Scott Jackson At It Again: Buying Choate HQ
After a year's selling binge, Scott Jackson is back out in the market. And this time, his target is Choate's HQ in Central Perimeter.
Jackson Corporate Real Estate's namesake revealed at our State of Office 2016 event this morning at the InterContinental Buckhead that he has Northridge Plaza under contract for $18M. The 128k SF office building off Roberts Drive strategically overlooks GA 400. Scott says he is buying the facility at $141/SF in a JV with the Pritzker family—one of America's wealthiest family dynasties.
Scott was part of an all-star power lineup that included Selig Properties' Steve Baile, Eastdil Secured's Kennedy Hicks, Vantage Realty Partners' Gene Rice and JLL's David Tennery (who moderated). Scott says Northridge Plaza fits the profile of the type of assets he's looking for—especially in light of improving fundamentals with little new office development. “We feel like we can buy a building at $140-, $150/SF full” where rents are sub $20/SF. But if the building's full, Scott says he can easily push those rents to $23/SF to $24/SF, even on renewal. When it comes to Northridge Plaza, which is more than 90% leased, his basis in the building means he could drop occupancy to 67% and still make his debt service.
In other breaking news, New City's Jim Irwin has construction financing for his 725 Ponce project. Just no office tenant yet. Jim revealed JPMorgan is his development partner on the $140M project. New City just filed permits with the City of Atlanta to begin construction, although Jim tells us he's still working out details with The Kroger Co for an exact start date. But all of this is evidence of his conviction that the Ponce de Leon corridor was an untapped office market for many years, proven with Ponce City Market. “We found this pocket of demand on the East Side for companies looking for non-commodity space off the Peachtree [Street] spine,” he told our audience of some 200 industry pros.
Eastdil's Kennedy Hicks says while Atlanta still has some negative impressions from institutional investors—especially those stung during the Great Recession—the city is drawing big names and big dollars for investment. Cap rates here are “a pretty nice premium to what you're getting in NY and San Francisco.” She notes the development “bloodbath”—as it was called in a 2009 ULI report about the then-new spec tower being developed in Buckhead—actually had a happy ending. All got leased, of course. What's more, it cost some $235/SF to build on average back in 2007. Today, that cost would be north of $400/SF. That's a big reason rents are driving upward and new construction is sparse.