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Cousins solidifies Buckhead presence

By WALTER WOODS
The Atlanta Journal-Constitution

Published on: 05/26/06

Barely two years ago, Cousins Properties was essentially locked out of the Buckhead office market. Now the Cobb County developer is getting some suite revenge.

Cousins said Thursday it will add another 22-story office building, Terminus 200, to the Buckhead skyline by 2009. The 520,000-square-foot skyscraper, to rise on the corner of Piedmont and Peachtree roads, will follow Cousins' 27-story Terminus 100, which is under construction, flush with tenants and set to open next year.

The Terminus 200 announcement, at which the company has hinted for months, signals there's a pulse to Atlanta's office market, particularly in Buckhead, where office vacancy is lower than nearly anywhere else in town.

It's also an omen that Cousins is likely to be that district's dominant office player for the next several years.

Strong demand for Buckhead office space, including its own Terminus 100, pushed Cousins to start the second building, said Tom Bell, Cousins' chief executive officer.

"There was so much leasing momentum in the first building, and we were seeing opportunities that we couldn't compete for," he said.

The company announced Thursday that three new tenants had signed up for Terminus 100: Cumulus Media, the country's second-largest radio station owner, financial adviser Wilmington Trust Corp. and investment firm Riverside Advisors.

The new leases have made Terminus 100 more than 60 percent full, and is likely to push Cousins itself, which had planned to move to the tower from Cobb County, into the Terminus 200 project, Bell said.

Cousins' second building is a challenge to other competitors in the neighborhood. As Bell put it, "We say [we're doing] this, and everyone knows we mean it."

Equity Office Properties, the country's largest real estate company, Trizec Properties, Regent Partners and a team of developers headed by Post Properties and Duke Realty Corp. have all promoted new office suites with a Buckhead address.

But none of them has, so far, attracted tenants, said Andy Lechter, vice president at Studley, a Buckhead-based office broker. Cousins, which is very well connected with the community of corporate tenants, has done well in getting out ahead, Lechter said. Right now, "they are the only game in town," he said.

Cousins sitting in the Buckhead catbird seat is a surprising outcome, even to Cousins. Just months ago, while its competitors controlled prime office sites overlooking Ga. 400 and Lenox Square, Cousins owned no Buckhead dirt. But that changed quickly in August 2004, when the company cornered a key corner.

Flush with cash from selling some of its trophy office towers, Cousins bought from rival developer Pope & Land Enterprises 10 acres at Piedmont and Peachtree roads for a cool $28 million.

Shortly after, Cousins persuaded brokers CB Richard Ellis and consultants Bain & Co. to vacate nearby towers for Terminus 100. Citigroup and Synovus also leased space in the building.

"They got an aggressive early jump" on the market, said David Canaday, vice president of competitor Trizec Properties, which owns Lenox Road's Alliance Center office complex. "It was a great move on their part."

Because of traffic issues, more tenants are looking for offices closer to town, and Buckhead has become an established office brand, Bell said.

The vacancy rate for Buckhead's best office space is 14.6 percent, according to CoStar Group, a real estate research firm. In districts like downtown or Sandy Springs, the vacancy is around 20 percent; in the metro area overall, it's nearly 16 percent. Buckhead is "hot, if you will," Bell said.

Cousins, expert in building suburban office complexes, has tried to take advantage of the demand for close-in offices by erecting multibuilding developments at key city intersections, like Terminus.

Cousins will first go ahead with a previously announced, 150-unit condo tower at Terminus. The Terminus 200 office project will follow shortly thereafter, Bell said. Two more 300-unit Terminus condo towers are on the drawing board.

But Buckhead is not Cousins' only focus. The company will later this year demolish an aging office building at Peachtree Street and Ponce de Leon Avenue.

In its place, Cousins will build a condo tower facing Ponce de Leon and, depending on market conditions, a Peachtree Street office tower.