February 18, 2015

5 Things Learned At Our Construction & Development Summit

From subcontractor issues to new ways projects are financed, top construction company execs sounded off on key challenges facing the industry at our 3rd Annual Atlanta Construction & Development Summit yesterday.

More than 250 braved the threat of ice on the roads to join us at the St. Regis for our opening panel, which included DLA Piper's Brian Fielden, JE Dunn's Stuart Bruening, New South Construction's Doug Davidson, Balfour Beatty's Mike Macon, Partner Engineering and Science's Joey Bonin and tvsdesign's Dave Brown. Here are the things we learned:


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Mike (here with Doug) says construction costs are factored into projects more closely, and Stuart says scheduling of projects in conjunction with  subcontractor availability is a science. “We're historically a very, very wasteful industry,” he says. But scheduling has GC's delivering projects faster and at lower costs than before. 


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Despite the race by tenants to the city, Dave says there are still many projects taking place in suburbia. But they have to be done like Avalon to attract Millennials, he says. “I think that nowadays, you've got to somehow figure out and tap into what the urban context has,” Dave says. Gone, he says, are the days of the insular office campus sitting in the middle of a field. 


Mike says labor is certainly at a premium, while commodity costs are flat overall. And that has to do with the number of subcontractors and laborers left in the marketplace following the recession. In fact, some subcontractors are actually turning down new work. “That was unheard of two years ago,” he says. 


What started with the privatization of military base housing has now led to on-campus student housing, especially with the Board of Regents here in Georgia. Stuart (here) says it's about efficiency. “It's a model that's really come out of Europe and Canada,” Mike says. “And it looks like the Board of Regents later this year is planning to have another tranche of projects come out.”


Doug (on right) says some developers are actually looking to general contractors to be equity partners in projects. “It all comes back to being part of a team,” he says. “But that's a risk factor we're not used to.”

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Top stories on Bisnow.com

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Comcast to Anchor Braves Stadium Office?

Comcast could be landing at the new Braves stadium. Sources tell us that Comcast could be the lead office tenant at SunTrust Park's mixed-use project, securing in excess of 100k SF. This would in essence be a consolidation of various offices in the Cumberland/Galleria area, and perhaps even an expansion of additional space in the Atlanta area that could add new jobs to the market. Comcast's Alex Horwitz confirmed that the telecom giant has been eyeing the Braves project, but no deal has been reached. “We are growing and investing in the Southeast and continue to look at a number of options to accommodate future growth.  We have had discussions and looked at the feasibility of the Braves' new complex along with numerous other projects but no agreements have been made. We are growing and investing in the Southeast and continue to look at a number of options to accommodate future growth," Alex wrote in an email. 

A potential lure for Comcast would be signage on the office building, sources say, marketing exposure to the thousands who are projected to flock to the games and the shops and restaurants at the project. This deal would be in in addition to Comcast's plan regional HQ consolidation in Peachtree Corners announced by Gov Nathan Deal today. As we previously reported here, Comcast has leased 88k SF at 6200 The Corners Pkwy, the 143k SF office building nested in a wooded campus that acted as the home to the former Wells REIT. The Atlanta Business Chronicle previously reported that Comcast has been scouting for upwards of 150k SF here in Atlanta. 

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New South: Get Your Construction Company Involved Early

Celebrating its 25th anniversary, New South continues to work with its first clients, Coca-Cola and Delta Air Lines, as well as on the Atlanta Braves SunTrust Park. Additionally, New South is working on the Georgia Tech and Clemson baseball stadium renovations, the USC student housing facility and the Surya Rugs facility. Construction companies like New South want to get involved with a project at the beginning of design conception, so that preconstruction expertise can be offered during preliminary planning. Clients can then initiate a faster, more streamlined timeline to completion and get a better gasp on cost, according to New South CEO Doug Davidson. Doug sees a tremendous amount of senior living project opportunities as well as corporate industrial facilities; also, a strong demand for student housing and sports projects. Interesting how New South got its first project at Clemson as Doug's daughter (seen here next to Dad) started her freshman year there. For more info on our Bisnow partner, click here.


Starwood Hotels Chief Departs Amid Company Redirection

Starwood Hotels CEO Frits van Paasschen (right) resigned this morning, with the company's board saying the move came by "mutual agreement" but giving no further reason for the exit. Van Paasschen had held the position since 2007. Last Tuesday Starwood, which operates the Westin, Sheraton, W and St. Regis chains, among others, announced it would spin off its timeshare unit into a public company, leading to a 10% jump in early trading.

The executive shakeup comes amid a shift in focus toward property management for the hotel unit of Barry Sternlich's Starwood Capital Gruop. It recently sold the Sheraton on the Park in Sydney for $399M. And earlier today, The Real Deal reported that Starwood Capital had sold its remaining 49.9% stake in Manhattan's Hilton Garden Inn. Van Paasschen will be a consultant for the company while Adam Aron assumes the role of interim CEO.


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