According to a recent RentCafe/Yardi Matrix report, the Atlanta metropolitan area will see 2,239 spaces come to life through office-to-apartment conversion projects, which make up 56% of all adaptive reuse projects underway. That is the sixth most in the country. Boasting a 57% year-over-year increase in office conversions, Atlanta has emerged as a key player in the adaptive reuse landscape. However, only 14.2 million square feet worth of office buildings (6% of the metro’s total office inventory) are deemed suitable for future office-to-apartment conversions. A notable project is the transformation of the building at 2 Peachtree St., which is expected to create at least 200 new apartments within its 890,000 square feet of space.

New York is the leader with 8,310 units, followed by Washington, DC, Los Angeles, Chicago Dallas and Atlanta.

Acquisition volumes among net lease REITs decreased modestly in the third quarter of 2024, as costs of capital remain volatile for most of the REITs, Green Street said in its latest report on the sector. Transaction volume was down 45% from Q3 2023 and down 50% from the same period two years ago.  

Although the net lease sector’s gross asset value premium averaged 13% in Q3, compared to 6% in the previous quarter, Green Street noted that this was skewed higher by outsized GAV premiums among two of the seven publicly traded REITs in the data and analytics firm’s coverage universe. “As such, most REITs are abiding by their weaker-than-normal cost of equity signal and acquiring less,” according to Green Street.  

Looking ahead, Green Street reported that most net lease REITs anticipate “a significant uptick in transaction volumes” in Q4 of this year and heading into 2025. 

Pictured: A Cooper’s Hawk Winery & Restaurant property in the Essential Properties Realty Trust portfolio.