Skyline Views

"Emerging Trends" Slams Atlanta Again

By Tony Wilbert

Last year, Atlanta’s commercial real estate professionals bristled and cringed at what Emerging Trends in Real Estate had to say about the metro areas real estate market. Expect them to be much more upset this year when ULI and PwC present Emerging Trends in Real Estate 2009.

The newest version of the report slams Atlanta’s commercial real estate market and questions local developers’ decision-making ability. The take-away: Investors should stay away from Atlanta property and place their money elsewhere.

The annual report from the Urban Land Institute and PricewaterhouseCoopers, is considered by some as the Bible in forecasting for the commercial real estate world. On Nov. 11, ULI and PwC will present its findings at the Cobb Energy Performing Arts Centre.

Last year, even Jeff DuFresne, executive director of ULI Atlanta, took umbrage with Emerging Trends’ characterization of Atlanta as “chronically overdeveloped.” DuFresne shot back at the report, telling Kevin Duffy of The Atlanta Journal-Constitution: "I just don't think the report fully reflects what's going on here. We're certainly not 'chronically overdeveloped.' "

A.J. Robinson, president of Central Atlanta Progress, was miffed by the report’s characterization that nothing was happening on the residential front downtown. "I would be embarrassed if I was ULI. The synopsis is 10 years old, not only in terms of what it said about downtown, but even a lot of other coverage of the marketplace," he told Duffy.

The 2009 report should prove much more irksome to local developers and boosters. Overall, Atlanta ranks 12^th out of 15 major markets (ahead of only Philadelphia, Miami and Phoenix).

Worse yet, Atlanta ranks last, as an investment market for industrial real estate, hotels, retail centers and second-to-last for investments in apartments and office buildings, based on the attractiveness to buyers seeking properties in a specific market.

“2009 promises ‘tough times’ as an overbuilding hangover and slipping demand roil investors,” the report says of Atlanta. “The regional economy depends on high growth, but lacks energy and high-tech engines that currently help sustain other markets. It’s no time to buy in any of the property sectors.”

And in a sentiment sure to be debated by Chamber of Commerce types, Emerging Trends said metro Atlanta’s problems with traffic, lack of water and oversupply have lessened its famed quality of life that attracted tens of thousands and new residents over the past decade. “The reason for relocating here will no longer be a more relaxed, cheaper quality of life.”

Respondents to Emerging Trends saved their most-graphic language for the Buckhead office market, where several developers are about to deliver new office towers, most of them with large amounts of spec space. Construction commenced on the newest building, Phipps Tower (rendering at left), with no leases signed. “Office developers ‘play a game of chicken’ in Buckhead, where ‘a bloodbath is coming.’ ” (This phrase was first heard at Ackerman's Investment Conference in the spring.)

People cannot fathom why Buckhead, which has an annual net absorption of less than 500,000 square feet of office space, has 2.5 million square feet under construction. “The ‘goofy’ activity ‘defies description,’ ” one responded said of all the spec office development in tony Buckhead.

With that assessment, it’s no wonder ULI and PwC have relocated the annual Emerging Trends event from Buckhead to Cobb County last year.

Atlanta Real Estate Parties Like It's 1999

By Tony Wilbert

ATLANTA (Nov. 6, 2008) - Atlanta commercial real estate's A-list came out tonight for a happy hour to remind each other that "The Glass is Half Full." Hal Barry, whose Barry Real Estate Cos. organized the event on Piedmont Park in Midtown, said the crowd would be huge.

Developers, brokers, asset managers, investors and various service providers came to Park Tavern for the event, word of which was spread via e-mails from Barry and the Georgia chapter of the National Association of Industrial and Office Properties. The party competed for guests with an event at Cousins Properties' Terminus development in Buckead. But the Midtown event had a band, rumors of a comedian and one tall guy who might have been played professional basketball at some point.The party also harkened back to 1999, when dot-coms fueled record office absorption in Atlanta, positioning developers in the driver's seat.

"Lance (Patterson, Barry president and COO) told me we might have 2,000 people here and the TV news," Barry told Brian Hogg of Portman Management. At that point, the crowd appeared to have topped several hundred."This is a good idea; we needed this," Hogg said.

Hogg would know. He has been through six down-cycles in commercial real estate, including one in 1961, when he graduated from Georgia Tech and headed into an uncertain job market. "This one is different; it's not like the others," Hogg said. It's also hard to predict when the cycle will end.

Hogg said Donald Ratajczak, a well-respected economist, recently told a group not to look for the stock market to return to 2005 levels until 2012 and the housing market not to return to '05 form till 2015.

Others in attendance said the commercial market has soured quickly. "I went from having a great year to a good year," said Cynthia Robinson Alexander of Comstar Real Estate Services Inc. Alexander is very well known in the industry for her former role as head of Sumitomo's real estate arm in Atlanta when it owned One Atlantic Center, a.k.a IBM Tower.

By 7 p.m., the lines at the cash bar were six deep and real estate under the tent was getting harder to come by as survivor Dick Bowers held court and Vance White of White Properties talked about his new project in Hapeville.

Up next for Atlanta's commercial real estate industry: Emerging Trends in Real Estate 2009, which takes place at 7:30 a.m. Nov. 11 at Cobb Energy Perforning Arts Centre. Jonathan Miller of Urban Land Institute will be the keynote speaker, and no doubt, ULI Atlanta District Council President Jeff DuFresne (shown at left at The Glass Half Full party) will be in attendance. Cousins Properties' Tad Leithead will moderate a panel with participants Rick Bradshaw of Bullock Mannelly Partners, Jason Tessler if ING Investment Management, Eugene James of Metrostudy and Lyle B. Fogarty of Crescent Resources. 

Trump Plans "Greatest Golf Course in the World"

By Tony Wilbert

ATLANTA (Nov. 4, 2008) - While Atlanta waits for Donald Trump to officially start his Trump Towers in Midtown, the world's best-known developer is celebrating in Great Britain.

On Monday, officials in Scotland approved Trump's plans for a $1.6 billion project on the country's northeast coast that would include two championship golf courses, hundreds of homes and a 450-room hotel. The ever-modest Trump has said the project will be anchored by "the greatest golf course in the world."

Environmentalists aren't too happy about Trump's plans for the 1,400-acre site, according to an article in The Washington Post. "It's one set of rules for other developers and another set for Trump," Jonny Hughes of the Scottish Wildlife Trust told the Post.

That said, the project would create 1,400 permanent full-time jobs and generate more than $100 million annually for the economy of northeast Scotland, according to the Post article.

The good news out of Scotland comes as Trump faces a major challenge in Chicago, where he has asked banks for more time to pay back a loan on Trump International Hotel & Tower, his 92-story tower. "The market in Chicago is very bad at this moment," Trump told Bloomberg.

Only time will tell whether Trump can get the mega-development financed in this tough credit market or when he'll actually start construction. His site in Atlanta where towers are slated to rise remains an ugly surface lot. Let's hope he doesn't wrap the picturesque site in construction fencing and let it lie fallow for months and months.

 

With ULI Gloom Gone, Atlanta Looks to Party

By Tony Wilbert

ATLANTA (Nov. 3, 2008; updated at 1 p.m.) - Barry Real Estate, NAIOP and others apparently are tired of all the bad news and negative headlines centered on real estate. And they've come up with a solution to forget about it all - for a night at least.

Barry Real Estate is spearheading an industry-wide happy hour this week designed to remind people in commercial real estate that "The Glass is Still Half Full!" Barry's efforts have been endorsed by the Georgia chapter of the National Association of Industrial and Office Properties (NAIOP), which sent an e-mail to its members (including me), urging them to attend.

The Atlanta event will be a nice counterpunch to last week's ULI Fall Meeting in Miami, where doom and gloom hung out for four days and dominated the conversation.

"Given the troubled state of the financial and real estate market, we at Barry Real Estate Cos. came up with the idea that it would be appropriate and the right thing to do to organize a real estate industry-wide happy hour just to do a little networking and lift everyone's spirits," Barry Real Estate projment manager Steve Tedder writes in his e-mail invite to brokers, developers, financiers, contractors, engineers, appraisers, mortgage bankers, architects and others. (Real estate PR was not mentioned, but in a follow-up e-mail exchange, Tedder said we also are welcome.)

"The premise," Tedder continues, "is that we could all use a little good news and some relief these days. Consequently Barry has arranged for a real estate outing with entertainment, including a live band and comedians." (In the photo at left, Tedder is the tall guy with the white-checked shirt.)

The industry-wide Happy Hour will have a cash bar, which will help ease the pain. Skyline Views will be there and will report back on this good idea. The industry needs a pick-me-up.

Here are the details: WHAT: Industry-wide Happy Hour WHO: Anyone in or affiliated with the commercial real estate industry WHERE: The Park Tavern at Piedmont Park WHEN: 5:30-7:30 p.m. Nov. 6; WHY: Have you seen the paper lately?