Skyline Views

Home Depot sees the downside to mixed-use

ATLANTA (May 30, 2008) - When the new Home Depot opened in Atlanta’s tony Buckhead community in April 2006, it was easy to spot. The store sits at the busy intersection of Piedmont Road and Sidney Marcus Boulevard, and thousands of cars passed it each day.

By the time I started my job at Home Depot corporate with a three-day stint at the Buckhead store in June 2006, part of a parking garage had been erected on the Piedmont side of the Home Depot. But the store remained highly visible.

By the time I left Home Depot for Edelman, the Buckhead store was nowhere in sight of people driving on busy Piedmont and only a blur to drivers on Sidney Marcus who happen to look to the left or right for a split second and catch the store between buildings.

So, what happened? The mixed-use development that Home Depot is a part of has enveloped the store. Specifically, apartments - ironically called Vista Lindbergh - have enveloped the Home Depot store. It always was part of the master plan to wrap residential space around the retail at Lindbergh Plaza, but I’m sure Home Depot real estate executives couldn’t have envisioned that its store would be blanketed – save for a corner that sticks out on a side street.

Home Depot has attempted low-tech solutions such as hanging a sign outside the store, but that’s long gone.

The Home Depot store has replaced the former Sidney Marcus store, which was much larger and easier to see from the street and from busy Georgia 400. Home Depot felt compelled to grab the new spot after the original plans for the Lindbergh Plaza redevelopment included a Lowe’s store. Home Depot said, “Not in My Back Yard.”

And so, Home Depot ended up with a store with low visibility – and with a still empty shell in the same shopping center.

For retailers, Home Depot’s story shows that while being part of a mixed-use community has an upside (additional traffic/a built-in customer base), it also has a potential downside.

The GM Building Sale: Timing is Everything

The PR, finance and Legal departments at Boston Properties faced an interesting communications conundrum over Memorial Day weekend. They had to decide when to release news of the REIT’s agreement to purchase the GM Building and three others in Manhattan from the Harry Macklowe for $3.95 billion.

The Macklowe family’s need to sell the buildings has been well documents in the nation’s largest newspapers, with reporters covering every incremental development. Reporters likely were calling SVP of Finance Michael Walsh and other designated contacts at Boston Properties headquarters daily for updates.

The transaction closed around 2 a.m. May 24 (Saturday), according to The New York Times, and Boston Properties issued a press release about eight hours later. (Because Boston Properties is a publicly traded company, it had to follow certain guidelines when releasing the news to comply with Regulation FD (Fair Disclosure)).

The timing of the press release meant the story of the largest price paid ever for an office building in this country was relegated to the back pages of the A section in Sunday’s Times, which estimated that Boston Properties' $3.95 billion purchase price included $2.9 billion for the GM Building.

The Wall Street Journal, whose reporter Jennifer Forsyth covered the Macklowe empire’s decline as closely as anyone, found itself even more handcuffed by the timing. The WSJ does not publish Sunday and did not publish Monday because of the holiday. So, the earliest the GM Building sale story could appear in print is Tuesday morning. Of course, the WSJ did publish a story online (although not until Monday morning), but the amount of online readers on Sunday can’t possibly match the more than 2 million readers who subscribe to the print edition.

Not to be outdone though, the Journal does have some good scoop in Tuesday morning’s edition about son William “Billy” Macklowe being poised to push the company patriarch aside now that the company has staved off extinction with the sale of the New York skyscrapers to Boston Properties.

So, while Corporate Communications departments at public companies often joke that 8 p.m. Friday – especially a Friday before a long holiday weekend – is the best time to announce bad news, they now have to contemplate what to do when good news breaks over the long holiday weekend.

 

CBRE teams with GM to find developer for Doraville plant

UPDATED at 3:35 p.m. May 22

Here's a great, breaking-news update to our post from Las Vegas about Jacoby Development being interested in the GM assembly plant in Doraville from Atlanta Business Chronicle. Doug Sams of the ABC reports that CB Richard Ellis has teamed with GM to find a developer to "remodel" the 165-acre site near Spaghetti Junction.

Paul Donsky, development reporter in the DeKalb Countyy bureau of The Atlanta Journal-Constitution, also is covering the story.

This one will be fun to watch unfold and see who wins the right to redevelop the site. It also will be fun to see which news outlet breaks the big stories to come.

Leaving Las Vegas

LAS VEGAS (May 21, 2008) - As ICSC’s Recon comes to a close and tens of thousands head to the airport today, attendees are reflecting on a vibrant show that felt somewhat smaller than in years past. Despite the overall mood brought on by the stagnant economy and harder-to-get financing people here networked and partied.

In today’s Wall Street Journal, Kris Hudson says this year’s RECon attracted “nearly 50,000” attendees. The exact number has been a little hard to find, and according to National Real Estate Editor Matt Valley, ICSC typically announces attendance numbers by the convention’s second day.

Plenty of people here said their companies sent fewer people to Las Vegas this year to save money. Others flat out canceled their trips. But the place still was packed, the Leasing Mall hummed and taxis at the show’s hotels were impossible to get without a 20-minute wait.

Overall, the mood was a little optimistic, which is the usual for developers. But several attendees said they’ll move forward in a very cautious, calculated manner. And most who attended Marcus & Millichap’s popular Retail Trends event said we were in a recession and that recovery is six months out.

We’ll see. Hope the mood is rosier at RECon 2009.

With Ford plant in hand, Jacoby eyes GM plant

LAS VEGAS (May 20, 2008) – As the GM assembly plant in Doraville, a suburb northeast of Atlanta, rolls toward a September closing, developers are lining up to make bids for the prime property neat Spaghetti Junction.

Out here at ICSC’s Recon, Jacoby Development Inc. Jacoby Development Inc. executives were saying they planned to make a play for the site. Jacoby is fresh off announcing plans to redevelop the shuttered Ford Motor Co. plant in Hapeville to an "aerotropolis," and it’s already scouting for its next project.

Of course, Jacoby is busy at ICSC trying to land tenants for the Ford project, dubbed Airport Station. Its booth at the show highlights the proposed development.

But Jacoby likely will be in for some competition from Duke Realty Corp. Duke Realty Corp., which made a late bid for the Ford plant but ultimately pulled out of that sweepstakes.

Indianapolis-based Duke has some good experience in redeveloping former GM plants. In Baltimore, Duke won the big to redevelop the 182-acre GM van assembly plant, and in New Jersey, the REIT early this year bought the Linden GM plant. 

Duke's plans for its former GM sites call for warehouses and distribution centers, so it’s expected it would have similar plans for the Doraville plant.

Jacoby on the other hand likes mixed-use developments and probably would do one at Doraville if it gets control of the site.

Las Vegas show a big hit for Real Estate Journos

LAS VEGAS (May 20, 2008) - Matt Valley, editor of National Real Estate Investor magazine, and Rachel Ramos, retail reporter at The Atlanta Journal-Constitution, are both in Las Vegas to cover ICSC’s Recon 2008. While here, they expect to cover some of the hottest stories in retail real estate, meet with key real estate magnates and eat at some of the city’s best restaurants. But on Monday night, they ended up seeing the seedier side of Vegas - an area better suited for an episode of "Cops - Sin City."

Matt, Rachel and I were heading to dinner in a taxi – Western Cab No. 165 – when our driver decided to try to drive past an older-model Cadillac Eldorado veering on a four-lane shortcut off the Strip. Just after the cab accelerated, the Eldorado’s driver tried to turn into our lane, and bam! The cars collided and Rachel bounced off Matt in the back seat.

Everyone was OK but somewhat shaken. (In photo at left, Matt and Rachel are all smiles outside the dented taxicab.)

Shortly after the crash, the cab and car pulled into a parking lot, and we quickly realized we were surrounded by sleazy extended-stay motels. Several residents, all male and none wearing shirts on this 109-degree day, came out of their rooms, lured by the sound of crunched metal. They quickly retreated into their rooms when motorcycle cop arrived.

The accident gave us a unique opportunity to experience the dichotomy of Las Vegas real estate while waiting for the Metropolitan Las Vegas Police and Nevada Taxi Authority to come interview us about the crash. Here we were, about two blocks from the Las Vegas Hilton and the site of Recon 2008, surrounded by lowly flophouses with names such as La Mesa Sierra Nevada. They represent a vastly different type of lodging than Mandalay Bay, Planet Hollywood hotel and the Renaissance, hotels we chose for the trip.

But we were the lucky ones. Once we gave our statements to the police and insurance adjustor, we jumped into another Western cab and headed for the Venetian for dinner at Bouchon.

Bears beat Bulls at Retail Trends event

LAS VEGAS - Bears were roaming the room at Marcus & Millichap’s annual Retail Trends event at ICSC’s Recon Monday evening.

A majority (55%) of the 500 or so brokers, owners and investors in attendance said the country is in a recession and that they were “Somewhat Bullish” about the economy. Most attendees, who voted via a handheld clicker, said recovery is six months away.

The panel of experts tended to agree with the clicker-wielding, cocktail-drinking audience members. Sandeep Mathrani, executive vice president of retail at New York-based Vornado Realty Trust, said the country is in a recession, based on “the sentiment of the people.” Of course, Sandeep probably personally isn’t feeling the pinch. According to salary.com, his total annual compensation is $1.2 million.

James Stolpestad II, managing director of GE Real Estate, told the group that the country and retail industry were getting its comeuppance. “Things were too good for too long,” he said.

And the panel’s resident retailer, Randy Kelley, senior vice president of real estate and development at The Fresh Market Inc., said he’s feeling bearish. He then went to let the audience know that despite his bearish feelings Fresh Market is growing rapidly and looking at expansion opportunities in 25 states. The Greensboro, N.C.-based gourmet grocer currently has 78 stores in 18 states.

For this, Kelley earned a rebuke from moderator Bernie Haddigan, managing director of Marcus & Millichap’s National Retail Group. Haddigan urged Kelley to avoid “informercials” about his company in future answers.

As for Haddigan, pcitured here, he offered this advice to potential sellers of fortress malls and power and strip centers: “Opportunity exists in selling premium assets.” The best properties will attract the most consistent pricing, he said, though Haddigan acknowledged that disposing of prime assets is “like selling your children.”

Buying opportunities will exist, Haddigan said, because of the “huge overhang on new development.” In 2007, developers delivered a lot of empty space in new centers – and created opportunities to buy at a discount.

When will the retail real estate market see improvement? “Things will get better slowly,” Stolpestad said. When Haddigan asked Mathrani the same question, he quipped, “Depends on who’s the next president.”

And according to the audience, they want more of the same on the White House front. Some 63% of the audience members said they expected (and probably wanted) John McCain to win the presidential election.

Atlanta developers compete for retailers at ICSC

LAS VEGAS - Atlanta-based developers were seen all over the leasing mall areas on the first full day of ICSC’s Recon convention on May 19 in Las Vegas.

At Cousins Properties’ booth, Joel Murphy, president of Cousins’ Retail Division, prepared for a schedule full of meetings with people representing potential tenants. Murphy said he’s hopeful for a good show, but he’s not being overly optimistic. In fact, ICSC organizers gave Cousins the opportunity to expand its booth into an adjacent area this year, but the Atlanta-based REIT decided against it. Maybe next year.

Down the “street” at Selig Enterprises’ booth, Cathy Selig was preparing for a smaller-than-usual crowd this year. The booth emphasizes 12^th & Midtown, the huge mixed-used project Selig is developing with Edelman client Daniel Corp. at 12^th and Peachtree streets in Midtown. Despite projections of smaller crowds this year, Selig said she also remains hopeful - if the large turnout at The Shopping Center Group’s 25^th anniversary party Sunday night is any indication.

N ot too far from Selig’s booth, activity hummed at Ben Carter Properties’ display. Photos inside the booth showed off BCP retail centers across the Southeast, but Scott Higley, vice president of marketing, said the emphasis clearly is on the Streets of Buckhead. In fact, Higley said, company founder and Chairman Ben Carter is so focused on lining up tenants for the ultra-upscale development rising on what once was the heart of the Buckhead bar district that he’s in New York working on deals instead of herein Vegas. Although Ben is missing his first ICSC show is several years, his son Benjamin Jr. and company CEO Paisley Boney were on hand to sign any tenants wanting space.

Shopping Center Group kicks off hot Recon 2008

LAS VEGAS - ICSC's Recon, the largest annual commercial real estate gathering, is underway in Las Vegas, where an unprecedented heat wave has the city poised to set a record of 107 degrees Monday. While the temperature is hot, the general mood is somewhat reserved because of the credit crisis/mortgage mess that has slowed business to a crawl for most people here.

Atlanta’s own The Shopping Center Group got things kicked off Sunday night with its annual cocktail party at the Four Seasons Las Vegas. This one was special as the Shopping Center Group celebrated its 25^th anniversary, complete with a huge ice statue in the form of “25.”

Shopping Center Group also was celebrating its merger with SiteWorks, an Annapolis, Md.-based retail consultancy that now is part of Shopping Center Group.

People packed the Four Seasons’ grand ballroom, ready to party and drink away concerns about the lousy real estate market.

Lots of Atlanta biz-celebrities were in attendance. Selig Enterprises chief Steve Selig worked the room; Larry Gellerstedt, president of Cousins Properties Office/Multi-family Division, hung out. Abe Schear, co-chair of Arnall Golden Gregory’s real estate practice personally chaperoned Rachel Ramos, retail reporter at The Atlanta Journal-Constitution, to ensure she met all the right people.

As the party died down, several people headed over to the CSFB party to see Huey Lewis & the News perform songs such as “Do You Believe in Love” that haven’t been on the radio in (appropriately enough) 25 years.

Congratulations to David Birnbrey and the rest of The Shopping Center Group.

How does this guy Dew it?

UPDATED at 4:30 p.m. May 16: See John Dewberry's performance here.

When CNBC’s Squawk Box broadcasts live May 16 from downtown Atlanta, its hosts will be speaking with some of the most powerful and legendary businessmen in the city.

Tom Cousins (Cousins Properties founder), Bernie Marcus (Home Depot co-founder), Dan Amos (chairman and CEO of ducky Aflac), David Ratcliffe (chairman, president and CEO of Southern Co.) , Dan Truett (president of Chick-fil-A and son of founder Truett Cathy) and Richard Smith (Equifax CEO) all are scheduled to appear when the all-business-news channel broadcasts from the World of Coca-Cola and Georgia Aquarium in downtown Atlanta.

And then there’s John Dewberry. Dewberry is CEO of Dewberry Capital Corp., which is developing a multi-building complex on the northern edge of Midtown Atlanta. He’s done some admirable things in his career as a real estate developer but right now probably is more well-known for being a Georgia Tech quarterback who beat the rival Georgia Bulldogs between the hedges in Athens

It’s pretty impressive that Dewberry is on this list of CNBC Atlanta business celebrities. Dewberry is a natural with the press, and reporters like his style. But some of the credit has to go to his in-house PR guy, Dan Beeson. Beeson is very well-connected with the national media, and he played a big role in getting Dewberry slotted on the show.

So tomorrow, Dewberry will share the spotlight with Tom Cousins, the man who built half the city. Of course with Cousins being a Georgia Bulldog, he might not like being so close to Dewberry. But, it’s good for the city to have so many business heroes spotlighted, and it’s good for the Dew to be positioned with them.

Of course, it also will give us a chance to find out whether Dewberry still dates Marla Maples from time to time.