November 11, 2014

Race to be Atlanta's Next Office Tower

Piedmont REIT has given itself two chances to be next out of the ground.

Piedmont REIT's George Wells (here with his wife Karen) chatted with us about two entries in a company presentation: Glenridge Highlands III and The Gavitello. Both could be the company's next Class-A mid-rise developments

PM Realty (100Ashford) RATL

George feels Central Perimeter is ripe for a new tower. As of Q3, CP landlords have leased more than 400k SF of Class-A space, and the vacancy rate is below 10%. But what's more appealing to developers is the sheer lack of contiguous blocks of space. According to Colliers', the largest blocks of office space in Central Perimeter are 100k to 150k SF. And there are only two of them. On top of that, there are fewer than 20 blocks of 30k SF or larger spaces in the whole submarket. The proposed Glenridge Highlands III, a 300k SF building that's part of the Glenridge Highlands development (including a proposed restaurant), could field those prospects.

CohnReznick (Field) RATL

George says Class-A rents should rise to the mid-$30/SF range in Central Perimeter before shovel hits dirt. Some are close, he says, but not quite there. It's second land holding, called The Gavitello (pictured), will be developed into a 250k SF office building next to The Medici Building at the Piazza at Paces off Northside Drive in Buckhead. “That one's probably a little further out,” George tells us.

Wilbert (PR) ATL
CohnReznick (Field) ATL

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What About Goldkist?

While Crown Holding Corp unveils plans for Atlanta's latest potential mega development (see our story from last week) we spoke with Blair Schlossberg about the purchase that made Crown a household name--the former Goldkist HQ site. Crown is getting land disturbance permits there that could have up to 1.7M SF of commercial space, including two office buildings (one 500k SF and another 750k SF), a hotel and convention center, according to its website, which includes this rendering. Blair tells us the firm is also looking to add a high-end condo project,which makes sense given the influx of big companies into Central Perimeter, like State Farm. 

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CBD Office Leases
Getting Shorter

According to CompStak, leases in Atlanta's CBD are getting shorter, especially for Class B properties. Is this a sign that Atlanta landlords are looking for quick turnover as the markets heat up? Or is it a sign of tenant uncertainty? Regardless, it's definitely a metric to watch over the coming quarters. CompStak is a free lease comp exchange for brokers, appraisers and researchers, and you can click here to request an account.


Jon Stewart Sells
Tribeca Loft for $17.5M

Daily Show funny man Jon Stewart has sold his 6,000 SF Tribeca penthouse for $17.5M in what was last week's most expensive NYC residential trade. To see who bought it, and which Entourage star also lives in the building, click here.


Multifamily JV Enters Atlanta Fray

This summer, The Bascom Group cobbled together a $250M fund to buy value-add apartments nationwide. The Cali-based company JV'd with NYC-based Spirit Investment Partners and received money from Oaktree Capital Management. We spoke with Spirit's David Nachman about its purchase of The Laurels at Overlook Park, a 232-unit apartment project in Sandy Springs along the Chattahoochee. The plan is to use a $13k/door renovation to push rents from 75 cents/SF to $1/SF--while remaining an affordable option. “If you can improve the interiors, create a real [awesome] pool, and deliver at a price that is 10%-20% cheaper than the competitor, that's the sweet spot,” David says. (As for what makes a pool "kick-ass," we'd probably need a full-length newsletter to address that.)

When it comes to suburban garden apartments, the money is only starting to look there (spending the past few years in a love affair with urban multifamily). So, product tends to be cheaper by the pound. As for architecture, David says a project built in 2000 differs little in look from one built in 2007 or even 2013--at least from a renter's perspective. “We're a little bit more nervous about supply in the Buckhead area and Midtown,” he says. But Atlanta is fast gaining economic steam. And suburban apartments are now feeling the benefit, he says.


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