Skyline Views

Like a Nimble Boxer, Charlotte Has Right Mix to Compete for Titles in Several Weight Classes

CHARLOTTE, N.C. (March 25, 2015) - Former Atlantan Brian Leary is doing exactly what Crescent Communities hired him to do - lead its charge into new urban commercial and mixed-use developments. 

Or, as the Charlotte Observer puts it, "Crescent Dives Head First into Urban Development." That's the headline of a story based on an interview of Brian by Observer's correspondent Ely Portillo. Click here to read the story.

Portillo asked to interview Brian, a client of The Wilbert Group, after reading this thought-leadership piece Brian wrote about why Charlotte has emerged as a favorite market for investors, developers and people and businesses seeking a new home.

Like a Nimble Boxer, Charlotte Has Right Mix to Compete for Titles in Several Weight Classes

By Brian Leary, President, Crescent Commercial/Mixed-Use

When I think of Charlotte these days, the image that often comes to mind, believe it or not, is that of legendary fighter Sugar Ray Leonard. Lean, fleet of foot and possessing a seemingly bottomless supply of energy, the North Carolina-born boxer used those attributes to scale the heights of the boxing world.

Similarly, the Queen City is emerging as a championship economic player through a potent combination of a nimble, business-friendly environment and a vibrant financial and millennial scene, and the rest of the world is taking notice.

Earlier this month, a Bloomberg News article detailed how commercial real estate developers and investors from across the globe are betting on Charlotte and a handful of other “secondary markets” across the U.S. because their long-term job markets, and thus the demand for commercial space, look so promising. Indeed, the reasons for optimism about Charlotte’s ability to maintain and expand its economic momentum are ample and include the following:

• Ongoing Appeal to the Financial Sector. Charlotte rode to economic prominence because of the banking industry and, with approximately $2.2 trillion in assets under control, remains the second-largest banking center in the U.S., behind only New York City. Looking ahead, Charlotte figures to remain a hotbed for the financial services sector. Its warm weather and low cost of doing business — only 86 percent of the national average according to a recent report — offer a appealing alternative to firms considering space in the Northeast, and its location in the Eastern time zone gives it a big leg up on the West Coast, where financial workers have to be on the job well before dawn to be ready when the markets open.

Furthermore, the top-notch talent produced by the many colleges and universities in Charlotte and the Triangle area offers an additional lure to financial firms contemplating relocations, and much of that talent is also fueling an energetic startup scene related to the financial services sector.

• High in the Sky. The second-largest hub for American Airlines, now the world’s largest airline after its merger with US Airways, Charlotte Douglas International Airport is a major boon to the city’s economic development efforts and has the lowest landing fees of any major U.S. airport. The airport offers non-stop service to more than 150 destinations, nearly 40 of which are international — tantalizing numbers for the business community. Put another way, the Queen City offers nearly unbeatable and affordable access to the rest of the globe.

• A Hearty Embrace of Transit. Although it resides in the very heart of the car-centric Southeast, Charlotte has been progressive in its adoption of commuting options in the form of light-rail and streetcar transit. The nearly 10-mile light-rail line that connects Uptown and the burgeoning South End neighborhood, the just-begun network of streetcar lines, and the expansion of the Lynx light-rail system to University Park to the north signal to companies — and to young workers that crave a location in which they are not completely reliant on cars — that Charlotte is dedicated to offering the best quality of life possible.

• Millennial Growth. According to a recent report by PricewaterhouseCoopers and the Urban Land Institute, Charlotte’s number of millennial residents (those ages 20-35) has grown by 23.4 percent over the past half decade. That’s the highest increase of the major U.S. metro areas and means the city can offer employers a large supply of the tech-savvy workers they desire.

• A Good Bargain. As noted above, the cost of doing business in Charlotte is well below the national average, and residents of the city also benefit from a relatively inexpensive cost of living and high quality of life. Similarly, real estate investors are attracted to the comparatively low prices of commercial properties in Charlotte, which offer them the prospect of greater returns than comparable assets in gateway markets such as New York or San Francisco.

Simply put, Charlotte’s affordability will continue to serve as a magnet for both businesses and residents, as well as the investors needed for a strong commercial real estate sector.

• Location, Location, Location. Charlotte itself is a beautiful city, but its appeal grows even more when you consider the easy access it offers to both the mountains and the ocean. Again, this dynamic is bound to exert a powerful influence when businesses are considering locations that will cultivate a happy workforce and young college graduates are contemplating where they would like to move.

Add these factors up, and it’s easy to conclude that the Queen City is at the beginning of a long, sustainable period of serious economic expansion. Companies will locate and grow here; construction cranes will dot the skyline; and, just as Sugar Ray was in the 1980s, Charlotte will be in championship form for a long time to come.

Brian Leary is president of Crescent Communities’ commercial and mixed-use business unit. 

Popular Restaurant Stands Tall in Face of Wrecking Ball

ATLANTA (March 24, 2015) - A sole yellow backhoe is making quick work this week of the Garden Hills Shopping Center, doomed by a December 2013 fire that ravaged the single-story structure that once housed the type of neighborhood cinemas that today are hard to find.

The demolition began March 16, as first reported by Buckhead View. The site run by John Schaffner secured a pretty decent no-comment comment from the center's owner. Read that here, and scroll down for the entire story and update posted on buckheadview.com.

I stopped by the site today to see whether the demo crew skillfully tore down the part of the center that literally was attached to the popular La Fonda location and Fellini's outlet. As you can see in this photo, Atlanta Demolition did a good job of ripping the old center away from La Fonda.

The Chamblee, Georgia-based firm has worked several delicate and high-profile demos, including the recent implosion of the Children's Healthcare of Atlanta Tower that used to stand on North Druid Hills, right off I-85. CHOA and Gilbane contracted Atlanta Demo to implode the well-known building in a job valued at $3.3 million.

- Tony Wilbert

 

Published on March 16th, 2015 |

Long-delayed Garden Hills shopping center demolition begins

(Editor’s Note: This story has been updated March 17 with a brief  response to questions from BuckheadView regarding the future of the Garden Hills shopping center property)

After many months of delays, the demolition of the Garden Hills strip shopping center, at 2815-2839 Peachtree Road N.E., has finally begun with a flurry of activity on the site as heavy equipment tore into what once was the home of the former Garden Hills Cinema art theater and workers prepared for the delicate job of separating the fire-destroyed shops from the buildings that house La Fonda and Fellini’s restaurants.

Equipment was moved in on Friday March 13 and Saturday to get ready to demolish the Garden Hills shopping center. The entire property also was fenced in and a dust sheet put in place.

The former longtime home of Peachtree Bikes, Flemings custom leather goods, Witzlib Fitness Sudio and the long-closed Garden Hills Cinema may soon be replaced—at least temporarily—by a vacant grassy patch after a December 2013 fire left the center declared a total loss.

On Monday March 16 afternoon, workers where on the roof working to separate the strip retail center building from the the La Fonda restaurant, which is not owned by Brand Properties and is not being torn down.

The fire, which broke out in the Peachtree Bikes store around 8 p.m. on Dec. 4, caused about $1.4 million in damages, according to early estimates, including smoke and water damage to five neighboring business in the Garden Hills strip shopping center. All the affected businesses were closed at the time of the fire.

The shopping center, except for Fellini’s and LaFonda restaurants, is owned by a subsidiary of Brand Properties (GardenBrand LLC) and has been totally empty and a community eyesore since the fire caused all the retail tenants at the time to close or move their businesses.

After some nine months, a demolition permit for the property was applied for and granted by the city of Atlanta and Brand Properties

The front of the retail shops now have chain link fencing separating the building from the sidewalk and fabric shielding.

management assured BuckheadView the demolition would proceed—certainly by the end of 2014.

On March 9, BuckheadView sent an email to Brand Properties Chairman Brand Morgan and President Michael Hoath asking what was happening, since demolition permits are only good for six months and the six months seemed to be up.

Morgan responded to BuckheadVew by email, saying, “We started the interior demolition in the Fall and we have six months to complete our

work. We will be starting our exterior demolition very shortly, within weeks.” The work obviously began in earnest Monday (March 16).

Morgan also offered to answer questions from BuckheadView about the property and demolition plans if they were presented in writing, which BuckheadView did last Friday (a list of 12 questions). As of the posting of this story, Morgan has not yet responded to those questions.

R. Brand Morgan

Update March 17, 2:30 p.m.: Morgan finally replied to BuckheadView Tuesday afternoon (March 17) regarding the questions he had asked be submitted to him. Morgan’s email stated: “I reviewed the questions below and we are not to the point where it would be prudent to share

On March 17, workers began the delicate job of separating the Garden Hills center shops from the La Fonda restaurant building, as seen from Peachtree Road.

any redevelopment plans. We will be getting with the neighborhood at the appropriate time and look forward to working with them during the process.” One  of he questions from BuckheadView that  Morgan refused to answer dealt with the demolition timeline. However, Morgan apparently told members of the Garden Hills Civic Association the demolition will take 6-8 weeks.

Both the city of Atlanta fire investigators and the company that held the insurance on the building declared the strip center a total loss, but Brand Properties said it had trouble collecting the insurance money and that delayed moving toward demolishing the center until last September.

The December 2013 fire was confined to the Peachtree Bikes store. However, neighboring businesses were also affected, including longtime upscale leather goods merchant Flemings, a chocolates retailer Cacao, dog retail shop Woof Gang Bakery & Grooming, Witzlib fitness center and SixT car rental agency.

“The cause of the fire was the failure of an extension cord inside the bike store,” Captain James Oliver, of the Atlanta Fire Rescue Department’s Fire/Arson

Investigations division told BuckheadView via email in June 2014.

Then on March 19, workers collapsed the roof on the store next to LaFonda in preparation of tearing down the shopping center.

Peachtree Bikes has relocated a short distance up Peachtree Road to a two-story building at 2883 Peachtree and spent about $50,000 to renovate that house. However, the Garden Hills

shopping center had been its home since the business started, and owner Mike Wagamen may want to move the business back there someday.

Flemings has moved to a new location at The Factory, 2148 Hills Avenue, Suite M, near the Peachtree Battle Shopping Center. Cacao is directing its customers to its Virginia Highland store location. SixT car rental agency, which had been operating out of a trailer in the parking lot behind the shopping center, has since moved further up Peachtree Road to a hotel location. Woof Gang Bakery & Grooming has just remained closed all this time.

Demolition of the building that formerly housed the Garden Hills Cinema began early in the morning of March 18.

Witzlib Fitness Studio, which had been a tenant in the shopping center from 2009 until the fire (and had just expanded its space in 2013) has relocated to 365 Peachtree Hills Avenue, next to ADAC, after it was closed for three months in early 2014.

Last October, Brand Properties Chairman Morgan told BuckheadView that the fire-damaged Garden Hills center, would likely be demolished by the end of 2014. “We would like to get it down and out by the end of the year.” That did not happen.

Then on Jan. 4 Morgan informed BuckheadView, “We are making progress on the demolition at Garden Hills. There have been no surprises

By late in thre morning all that remained was remnants of the movie screen, the stage and the wall behind them.

involved with the demolition; the holidays just set us back a few weeks.” The demolition permit had been approved in August or September by the city.

The property will “just be a land investment for us for the time being,” Morgan told BuckheadView in October. He said there has been lot of interest in the property “but there is nothing

firm to discuss at this time.” He did not say if the interest was from potential tenants or for the sale of the property to another owner.

Once the strip center is demolished, the next round of anticipation and anxiety will involve what the future of the site is likely to be. Will it be a multi-story development with retail on the ground floor and either office space or residences above? (There was a plan for that in the past.) A new retail strip shopping center? Or a development of expensive townhomes?

By noon on March 18, all that remained of the Garden Hills Cinema was the marque on Peachtree Road, rubble and memories.

If there is retail space, what will the retail mix be? Is it possible a neighborhood food market might return there as Shuman’s Market was many years ago? Might there be a neighborhood deli or meat market? What about a hair salon and/or barber shop? The expectations are endless.

One thing for sure, it is highly unlikely there will be single-screen art theater at that location, ever again. All that is left of the Garden Hills Cinema today are memories of the past. To read some of those memories from Buckhead residents, click here.

(Editor’s Note: BuckheadView would like to know what residents in the neighborhood would like to see replace the present Garden Hills shopping center once it is torn down. Either submit your suggestions as comments to this story email them to [email protected]. Thanks)

 

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Cousins Properties' Thad Ellis Leads REIT's New Development Charge in Charlotte

ATLANTA (March 20, 2015) - It's great to see Thad Ellis, a friend and Delaware native, leading Cousins Properties' new development effort in Charlotte. It comes as The Wilbert Group ramps up its efforts in the Queen City, led by our work with Crescent Communities.

The Wilbert Group would be conflicted out of working with Thad and Cousins in Charlotte because of our growing relationship with Crescent. That said, we wish our buddy great success - just not when competing head-to-head with Crescent for raw land or prize tenants.

- Tony Wilbert

Here's the scoop from Will Boye of Charlotte Business Journal.

Cousins Properties looking for development opportunities in Charlotte

Mar 20, 2015

 

Thad Ellis, by Bard Wrisley

"We didn’t want to just stick our toe in the water," Ellis says of the company's acquisition of the Fifth Third Center uptown.

Cousins Properties Inc. has no regrets about the price it paid to acquire the Fifth Third Center building in uptown Charlotte last year, but now the Atlanta-based real estate investment trust is shifting away from acquisitions and focusing on development opportunities in Charlotte.

That’s what Thad Ellis, a senior vice president with Cousins, told me in an interview this week. Ellis oversees the Atlanta, Dallas, Charlotte and Raleigh markets for Cousins, which acquired the 30-story Fifth Third Center last year for $215 million, a record price on a square-foot basis for a Charlotte office property.

Cousins owns 17 properties totaling 16.2 million square feet in Charlotte, Atlanta, Dallas, Houston and Austin, Texas. That includes the nearly 1.1 million-square-foot Gateway Village complex in uptown Charlotte, which Cousins developed and co-owns with Bank of America Corp.

During Cousins’ fourth-quarter conference call last month, CEO Larry Gellerstedt said the company won’t be a big buyer in 2015 due to the rising prices for office properties. Ellis echoed that sentiment this week but said the company is actively looking for development opportunities in Charlotte and is happy with its purchase of the Fifth Third Center, where a new tenant recently signed and an existing tenant expanded. Fifth Third Center is approximately 84% leased.

Following are excerpts from our conversation:

Cousins purchased Fifth Third Center last year for a big number. How do you feel about that purchase today?

We’re very pleased. We’re very bullish on Charlotte as a corporation. We’ve been trying for several years to get back in the market in a meaningful way. There’s no question Charlotte’s got some terrific dynamics. It’s an inexpensive place to do business. It’s one of the leaders in the Southeast. The airport is only going to be more of a draw. The fact that you all have a plan for light rail and transit and you’re executing on it puts you way ahead of other Southeastern markets. I know everybody loves to get hung up on millennials, but you walk through downtown Charlotte, and it’s very vibrant and youthful. And people want to live in Charlotte because of the cost of living and the quality of life. All of that is a real plus for us. Did we pay a high number to acquire Fifth Third? History will dictate, but we felt like it was a very sound investment because of who the customers are, the quality of the real estate, where it’s located. And we really wanted to get back into the market in a meaningful way. We didn’t want to just stick our toe in the water.

How do the sales and prices for office properties here compare with what you’re seeing in other markets?

Charlotte is on everybody’s radar, so there are no secrets, and there’s no one stealing anything on acquisitions. I’m not going to be so bold to say that we won’t acquire additional trophy assets in the next 12 to 24 months, but I think you’ll see us have a lot more success and focus on new development. Not necessarily speculative development, but hopefully with anchor tenants and build-to-suits. We just think for the adjusted risk-reward, right now we’re in a cycle where new development is more attractive to us than acquisitions. Higher projected yields.

Do you see any opportunities in Charlotte for development?

We do. We’re focused on the Charlotte urban area. We would include SouthPark in that. Everything from the central business district to South End on into SouthPark. It’s vibrant, job growth is healthy, the multifamily industry seems to be leasing up well. All things that are good indicators. It’s real favorable right now.

How’s the leasing activity at Fifth Third?

If there has been a surprise for us in Charlotte, it’s that the velocity of deals in the central business district has been OK. I wouldn’t give it strong marks. And the deals have been smaller than we would have anticipated. There’s not a lot of full-floor users and larger in the market today. Most of that activity seems to be more in SouthPark and elsewhere. But we’re very happy with the creditworthiness of the tenants. And with the deals that we plan to announce, it also allows us to break up some of those floors and we can do smaller deals and be that much more competitive. We’re very pleased with where we are at Fifth Third.

 

Houston's Gas Pains Hit Office Market Hard

This post is courtesy of Ralph Bivins, the king of real estate news in Houston. Be sure to subscribe to his email blasts here. His story is based on industry-leading research from JLL, a client of The Wilbert Group.

Since Jan. 1, Over 2.5 Million SF of Space Put Up for Sublease in Houston, Says JLL

HOUSTON - JLL reports that 2.5 million square feet of sublease space has come on the office market so far this year. About half of the sublease space is located in west Houston, where the Energy Corridor is located.

BP, StatOil, and ConocoPhillips have all placed large blocks of excess space onto the market, this year, JLL says. Other reports say Sasol and Worley Parsons are subleasing big blocks.

A number of energy firms have announced layoffs and reduced capital expenditure budgets by billions as oil prices have declined. West Texas Intermediate has fallen from $108 a barrel last summer to less than $50 a barrel today.

According to a JLL report counting full-floors of space put on the sublease market since Jan. 1, including some 883,000 square feet of sublease has been offered in downtown Houston and 664,000 square feet in the Energy Corridor/Katy Freeway.

Another report from CBRE says 5.3 million square feet of sublease space on the market.  Houston leads the nation with 16.5 million square feet of office space under construction and it is 65 percent pre-leased.

Last year was an outstanding year for the Houston office market, which racked up 5.5 million square feet of absorption in 2014, CBRE said.

UPDATE: Longtime AJC Business Editor to Retire July 1

By Tony Wilbert, The Wilbert Group

SAVANNAH (March 5, 2015) - Henry Unger, the longtime AJC staffer who covered Coke like no other and served as Sunday business editors and other positions, is leaving the paper. We hear he'll head to the beaches of Miami after retirement.

Henry, who joined The Atlanta Journal-Constitution in 1990 from Los Angeles, back when it was two papers, told senior management of his major decision on Wednesday.

Charlie Gay, who oversees business coverage at the paper praised Unger's commitment to journalism and the AJC.

"I think it’s a big loss for business journalism not only at the AJC, but in metro Atlanta and Georgia. Henry’s 25 years of expertise and countless relationships in the business community can’t be easily replaced. But I’m happy for him personally. We’ve worked together for well over a decade and it’s been a great ride," Gay said.

As far as what happens with the position and the 5 Questions for the Boss column, too early to say. We’re just starting to discuss internally. But Henry’s work will be replaced in some fashion, even if his knowledge base and outsized personality can’t be

More to come, after we catch up with Henry.

Planned Prominent Peachtree Project Adds New Use

By Tony Wilbert, The Wilbert Group

ATLANTA (March 3, 2015) - Like a healthy baby born at Piedmont Hospital across Peachtree, Cornerstone's proposed medical development in south Buckhead is alive and kicking - and growing.

Cornerstone affiliate CDP Medical Building LLC just filed plans to add an assisted living/nursing home component to its proposed Cornerstone Medical Center, a 188,000-square-foot medical office building that would rise where a popular-but-hard-to-access Chick-fil-A outlet and a killer liquor store stand now.

Specifically, CDP Medical Building filed for a Special Use at 1875 Peachtree Road, where today you'll find a shuttered SunTrust ATM, long-closed Harry's in a Hurry location and a handful of homeless people. The parcel at 1875 Peachtree is owned by Jim Cumming, who also owns a couple of other adjacent properties such as the always-busy Texaco at 1888 Peachtree that typically sports metro Atlanta's highest gas prices.

To date, Cornerstone, founded by Bob Kern (who, sadly, passed away on New Year's Day), has managed to assemble four parcels (1875, 1891, 1895 and 1901 Peachtree) comprising 3.25 acres, including Peachtree Cleaners & Laundry and Peachtree Road Liquor Shore. In an August 2013 letter to the city's Bureau of Planning, Cornerstone's law firm Holt Ney Zatcoff & Wasserman, LLP evokes a 2006 rezoning of three of the four parcels for an ill-fated two-building development, Peachtree at Collier. "To the best of knowledge, the Peachtree at Collier redevelopment project has never commenced," the letter states. (If they drove by the site, they could confirm this.)

The developer's attorneys also state that the "Applicant is leaving a large space to the rear (and east) of the site to provide ample open space to our residential neighbors (including me)." My Brookwood Hills neighbors will be happy to hear this, but they might want to head to the April 2 meeting of the Zoning Review Board to make sure.

You can download the letter here.