Atlanta Report: Still Steady

Atlanta Construction Market Should Keep Humming Along in ‘08

By Debra Wood

As America’s fastest-growing metropolitan area, Atlanta continues to experience robust construction activity, despite the current residential downturn.

“The market is vibrant,” says Bill Pinto, president of Hardin Construction Co. of Atlanta. “There is a slowing in the residential markets, but office building and hospitality work is showing strength. Retail continues and health care and institutional are still strong.”

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Hardin expects to complete 10 Terminus Place, a 19-story, 142-unit residential condominium tower atop a 12-story parking deck, later this summer. The project is being built at Cousins Properties of Atlanta’s $660 million, 10-acre Terminus mixed-use development.

Millard Choate, president of Choate Construction Co. of Atlanta, also says the market is moving well in all commercial areas, including institutional. He adds that his company is building a student housing complex and 868,994-sq-ft parking deck at Kennesaw State University.

“The general economy is good, and there has been some pent-up demand and an influx of people moving into Atlanta,” Choate says.

Atlanta gained 890,000 residents from April 1, 2000, to July 1, 2006, according to the U.S. Census Bureau, placing the community of 5.1 million people at the top in terms of growth among the country’s 361 metro areas.

“The population shift has put demand on schools and infrastructure and all manners of roads and sewers,” says Mike Dunham, executive vice president of the Georgia Branch of Associated General Contractors in Atlanta.

Others see continuing opportunities as well.

“Atlanta seems to be faring well, although it’s no secret the condo world is probably crashing with an oversupply,” says Jeff George, vice president of the Atlanta Commercial Group for Balfour Beatty. “Mixed-use projects that combine retail and living quarters are still doing well, but stand-alone condos are not as attractive.”

Dave Schoendorf, senior vice president and Atlanta division manager for R.J. Griffin & Co. of Atlanta, agrees, saying that “it looks like condos have finished their tremendous run in Atlanta for the time being.”

In 2007, the company started the Atlantic, a $129 million, 46-story condominium for Novare Group and Atlantic Station, both of Atlanta, and the $94 million, 20-story Brookwood condominium for Regent Partners and Urban Realty Partners, both of Atlanta. The contractor plans to begin construction on the $150 million Trump Tower in 2008.

Schoendorf says he expects the hotel market to pick up, but office buildings “look like a slow mover until 2009, yet our work load is up in that sector.”

For example, R.J. Griffin expects to start the $120 million Metropolitan Life Office Building in 2008.

Mickey Gamble, vice president of Bovis Lend Lease in Atlanta, cites retail, mixed-use and hospitality projects as bell ringers. The company is building the 26-story St. Regis Hotel and Residences in Buckhead.

Expressing a bit of caution, Bill Anderson, president of Associated Builders and Contractors of Georgia in Atlanta, says he doubts the market will experience the double-digit growth it has in the past few years, due to national issues such as interest rates, oil prices and the depressed housing market, as well as local concerns such as traffic and water supply.

“There is momentum going into 2008, but there probably will be a modest pullback,” he says.

Retail

Retail remains a growth market, but industry insiders say it could slow if the housing market continues to falter.

“If the residential stays down for more than a year, we will see a gap that will show up 18 to 24 months from now,” George says.

Several projects along the Georgia 400 corridor north of Atlanta are on the books. The Griffin Co. of Atlanta planned to break ground late in 2007 on Centennial Walk, a 26-acre master-planned office, retail and residential development. The Sembler Co. of St. Petersburg, Fla., announced plans for Dawson Marketplace, a 900,000-sq-ft retail center in Dawsonville.

Balfour Beatty is working on a $20 million contract at the Prado, a 345,000-sq-ft redevelopment project in Sandy Springs for Sembler. The new facilities are set to open this fall.

Ben Carter Properties of Atlanta has taken a different approach at the $1.2 billion Streets of Buckhead, where existing restaurants and bars are being relocated into a new center spread across seven city blocks. The mixed-use Streets project includes four hotels, 300,000 sq ft of office space and 1,000 residential units on top of 500,000 sq ft of retail and restaurants. Balfour Beatty is working on the first $130 million phase.

Mixed Use

“The trend is mixed use, and the projects are getting bigger,” says George with Balfour Beatty.

Batson-Cook Co. of Atlanta began construction in March on the $35 million Astoria at the Aramore in Buckhead for Kairos Development Corp. of Atlanta. The mixed-use center includes a 289-car, seven-level parking garage; 6,200 sq ft of retail; 30,000 sq ft of office space; and 12 stories of residential condominiums. The contractor expects completion by August.

Opus South Corp. of Atlanta is building the $500 million mixed-use Suwanee Gateway development in Lawrenceville. The project begins with approximately 580,000 sq feet of office including a 125,000-sq-ft spec building and 350,000 sq ft of retail. Future phases will add 140 town homes, 340 apartments and 220 senior living units, says Marty McFarlane, senior director of real estate for Opus South.

Senior Living, Hospitality

Senior living projects also are rising from the ground.

“The baby boomers are coming along, and there is demand for high-end community care retirement communities,” Bovis’ Gamble says.

Bovis is working on a $100 million, 27-story expansion of Lenbrook’s continuing care retirement community in Buckhead.

Choate is building the 19-story, 310,000-sq-ft Parc at Buckhead for Parc Senior Communities. The 183 luxury apartments will range from $3,300 to $10,000 per month.

Hospitality continues to provide opportunities to contractors.

Hardin broke ground in January 2007 on the W Atlanta Downtown Hotel and Residences at Allen Plaza for Barry Real Estate Co. of Atlanta. The 460,000-sq-ft property includes 15 levels of hotel units and 15 levels of condominiums. Hardin expects to complete it in winter 2009.

Hardin also is building the $100 million, 21-story, 304-room Palomar Hotel on the campus of the Georgia Institute of Technology for Kim King & Associates of Atlanta. It is scheduled to wrap up in spring 2009.

Other projects

Hardin will start construction in early 2008 on a 29-story residential condominium building, One CityPlace, for Cousins Properties of Atlanta and The Related Group of Miami. Ultimately, Related plans nine buildings at CityPlace Buckhead.

Georgia Tech began construction in spring 2006 on the $80 million Nanotechnology Research Center. The 188,000-sq-ft, five-level structure features a 30,000-sq-ft, three-level clean room for bio and inorganic laboratory space. Whiting-Turner Contracting Co. of Atlanta should finish the building this summer.

Anderson of ABC anticipates school construction will remain active to keep up with the region’s population increases. AGC’s Dunham adds that even if some of that growth stops, a pent-up demand for new schools will keep contractors busy.

Turner Construction Co. of Atlanta is working on the Centers for Disease Control and Prevention’s $250 million, 12-story Roybal Campus Building 23. The 308,000-sq-ft project should wrap up in June 2010.

Holder Construction Co. of Atlanta began construction in September 2006 on a $130 million, 10-story addition to AmericasMart, which will provide additional exhibition space for home furnishings and apparel manufacturers. Completion is expected in August.

The City of Atlanta continues its water and sewer improvement projects. Ruby Collins/Reynolds/EPR joint venture is working on the $101.9 million Greensferry Sewer Separation & Water Main Replacement Project and the $79.6 million Stockade Sewer Separation Project. The partners include Ruby Collins of Smyrna, Ga.; Reynolds of Orleans, Ind., and EPR Environmental Pipeline Rehabilitation of Hoboken, Ga.

Rockdale Pipeline/Integral Municipal Services joint venture is completing the $93.3 million McDaniel Sewer Separation & Water Main Replacement. The team includes Rockdale Pipeline of Conyers, Ga., and Integral Municipal Services of Atlanta.

At Hartsfield-Jackson Atlanta International Airport, Austin Commercial of Dallas and PRAD Group of Atlanta are working on a $535 million consolidated rental care facility. Construction began in March 2006 and is scheduled to finish in early 2009.

Infrastructure Needs

Traffic and water have become two of Atlanta’s major problems and could limit further growth, Balfour Beatty’s George says.

Anderson predicts the construction market could face problems if the water shortage is not resolved by mid to late 2008.

“If there’s anything that can halt Atlanta’s (growth), it’s the water problems,” Dunham agrees.

Some developers are thinking ahead. Sembler located its $500 million, 54-acre, mixed-use TOWN/Brookhaven development between two MARTA stations and will provide regular shuttle service to the rail line. The project, with 600,000 sq ft of retail space, 150,000 sq ft of office space and 1,560 residential units, officially broke ground in October and is scheduled for completion in spring 2009.

Likewise, Hardin’s 3344 Peachtree project, a $139 million mixed-use office and residential tower in Buckhead, is located within walking distance to a MARTA station.

“Even the water crisis shortage may create opportunities for developers and contractors to build more environmentally friendly buildings and projects,” Anderson says.

Useful Sources:

Terminus
http://www.terminus-atlanta.com/

The Atlantic
http://www.novaregroup.com/news_05_02_06.html

Centennial Walk
http://www.centennialwalkroswell.com/

Streets of Buckhead
http://www.streetsofbuckhead.com/

One CityPlace
http://www.cityplacebuckhead.com/

Suwanee Gateway
http://www.opuscorp.com/-ProjectDetail/index.html?id=5140

Nanotechnology Research Center
http://www.facilities.gatech.edu/dc/cp_result.php?id=21

Hartsfield-Jackson Atlanta International Airport, Consolidated Car Rental Facility
http://www.atlanta-airport.com/