The property's owners of AtlantaXchange, renamed in 2000, are making the move at the 180 Peachtree St. NE site after two telecommunication tenants separately filed for Chapter 11 protection under the U.S. Bankruptcy Code. They are Colo.com of Denver and Teleglobe of Reston, VA. Downtown office brokers intimate with the submarket tell GlobeSt.com Colo.com had leased 55,285 sf; Teleglobe, about 30,000 sf.

The anchor tenant in the 69%-leased building is Level 3 Communications Inc. of Broomfield, CO with 203,377 sf. Area brokers tell GlobeSt.com on condition of anonymity Level 3 will be subleasing the space vacated by Colo.com and Teleglobe.

"Although metro Atlanta's vacancy level is growing, the owners aren't expected to have much trouble bringing occupancy up shortly to about 80%, or even 90%," a broker not associated with the property tells GlobeSt.com.

The property owners are five-year-old Taconic Investment Partners and eight-year-old Angelo, Gordon & Co., both of New York; and the 97-year-old Benenson Capital Co. of Charlotte. The firms' principals couldn't be reached at GlobeSt.com's publication deadline.

They bought the property in August 2000 from Federated Department Stores Inc., Macy's parent, for $40 million or $61.95 per sf. The new owners invested millions into retrofitting the structure into a class A telecommunications center and were on their way to a near 100% occupancy level when the dot.com economic debacle struck three years ago, area brokers tell GlobeSt.com.

Now the owners are gambling again in repositioning the asset as an office property in the midst of metro Atlanta's worst office leasing year, according to Atlanta broker Richard E. Bowers.

"With only 7,259 sf of positive absorption, year-to-date, calendar year 2002 will be the worst year in absorption since we have been tracking office market data in 1987," Bowers says in his third-quarter analysis. Total Downtown absorption was a negative 308,403 sf.

The overall vacancy rate is 13.61%. The 14.65 million sf, class A, B and C Downtown submarkets are showing a 10.99% vacancy mark. But the 6.9 million-sf, class A Downtown sector is at 12.12% vacancy. Average asking rent is $25.27 per sf.

The AtlantaXchange owners will be competing with the 836,539 sf of vacant class A space already on the market as well as with the 619,803 sf of class B product available and 154,193 of vacant class C space.

Rents will be a primary factor in leasing up the AtlantaXchange, area brokers tell GlobeSt.com. Class B properties are asking an average $20.57 per sf; class C, an average $17.42 per sf. Class B vacancies are at 9.72% level; class C, 11.28%.

"Current market conditions are extremely favorable to space users in all sectors of the market with significant concessions in free rent, lease assumptions, above standard improvements and escalations," Bowers says in his third-quarter report.