Urban-Like Mixed-Use Risks Becoming Commodity In North Fulton
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Future mixed-use projects in Atlanta's affluent suburbs must strive to be a lure to area residents or risk becoming a commodity in the marketplace, developers warn.
“If you make it a commodity, the product is going to be so diluted, everyone fails,” Rubenstein Partners Southeast Regional Director Taylor Smith said. “If you make it something special and authentic, there will be a lot of success.”
Hines Interests Managing Director Alan Kennedy said Avalon's success is in part because it is on Old Milton Parkway, "the most robust east-west connector" in the area.
Smith and Kennedy were part of a lineup of commercial real estate executives at Bisnow's event focused on North Fulton County Wednesday.
“I think part of the secret sauce that worked for North American Properties at Avalon is location-dependent,” Kennedy said. "That put Avalon right in the honey hole."
“When you start moving up and down [Georgia Highway] 400 … the important thing to think about is these mixed-use developments, they can be relevant, but you got to have a way for people to get there," Kennedy said. “What you're going to have is a mixed-use center at each interchange [becoming] a commodity."
Urban-styled mixed-use projects — especially ones with retail, housing and other commercial uses clustered together — were practically unheard of in North Fulton until North American Properties built its Avalon project.
The development has become a landmark in the area and is spawning a number of other potential mixed-use projects nearby, including Halcyon, a project just north of Alpharetta off McFarland Road in Forsyth County that will include 700 residential units, a dine-in movie theater, retail, office and a hotel. The project is currently underway from the development team of Atlanta-based RocaPoint Partners and New York-based The Georgetown Co.
Other developers endeavoring for mixed-use in the area include Pope & Land Enterprises — which has plans for Northwinds Summit, a mixed-use project involving more than 1.2M SF of office, 30K SF of retail, 140 apartments and a hotel off Haynes Bridge Road — and Greenstone Properties, which recently revised plans for Parkway 400 into a mixed-use destination involving office, multifamily and retail.
Even Rubenstein Partners, which acquired the 1.6M SF Sanctuary Park office project in 2016, is looking to add other uses to its wooded office campus with a 25K SF “amenity center” building that Smith likened to a student center on a college campus.
Greenstone Properties partner Chris Scott said rents are at a level for office that tenants are only willing to pay for new construction if the property is part of a mixed-use destination.
“I don't think you're going to see anymore six-story, surface-parked buildings,” Scott said. “They don't want a building that's a stand-alone where you have to get in your car to go do anything.”
Rents also have gone up in large part due to the sheer rise in the cost of construction, Pope & Land Managing Director Kerry Armstrong said. Higher construction costs mean developers need tenants to pay higher rents for new space, even in Alpharetta and North Fulton.
“Four years ago, I would have killed to get the rents they were getting in Buckhead that they're getting in North Fulton now,” Armstrong said. “It's a little mind-boggling how much rents have gone up.”