September 6, 2013
Buckhead Deals Include Office, Retail, Apartments
Atlanta Business Chronicle
By Randy Southerland After a long period of dormancy and doubt, commercial real estate development is once again coming to life in Buckhead. Office, retail and residential developments are underway that will not only reinvigorate the market, but transform this area into a walkable, mixed-use urban mecca for companies and jobs. After it ground to a halt in 2010, there was much speculation about when, or if, the massive development mixed-used development in Buckhead Village would come back to life. Launched as the Streets of Buckhead by Ben Carter Properties, it got underway just in time for the Great Recession. Since then the six-block, 8-acre mixed-use project at Peachtree and East Paces Ferry roads was acquired by OliverMcMillan at a bargain price. Rescaled and redesigned, the project is attracting tenants and is well on its way to opening next summer, according to officials. �This project is going to be a game-changer for that whole area that obviously been sitting dormant for a long time,� said Brannan Moss, managing director with Jones Lang LaSalle Inc. The new owners have been able to convince tenants that this time is the charm. Atlanta-based undergarment retailer Spanx Inc. decided to relocate its corporate headquarters and open a flagship store in the development. The project�s credibility intensified when OliverMcMillan secured a $167 million loan to fund full construction of the redevelopment. �In the course of that we modified the design, we changed the character a bit but kept a similar vision for the type of tenants we were going after,� said Hunter Richardson, development director for OliverMcMillan. �We modified it based on our reading of the marketplace. We changed a little of the feel, character and the look of the project.� The four buildings, which are being designed by different architects rather than one as before, have been given a �more human scale.� As the project gets underway, real estate professionals believe it will spur additional development at nearby underutilized sites. �Development around it and redevelopment of certain areas will take off as that project gets closer to completion next year,� said Moss, who brokered the Spanx deal. �You�ll see some of those outskirts projects become something else over the next couple of years.� A prime candidate is the old Three Dollar Caf� site across the street on Pharr Road. While sitting idle for the past five years there had been speculation of a hotel or small office building taking over the site, according to Moss. �I think part of what made the previous owner unsuccessful was not that the idea was bad, but the timing was really bad,� Moss said. �By the time that project had come together originally I�m sure they paid a premium at the height of the market. By the time it was done and they did their projects the people who you typically got to sign up on a project like that were scared. The whole economy was in a state of shock.� Further down Peachtree Road in the heart of Buckhead, the office market has picked up considerably. Vacancy rates have dropped as big blocks of space have been taken off the market. One of the big moves came when PulteGroup Inc. moved its Atlanta headquarters into 101,000 square feet at Capital City Plaza, a 17-story tower. Blue Cross and Blue Shield of Georgia Inc. also took 29,000 square feet. The building is now approximately 99 percent leased. Two other nearby towers are also nearly full � 3344 Peachtree is at 97 percent, while Tower Place is at 92 percent, according to John Barton, senior vice president and managing director at Parkway Properties Inc., the buildings� owner. As the vacancies have disappeared, it has given Barton�s company the leverage to increase rental rates for the small amount of empty square footage that remains. With more companies, workers and even customers coming to these buildings, nearby retailers, restaurants and hotels have more customers, according to Barton. �I think as Buckhead continues to evolve and transform itself one of the things that you will continue to see is the enhanced walkability of it,� Barton said. �What you�ll see as these building get more dense from a user perspective, the amenity base continues to get more and more enhanced.� Walkability is also being driven by a surge in residential development throughout Buckhead. Recently, Novare Group announced it is planning SkyHouse Buckhead, a 26-story, 364-unit luxury tower at a site just off Peachtree Road next to the new MARTA pedestrian bridge over Georgia 400. Just a short walk from the Buckhead MARTA station, it should have high appeal to young office workers who prefer to live near transit.