Skyline Views

Atlantan Buys High-Profile Buckhead Center

(UPDATED July 9 with information about how the transaction was funded.)

By Tony Wilbert, Wilbert News Strategies

ATLANTA (June 30, 2009) - The Shops Around Lenox, home to Dantanna's Surf, Turf & Turf - a popular hangout among commercial real estate types in Atlanta, will have a new, hometown owner today. Healey Weatherholtz Properties of Atlanta (Buckhead) is closing on its purchase of center across the street from Lenox Square mall this afternoon.

Healey Weatherholtz is acquiring The Shops Around Lenox in a joint venture with Alex. Brown Realty of Baltimore. The transaction price for the 125,000-square-foot center hasn't been disclosed yet, but Angelo, Gordon & Co. paid $33.9 million when it acquired the center in 2005 from AMB Property Corp., according to CoStar. Healey Weatherholtz likely got a pretty good deal.

Healey Weatherholtz and Alex. Brown formed Shops Around Lenox LLC to acquire the center, which was constructed in 1979. ABR Chesapeake Fund III, a value-added real estate investment fund sponsored by Alex Brown, provided $6.3 million to the venture, an equity commitment arranged by Peter Fish of Sterling Real Estate Capital LLC. Healey Weatherholtz affiliate HW Lenox LLC contributed $4.2 million. State Farm Life Insurance Co. provided debt financing, according to a press release issue by Molly Parrish on behalf of Healey Weatherholtz.

Quill Healey II, principal of Healey Weatherholtz and a fifth-generation Atlantan, confirmed his company's purchase of the high-profile center to Skyline Views. In addition to Dantanna's, which houses Brett Hunsaker's Buckhead Cigar Club, Shops Around Lenox's roster includes Roche Bobois and American Apparel.

It also includes some sizable vacancies, including the former CompUSA/Tower Place and Bally Total Fitness sites, that Healey says his company will reposition to attract new tenants. "The building that was previously CompUSA and Tower Records will be converted to a new format to include multiple shallow bay spaces with attractive glass storefronts," he said.

Healey Weatherholtz will take over management and leasing of the center. Heretofore, Transwestern marketed the retail center. Transwestern's marketing materials says the average household income of people living within a mile of The Shops Around Lenox is $113,912. Talk about tony Buckhead.

Healey says he and his partners are ready to revitalize the center. The redevelopment of the center is expected to be completed in spring 2010, and most retailers will remain open while the work is done.

"It's been underperforming for a while," he said of Shops Around Lenox. "We hope to change that."

Healey Weatherholtz also recently acquired Paper Mill Village in East Cobb outside Atlanta. The firms also owns Commerce Crossing in North Georgia and Howell Mill Shops next to the popular pizza palace of Fellini's.

 

Site of Deck Collapse Developed by All-Star Team

ATLANTA (June 29, 2009) - An all-star team developed Centergy in Midtown, site of a parking deck collapse today.

The development team is led by Kim King Asscociates, founded by the late Kim King, a former star quarterback at Georgia Tech. Gateway Development, with roots in Albany in Southwest Georgia, serves as the co-developer, and the University Financing Foundation (TUFF) financed the spec office building.

TUFF has close ties with Georgia Tech and financed Technology Enterprise Park, which is featured prominently on TUFF's Web site. In keeping with the Georgia Tech theme, Hardin Construction of Atlanta is Centergy's general contractor. Hardin was a contractor at Atlanta Botanical Garden, where an elevated walkway collapsed in December.

As of 2:45 p.m. Monday, Atlanta emergency personnel continued to search the parking deck and had

not reported any injuries, according to The Atlanta Journal-Constitution, which posted the above photo.

Centergy is $130 million project on 12.5 acres at Fifth and Spring streets, across from Georgia Tech's Technology Square project. The 487,000-square-foot Centergy One is the first speculative office building at Centergy, is home to RBC Bank, Georgia Tech's Advanced Technology Development Center and an LA Fitness location. 

Centergy eventually will comprise more than 3 million square feet of class A office, research, residential and retail space, according to its promotional materials. 

Blondie Keeps Pole Position in CRE Coverage

By Tony Wilbert, Wilbert News Strategies LLC

ATLANTA (June 29, 2009) - The commercial real estate story of the week last week centers on a semi-seedy strip club in the bottom of the Clermont Hotel in Midtown Atlanta.

News of the potential foreclosure of the Clermont and its famous Clermont Lounge prompted high-profile stories in The Atlanta Journal-Constitution, GlobeSt.com, Creative Loafing and on local TV newscasts. Atlanta Business Chronicle led its Tuesday June 23 e-mail blast with the story. Several people expressed concern that Blondie, at right in a Creative Loafing photo, might lose her job if the property's owner can't stave off foreclosure.

For Skyline Views, which posted its coverage last Monday June 22, the Clermont in foreclosure story resulted in a record number of hits.

The coverage even led to USA Today writing about Gene Kansas Developments' contest to help redesign part of the landmark hotel. 

The Clermont story also prompted an intriguing look at the owner of the Clermont, Inman Park Properties, and its impact on intown neighborhood such as East Atlanta. Scott Henry of Creative Loafing published his story Friday, and Paul Donsky and Russell Grantham ran their story in Sunday's Atlanta Journal-Constitution.

It's good to see that in these times of TARP, TALF and REO that an exotic dancer named Blondie still intrigues the commercial real estate world and the reporters who follow it.

Lenders Foreclose on Clermont Hotel, "Blondie's Home"

By Tony Wilbert, Wilbert News Strategies LLC

ATLANTA (10:30 p.m., June 22, 2009) - The home of Blondie the stripper is in foreclosure.

Regions Bank, the lender on Blondie's "home," the Clermont Hotel at 789 Ponce de Leon Ave. in Midtown Atlanta, advertised the beginning of the foreclosure process on the building earlier this month. The initiation of the foreclosure process does not guarantee the Clermont would be sold on the courthouse steps on the first Tuesday of July, but it could mean the owner would have to persuade the lender to restructure its loan.

The building is owned by 789 Ponce de Leon Avenue LLC and Jeffrey Notrica, head of Inman Park Properties, according to the foreclosure advertisement that appeared in The Daily Report. They have defaulted on their loan, according to the legal notice.

The Clermont, best known for the Clermont Lounge , the dance club in the basement where Blondie and her friends perform on the bar, has been on the market since April. That's when Gene Kansas Developments listed the seven-story landmark on behalf of Inman Park Properties.

The 88,000-square-foot property, with 129 keys, has an asking price of $6.5 million.

The threat of foreclosure comes as Gene Kansas Developments is running the Clermont Hotel Design Competition. The contest encourages designers, architects, students and others to submit their design for the Clermont's lobby, stunning rooftop and a guest room for the chance to win $1,000 and a weekend at the historic property.

Come back to Skyline Views for updates on the foreclosure proceeding and design contest on this piece of Atlanta history.

Construction Starts on Southeast's Largest LEED Distribution Center

By Tony Wilbert, Wilbert News Strategies LLC

ATLANTA (June 22, 2009) - Last week paled in comparison to the week before on the commercial real estate news front in metro Atlanta. As a result, we'll reach back to the previous week (June 8) to pick the first Commercial Real Estate Development of the Week.

It goes to Rockefeller Group Development Corp. and King Industrial Realty for the commencement of construction on the 1.5 million-square-foot distribution center in Social Circle for General Mills. The 130 acres needed for the mammoth industrial building closed June 5, and construction started the following Monday. The $42 million building easily is the largest industrial deal completed so far this year.

Rockefeller stormed onto the local industrial scene by beating hometown powerhouse Rooker the deal. Rockefeller gleefully announced its big win with an ad in the June 17 Wall Street Journal. "Rockefeller Group Development Corporation is proud to have been selected by General Mills to develop a 1,500,000 square foot Distrbution Center in The City of Social Circle Walton County, Georgia" the ad reads.

But what makes the General Mills distribution center more interesting is that the rail-served building will be constructed to meet LEED certification standards, according to Sim Doughtie, president of King Industrial. Doughtie, in partnership with William P. Nichols and Jim Schnur of Corporate Services Consortium, represented General Mills in the transaction.

"It is my understanding that this new built-to-suit facility will be one of the largest distribution centers ever built in the United States that meets LEED certification standards for a green building," said Doughtie, pictured at left. "It is certainly the largest LEED-certified distribution center ever built in the Atlanta market and Southeast."

King Industrial's involvement in the deal didn't end with General Mills. King brokers Jason McCart and Bill Randolph represented the sellers in the sale of the 130-acre parcel on East Hightower Trail that will house the DC. The new distribution center, when up and running, will employ 112.

Comm. Real Estate Won't Hit Bottom Till 2010

By Tony Wilbert, Wilbert News Strategies LLC

WASHINGTON (June 18, 2009) - The public commercial real estate likely hit bottom in March, which means the remaining 90 percent of the market that is private won't bottom out until next year, according to Steve Wechsler, president of the National Association of Real Estate Investment Trusts.

The property market's public sector, or publicly traded REITs, typically leads the private real estate market by four to six quarters, Wechsler told the National Association of Real Estate Editors, which kicked off its 43rd Annual Real Estate Journalism Conference here today. NAREIT's co-authored REIT index hit a low point on March 6, dropping 75 percent from its high on Feb. 7, 2007, according to Wechsler.

"We will not hit bottom in the commercial real estate market in general until some time next year," he said.

Wechsler estimated that the total U.S. property market is valued at about $6 trillion, with public REITs accounting for 10 percent of that.

Another panelist, Jamie Woodwell, a commercial real estate researcher at the Mortgage Bankers Association, said the current real estate recession differs from the 2001 recession. In 2001, the dot-com bust resulted in large amounts of office vacancies while the retail market remained relatively stable.

This time around, Woodwell said, retail is more closely following unemployment numbers and being hit harder than the office market. "More firms still have [office] leases in place," he said.

But things will change, Woodwell said. "Real estate is a very cyclical business, especially now."

Prime Piece of Peachtree Hits the Market

By Tony Wilbert, Wilbert News Strategies LLC

ATLANTA (June 17, 2009 - A prime piece of Peachtree Road in Buckhead is on the market. Tom Miller, a newly minted executive vice president of Grubb & Ellis, has been hired to market the property at 3330 Peachtree for sale or lease.

Until recently, the building housed the Buckhead campus of American InterContinental University. But AIU has consolidated the Buckhead campus into its main campus at Embassy Row. As a result, the property is on the market.

The property is adjacent to the new office/condo tower is adjacent to the new tower at 3344 Peachtree, the condo portion of which is known as Sovereign. The AIU property is a high-profile site, and the highest-and-best use probably isn't a mid-rise office building that's been used as a school.

The site at 3330 Peachtree is ideal for an office or mixed-use tower. Only problem is, Buckhead has a couple too many of those right now. But the market is starting to show signs of improvement, and if Marsh moves to Two Alliance Center, another of those new towers will have its first sizable tenant.

But for now, forget about any office development in Buckhead for a couple years, even though the 3330 site is a good one.

Meanwhile, Miller probably will work to get someone in the building at a great rate and then work on finding a buyer interested in scraping it and thinking big down the road. We'll keep an eye on this prime piece of Peachtree.

Quick Start Staves off Slow Summer News Cycle

By Tony Wilbert, Wilbert News Strategies LLC

 ATLANTA (June 16, 2009) - I went away for a week vacation, and I missed a hell of a lot of commercial real estate news here in Atlanta. (While enjoying the Beaches of South Walton - mainly Rosemary Beach, Fla., it was hard to forget Atlanta's CRE world. I walked past Hotel Saba several times. The hotel stands empty and dark, thanks to the hotel's ties to the failed Silverton Bank of Atlanta, formerly the Bankers Bank.)

The biggest news of the week was the ascension of Larry Gellerstedt to CEO of Cousins Properties, effective July 1. CEO changes at Cousins are monumental - Gellerstedt will become only the third CEO in the company's 51-year history. The announcement gives new meaning to the Roman numerals at the end of his full name (Lawrence L. Gellerstedt III).

Maybe, inside the halls of 191 Peachtree, they'll refer to him simply at "The Third."

Cousins made the right choice in Gellerstedt. His construction pedigree (his late father, Lawrence L. Gellerstedt Jr., was the longtime chairman and owner of the former Beers Construction), his development background (Gellerstedt III sold his multifamily development firm to Cousins in June 2005) and his Atlanta roots make Gellerstedt III the best person for the job.

Outgoing CEO Tom Bell, despite being from Memphis, effectively established himself as a community leader in Atlanta.

The Cousins news announcement was only one of several major commercial real estate stories that broke last week. 

Others big CRE stories included Phipps Tower developer Crescent Resources filing bankruptcy, local papers jumping on Sembler Co. for requesting a $52 million project for a foundering development, the state of Georgia competing for a large biotech development and WNS-client The Dawson Co. working to stave off foreclosure of its eon condo at Lindbergh City Center.

If the week of June 8-14 is any indication, the typically slow summer season won't be that way at all.

The busy week in CRE has prompted me to start a Commercial Real Estate Development (CRED) of the Week feature that will appear each Monday here at Skyline Views. Check back next week for the first installment.

If you have any candidates for CRED of the Week, e-mail me.

Streets of Buckhead Construction Restarts in July

ATLANTA (June 3, 2009) - Construction on The Streets of Buckhead, dormant since March, will start again in July. This, according to a report in Women's Wear Daily that was picked up by the newest edition of the Buckhead Reporter. 

Seeing the cranes in action and the construction workers back on the job will be a welcome development in Buckhead, where the stalled luxury retail-dominated mixed-use project had created a pall in the heart of the former bar district. Ben Carter Properties stopped construction temporarily in March to concentrate on renegotiate contracts with subcontractors and take advantage of dramatic drops in materials.

To check out photos of the construction site, read the Skyline Views post from February.

Ringing Up NCR Proves Georgia is Back

By Tony Wilbert, Wilbert News Strategies

(UPDATED June 2 to change location of manufacturing plant to Columbus from Macon.)

ATLANTA (June 1, 2009) - Georgia once again is a legitimate contender in the realm of economic development and Fortune 500 relocations.

The Peach State had struggled since luring UPS from New England in 1991 to land a well-known Fortune 500 company that brought thousands of jobs. Newell-Rubbermaid was hailed as a success when it relocated from the Midwest, but it wasn't an immediate job producer. Georgia and Atlanta became better known for losing Fortune 1000 companies (BellSouth, Georgia-Pacific, Scientific-Atlanta to mergers and privatization) than winning them under the current governor.

It all changes tomorrow when, according to Atlanta Business Chronicle, NCR will announce its decision to relocate its headquarters from rusty Dayton, Ohio, to the Atlanta suburb of Duluth, where NCR already has a substantial presence. NCR also said it will build a plant where ATMs will be manufactured in Columbus. 

The decision by NCR is home run for Georgia Gov. Sonny Perdue, left, whose economic development efforts have been maligned heretofore. Until recently, Perdue had few victories to claim on the headquarters-fishing front, but that changed this week. The decision by NCR to open an accompanying plant and create jobs outside metro Atlanta will ensure the entire state feels good about the NCR win. Some of the jobs at the Columbus plant will be filled by Alabamans, but that's OK. Alabama's auto-assembly plants have benefited Georgians.

It'll be sweet revenge when Perdue takes to the podium in the hot Georgia sunshine to announce that NCR will be a Georgia company.

In addition to its presence in Gwinnett County, NCR has several other ties to Atlanta. Home Depot is a large customer of NCR. Go inside any Home Depot, and you'll be able to use the self-check-out machines built NCR. SunTrust's ATMs are by NCR. And Bo DeRodes, former chief IT guy at Home Depot and Delta sits on NCRs board. (DeRodes, left, now is chief IT office at First Data, which also has a nice Atlanta presence.)

So, hats off to Gov. Perdue. Thanks for the jobs and returning Georgia to a real contender again on the economic development front.