New City Going Spec On Second Midtown Project After Tax Break Approval
The developer who reimagined Midtown's landmark “Murder Kroger” into an office for BlackRock and WeWork is readying to break ground on an ambitious project barely half a mile away.
New City Properties is a step closer to gaining a $500M lease-purchase bond with Invest Atlanta, the economic development arm for the city of Atlanta, that would give the developer a $22.5M property tax break over the course of a decade for 760 Ralph McGill, a $495M mixed-use project, according to documents filed with Invest Atlanta.
After receiving a green light from an Invest Atlanta committee Monday afternoon, New City is expected to seek full board approval for the project's abatement on Thursday, Invest Atlanta spokesperson Matt Fogt said.
New City purchased the former Georgia Power site in the Poncey-Highland neighborhood in 2017 for more than $10M. The initial phase, scheduled to break ground in March, is expected to include 475K SF of office, a 350-unit apartment complex and a 125-room boutique hotel above an underground parking deck.
In turn, New City is expected to spend $20M to build public infrastructure, including green space along the Atlanta BeltLine trail. The developer also plans to set aside 35 units of its apartments for renters who earn less than 60% of the area's median income in exchange for the incentive package. The hotel is not part of the incentive package.
“I would honestly say that the interest in this alternative type of office space on the BeltLine has continued to be as robust as we've ever seen it,” New City President Jim Irwin said. “Nothing is exempt from [economic] cycles, but what we are building here will have a generational impact on our city.”
New City's gambit with speculative development in Midtown Atlanta has so far proven fruitful.
Even before delivering 725 Ponce this past summer with more than 300K SF of office atop the redeveloped Kroger, the project snagged enough tenants to open up with all its office space leased, including to WeWork and BlackRock.
While spec office is a risk most developers don't want to stomach, Midtown may not be much of a gamble. The Midtown office submarket has dominated Atlanta's leasing market this year thus far. Landlords absorbed more than 460K SF as of the third quarter — the most of any Metro Atlanta office submarket, according to JLL.
Developers have launched several new office projects in light of the office activity. Norfolk Southern, Invesco and Google are each anchoring new Midtown towers. Midtown rents grew more than 12% between Q2 2017 and Q2 2019, according to a recent CBRE report.
“Atlanta is considered a growth leader, along with Silicon Valley, San Francisco, Seattle and Boston. The market saw high-tech employment grow 13% during 2017 and 2018, and is one of only nine markets to see its job growth rate accelerate compared to 2015 and 2016,” CBRE officials wrote in the report.