So reading that article in the ABC about the new progress at Buckhead Atlanta, I can't help but re-evaluate what I said before.
Considering the debt already placed, the prominence of the developer, and the amount of equity lined up...this thing is actually happening at some scale or another. Supposing the equity parties involved could exit and sell off the land, they would get nothing for it and there is that massive debt issue. Fool me once, shame on you; fool me twice, shame on me. There are no shame on me parties in Atlanta to that degree anymore. I think everyone is cautiously optimistic at best about investing here right now.
I still believe they bit off more than they can chew. What retailers are going to want to go in? Here are the new plans:
Quote:
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In December, the developer filed new plans for Buckhead Atlanta with the state, calling for 370 residential units, 98,360 square feet of office space and 346,006 square feet of retail space. The first phase is scheduled for completion in 2014.
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Considering this site and this project and the amount of press it has gotten in the past and the hopes for the site in the future, those numbers are teeny tiny...like "mid-size project" size (not much more to it than say Emory Pointe when it comes down to it). I don't think there is a phase II. Now when you look at Atlanta, those numbers really don't make a whole lot of sense.
Let's talk office first: Yea Atlanta is still wayyyy overbuilt, and Buckhead was a poster child, and absorption across all classes and submarkets is still negative, but Class A office in Buckhead is actually now performing better than practically anywhere in the city. For Atlanta/Buckhead especially and considering the past 2 years and the next 2 years, I would probably want to put more emphasis on the office component myself, but what do I know? I do know there are major users desiring large blocks of loft office space in this city, and there is hardly any supply of that...but that does not mean anything for this project.
Multifamily: a good investor's market and a good developer's market requires good job growth, limited supply, limited construction, and ease of development. We have ease of development and that is about it. We don't have good job growth, we have no supply constraints, rents are going up and vacancies are tight right now, but let's consider the market. 375 high end apartments are going up across the street and will deliver this year. 2 new towers with market rates are delivering 650 units between them next year. Emory Pointe with a couple hundred units will deliver this year. In the advanced pipeline bucket are projects that AMLI, NAP, Jamestown, and Westbridge Partners are moving forward on. All said, excluding the mega mixed-use master-planned developments OTP, there may be slight overbuilding of market and higher rent intown apartments over the next couple years. In terms of job growth, we are not TX, Raleigh, or even S FL right now. Actually, we are the opposite and we are bleeding jobs to those areas.
At least 370 units is not a large number.
Retail: Where should I begin? Atlanta is a crappy retail market and always has been. We have strong points: Saks Fifth Avenue sales at Phipps for one. We have a lot of weak points: no high streets and poor consumer spending for a market our size. Finally we are turning a corner and stepping up to the figurative plate a little bit, and retailers see this. Some of the intown neighborhoods such as Inman Park are retaining their consumer spending capacity rather than bleeding it to Buckhead. The Westside is really really picking up, in part because of a lot of vision, and in part because retailers are making their intown Atlanta shopping debut there (it's a risk and will determine many things for the city going forward if Free People and Calypso St. Barth have strong sales at White Provision...so start shopping there!).
Ponce City Market will deliver a few hundred thousand SF of intown retail space in a unique area and a unique "big-city" Chelsea Marketesque space. We'll have to see what happens there. Lenox Square is expanding and going more and more upmarket. Phipps is incredibly dynamic and is the fortress mall of the south and will always be desirable for high street type tenants. Atlantic Station is becoming more and more synonymous with what's going on at the Westside. What had a BAD name just 2 years ago is now a cool place to be and the new leasing team there is making great strides to retain and attract top tier local and national tenants. A lot of intown money that was being spent in Buckhead just a few years ago is staying intown, and on top - more people with high incomes are moving intown. Buckhead was growing super fast last decade, but this is the decade of "even closer in" to the city. Retailers are taking note and testing the new trend out.
I believe that not only is 350,000 SF of retail huge - especially considering it is ALL small in-line shops less than 3,000 SF, some larger > 3,000 SF shops, and potentially SOME junior anchors, it is going to have a TOUGH time competing with the intown trend, the Lenox expansion, the Shops Around Lenox, Phipps, and I don't see the Village/E Andrews tenants paying $40+ rents to be in Buckhead Atlanta. That leaves me wondering who IS going to go there? It's not near MARTA. It's not "walking distance" to thousands of young professionals. It's not near the malls. There aren't millions of SF of office surrounding it. I think it's an uber challenging retail spot and that's it's biggest weak point.
For that reason, I wish the developers would be more vocal with their thoughts. I know they need to be careful about press, but I just wish we could hear a reason for their plans and how much room there is for their plans to change? Also - their timeframe.
I wish them the best; this is one of the most complicated and risky projects in the country right now.
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