Regent's Dormant Buckhead Plans Get A JV Boost
A long-in-the-oven Buckhead office project is getting a financial boost from a partner. But it will still be years before there's a new addition to the skyline.
Batson-Cook Development Co has added unspecified financial resources to Regent Partners for the latter's $400M office-centric development at 3354 and 3356 Peachtree Road.
The four-acre parcel behind Capital City Plaza sits along the pedestrian bridge to MARTA's Buckhead station. Previous plans called for 550k SF of office and retail space along with 60 condominiums and 300 apartments. The JV closed on the land this past week for an undisclosed sum.
Batson-Cook's Litt Glover said the project — which was first announced in 2014 — could get off the ground as soon as next year, which would slate it for delivery by 2020.
Of course, as with most aspiring office projects, there would likely need to be a component of pre-leasing for full construction funding. But that's what Batson-Cook brings to the table: a combined balance sheet as a facilitating partner that also offers banks a completion guarantee. That often can get developers more favorable economic terms to loans, he said.
It's a strategy Batson-Cook has used on numerous occasions for such projects as Novare's Skyhouse developments in Atlanta and Dallas and Fuqua Development's retail project at The Battery at SunTrust Park that's part of the new Atlanta Braves stadium.
Buckhead has been ground zero for the start of new office development cycles since the dawn of the 21st century. And with good reason: It commands the highest rents in all of Metro Atlanta. According to a recent Cushman & Wakefield report, average asking rents in the submarket are more than $32/SF, with a vacancy rate of 12.4% on its more than 16M SF of space. Those rents can surpass $40/SF in the choicest of office buildings.
Still, 2016 was a flat year for Buckhead office landlords when it came to leasing. While companies signed more than 810k SF worth of leases, the net result still was a nearly 11k SF loss in absorption for the year, according to Cushman & Wakefield.
On top of that, Tishman Speyer is close to delivering Three Alliance Center, which is adding 500k SF (a good portion of which has been pre-leased by Global Payments, State Street Corp and possibly CBRE).
Glover said "I feel real good" about the demand in the Buckhead market heading into 2017. Even as new construction, he said Regent has "very conservative" expectations on what the rents are needed to underwrite construction, although he declined to reveal a specific rental rate number.
"It's not significantly more than what some people are getting today," Glover said.