Atlanta — During recessionary times, commercial real estate projects are either put on hold until more capital is available or downsized in order to reflect market conditions. Three developers presented their projects at last Thursday's CREW Atlanta luncheon at the Buckhead Theatre, detailing how their plans were adjusted in order to move forward with their mixed-use properties.
What was originally conceived as the $750 million Prospect Park in 2006 is now Alpharetta's master-planned, $600 million Avalon development. The project will include retail, hotel, office and residential space, but the original plans for the development have been drastically reduced. The retail, office and residential components of the project have been scaled back by more than 30 percent (see chart).
"We took a look at what was planned for Prospect Park and started to pare things down," said Mark Toro, managing partner of North American Properties (NAP), the developer of Avalon. NAP did not have to build an extravagant product in order to make the deal work, Toro pointed out to an audience of more than 150 people. "NAP focused on what it knows -- multifamily and retail. Using the knowledge gained from touring the country's most successful properties, we designed a community."
The development team traveled around the nation looking at projects and determining what would be successful for Avalon. NAP based the project largely on The Americana at Brand in Glendale, Calif., and Santana Row in San Jose, Calif.
Another mixed-use project that has received a lot of attention recently is Oliver McMillan's Buckhead Atlanta development. Ben Carter Properties LLC originally designed the $1.5 billion Streets of Buckhead, but had to bow out of the project for financial reasons. Oliver McMillan took control of the development in 2010 and rebranded the project as Buckhead Atlanta.
"First and foremost, it's great real estate. There was no downside to taking on this project. Ben Carter had a great vision and we redesigned it from top to bottom to fit our vision," said Hunter Richardson, managing director of development for Oliver McMillan.
Richardson said the biggest factor attracting Oliver McMillan to the project was that the zoning was already in place. The company came to the table with an equity partner, CB Richard Ellis Investors, and expects to deliver Buckhead Atlanta to the market in the spring of 2014.
Rendering of Buckhead AtlantaThe multi-phased 12th & Midtown is another project that has been reduced in scale. The development originally called for 2.6 million square feet of office space, 2,021 multifamily units, 1,654 hotel rooms and 500,000 square feet of retail. The project now includes 773,000 square feet of office space, 477 multifamily units, 414 hotel rooms and 97,000 square feet of retail space.
Steve Baile, senior vice president and head of Daniel Corp.'s Atlanta office, said the project has struggled in securing soft goods retailers, but has had its fair share of restaurants interested in occupying space at 12th & Midtown.
Despite each project having encountered setbacks, all of the developers present at the CREW Atlanta luncheon remained confident that their developments will continue to garner interest from retailers looking to capitalize on the millennial generation. Millennials crave an urban experience characterized by convenience. These mixed-use properties allow millennials to live, work and shop all in one environment.
Toro ended the lunch by stating, "We have to acknowledge that the largest consumer base doesn't look like us. They're our children... and they will be driving real estate."
CREW Atlanta, founded in 1982, is a member of the CREW Network, which stands for Commercial Real Estate Women. The organization's mission is to elevate women to positions of power and influence in commercial real estate by providing resources and business opportunities.