Even With Regent, Few See Repeat Of 2009 Buckhead 'Bloodbath'
With news of plans by Regent Partners to restart its long-delayed plan for a mixed-use tower in Buckhead, real estate experts are dismissing concerns of another "bloodbath" for office landlords in the tony submarket.
"This is a tale of two decades," Cushman & Wakefield Executive Director Ken Ashley told CoStar. "Ten years ago, in 2009, this submarket was the subject of a front-page [Wall Street Journal] article for overbuilding. Red-faced Atlanta real estate types wondered if we would ever get out of the doldrums. Today, the contrast is stark and the epitome of responsible development."
Developers delivered four office towers to the market at the worst possible moment in the U.S. economy — on the verge of the Great Recession. That led to millions of dollars in losses by some of the developers and bankruptcy for Crescent Resources, CoStar reported.
In 2009, respondents to the Urban Land Institute's Emerging Trends in Real Estate report wrote that "a bloodbath is coming" to Buckhead due to overbuilding, and the Wall Street Journal brought that overbuilding craze to the nation's attention, giving the area a reputation that has been hard to shake.
As reported earlier this week, Regent Partners and its joint venture partner Batson-Cook Development have gained a third benefactor, Tier REIT. The trio plan to finally break ground by the end of 2019 on a 560K SF office tower with 60 luxury condominium units atop it, the first significant new office tower in Buckhead since Tishman Speyer delivered Three Alliance Center.
This time, though, the office fundamentals in Buckhead are vastly different than in 2009, with strong demand for new office space.
"They won't have the same competitive pressures developers faced in 2009 when four or five towers with equal amenities were underway," CoStar market analyst Brad Raber told his publication. "I could see this trend causing stress in Class-B and B-plus buildings in Buckhead as big users vacate that for new Class-A space. There's no obvious tenant base to backfill those spaces."