom-time distress. Construction on the project started up again last year. OliverMcMillan said it paid less than 50 cents on the dollar to take control of the site in 2011 from the previous developer and lenders, who had invested about $360 million amassing dozens of parcels that are now part of the 8-acre project. Since then, OliverMcMillan has gone on to lease more than 60% of the 300,000 square feet of retail space in the project. Last month, it secured Spanx, which will occupy much of the 125,000 square feet of office space. The preleasing paved the way for the developer to obtain a $167 million construction loan earlier this month from a group led by PNC Bank NA. Still, new developers and old developers alike have to work hard to win tenants with Spanx's level of cachet and creditworthiness. Spanx executives wanted to remain in Buckhead but also wanted the rooftop garden and the option to take additional space if the company expanded. Morgan Dene Oliver, chief executive of OliverMcMillan, said that required him to go back to the drawing board and redesign the project's office building to include a third story. "That's the kind of complication you want," Mr. Oliver said.