Ohio Teachers markets Crown Pointe Center
Atlanta Business Chronicle - November 21, 2003 by Jarred Schenke
Another of Atlanta 's trophy towers is getting a for sale sign. Well, two actually.
The two-building Crown Pointe Center office park is being put on the market for an undisclosed amount of money, said Will Yowell, senior vice president with CB Richard Ellis Inc. in Atlanta.
Yowell and team member Justin Parsonnet, senior associate at CB Richard Ellis, have been tapped by Crown Pointe's owners -- the State Teachers Retirement System of Ohio -- to market the buildings. Both buildings are about 80 percent occupied, Yowell said. According to Dorey Cos.' Web site (www.FirstCLS.com), 1040 Crown Pointe Center is 221,000 square feet and has 60,000 square feet vacant; and 1050 Crown Pointe Center is 270,000 square feet and has 71,400 square feet vacant.
According to real estate tracking firm Databank Inc., 1040 is valued at $28.5 million and 1050 is valued at $26.9 million by DeKalb County . That equates to roughly $112 per square foot. Yowell said there is no significant rollover and sublease at the buildings. Teachers of Ohio also is including contiguous land as part of the package, land that has been slated for a 1060 Crown Pointe Center for a number of years.
"Quite frankly, this could be developed into a mixed-use [project]," Yowell said. "There is potential to add retail or residential." Yowell declined to say why Teachers of Ohio -- which developed the buildings in the 1980s -- plans to unload the properties.
But Crown Pointe Center is part of a larger, growing trend of major office buildings heading to market. So far this year, $535 million in office buildings have traded hands in the metro area.
For example, the four-building Interstate Northwest is under contract with Atlanta-based The Simpson Organization for an undisclosed sum. Another $900 million in local office buildings is heading to market, Yowell previously told Atlanta Business Chronicle. The more notable towers include Capital City Plaza in Buckhead; Windward Pointe 200 and Windward Plaza 100 and 300 which may be sold to The St. Joe Co.; Powers Ferry Landing West; Perimeter 400 Center I and II; the four-building Plaza 400 complex of more than 180,000 square feet, which was under contract to an undisclosed buyer at press time; and, of course, The Proscenium, the 527,500-square-foot Midtown trophy tower that could reach a record sales price given its strong tenant base.
Although the Crown Pointe Center properties are two of the more prominent office buildings in the Perimeter area, some real estate experts say the retirement fund could have an uphill battle to find a buyer. That has a lot to do with occupancy. "There will be plenty of buyers who will want to look at that investment," said David Meline, senior director at Cushman & Wakefield of Georgia Inc.
But office sales this past year have fallen into two different categories: very stable buildings with long-term leases (such as Glenridge Highlands Two) or struggling properties that are purchased by opportunity buyers willing to take the effort to turn them around (such as Cumberland Office Park ).
Those properties that fall in the middle -- with market average occupancy levels -- haven't seen much activity in 2003, Meline said. Crown Pointe Center 's prospects depend on the price at which Teachers of Ohio is willing to part with the buildings. "We haven't seen bigger, major assets with occupancy issues sell," he said. "[ Crown Pointe Center ] is a sizable transaction with occupancy issues. That really hasn't transacted in Atlanta , so it's untested in terms of pricing."
Capital purchase Century Capital Inc. has purchased the Century Lakeview Park office building in Peachtree Corners for $3.6 million, said Dan Decraene, CEO of Advance Realty Services Inc. Decraene brokered the deal for Century and has been tapped to lease the building. The building, built in 1988, sits on 5 acres and is valued at $3.8 million by Gwinnett County , according to Databank. Century Capital will occupy 15,000 square feet in its new office building. The remaining 40,000 square feet is vacant, Decraene said.
The seller was Cologne Investors Inc., which had purchased the building in 1989 for $6.8 million, according to Databank. "We're going to be leasing the property at $17 a square foot, full service," Decraene said. "Our plan is to find tenants between 1,000 and 9,000 square feet. We're not trying to find one big tenant."
More center sales Three more shopping centers have changed hands in metro Atlanta . Equity One Inc. (NYSE: EQY) bought The Market at BridgeMill, a 78,654-square-foot neighborhood shopping center in Canton for $14.1 million Nov. 17.
The Market at BridgeMill, at the intersection of Bells Ferry and Sixes roads, is anchored by a 37,888-square-foot Publix and is 94 percent leased. The deal makes the third shopping center acquisition for Equity One in the Atlanta market this year, said Chaim Katzman, chairman and CEO. "The Market at BridgeMill exemplifies the type of neighborhood center we prefer to own, with a dominant grocer and a complementary mix of local tenants providing a range of daily goods and necessities."
Equity One will continue to look for investments in Atlanta , he said. Equity One isn't the only real estate investment trust buying in the market. Inland Retail Real Estate Trust Inc. has added another metro Atlanta grocery-anchored shopping center to its portfolio. Inland Retail purchased Clearwater Crossing shopping center in Flowery Branch for $13.3 million from Clearwater Crossing LLC.
The 90,566-square-foot shopping center, which opened in July, is anchored by a 54,166-square-foot Kroger. Other tenants at Clearwater Crossing, at 7380 Spout Springs Road , include Subway, Allstate Insurance, Great Clips and Beef O'Brady's. "Inland Retail has added another grocery-anchored center to what has quickly become the largest portfolio of open-air centers in the Atlanta market," said Joe Cosenza, chairman of Inland Real Estate Acquisitions Inc., which purchased Clearwater Crossing on behalf of Inland Retail. In total, Inland owns and manages more than 7.4 million square feet of retail space in greater Atlanta .
Margaret Staats of Redd Realty Services and attorney Kathi Tomcho of Arter & Tomcho LLC represented the seller in the deal that closed Oct. 31.Elsewhere, Gwinnett Walk shopping center sold for $2.9 million on Nov. 14.
Fitzwil Properties bought the 20,200-square-foot retail center, which is anchored by David's Bridal and is adjacent to Gwinnett Place mall.
Kris Cooper and Margaret Caldwell, brokers at Cushman & Wakefield's Atlanta office, represented the seller, Andrews Buckhead Properties LLP. Fitzwil Properties was represented by Coro Realty Advisors.
Plowin' through King Plow Art Center 's move toward becoming an office condominium project is partly there.
Bull Realty has sold 52,800 square feet at the West Atlanta office project that is considered "phase one." Sales have been to new tenants, officials said. The spaces at King Plow range from 1,000 square feet to 12,000 square feet and are priced between $200,000 and $1.6 million.
Officials with Bull Realty did not say what companies purchased the space.
Paying for Coke space A major office user could be headed over to the old Coca-Cola fountain beverage division space at 10 Glenlake North.
Sources told Atlanta Business Chronicle that Global Payments Inc. (NYSE: GPN) is negotiating for space in the 250,000-square-foot building leased by The Coca-Cola Co. (NYSE: KO).
Global Payments' main office is in the Corporate Square office park in the Perimeter area, but the company, which authorizes credit card and check retail sales, has been scouting the office market for up to 200,000 square feet, real estate sources said. Brokers involved in the deal declined to comment by press time.
Phyllis McNeil, a spokesperson for Global Payments, said the company was looking for new office space, but she declined to elaborate.
And Frank Farrell, senior marketing representative with Highwoods Properties Inc., said he was unaware of any pending deal for the Coke sublease.
"There are no done deals. We haven't seen a letter of intent. We haven't seen a sublease. Those are things I'd need to see before we'd consider a deal on third base," Farrell said.
Cobb office deal a sign market is warming
Atlanta Business Chronicle - November 14, 2003 by Jarred Schenke
After a chilly year for office sales, a sizable office park is under contract with a local real estate investor. The four-building Interstate Northwest Business Park is being acquired by Atlanta-based The Simpson Organization for an undisclosed amount of money. Interstate Northwest is located off Interstate 75 at the intersection of Powers Ferry and Windy Hill roads.
Although the deal won't break any price-per-square-foot records, some real estate experts say it is a further sign that the office sales market that's been in a state of deep freeze this past year finally may be thawing. "I think there's no question that in some of our markets ... we're starting to see quite a bit of more activity from the investment sales community," said Chris Becker, senior vice president of asset management at Trammell Crow Co. in Atlanta . Although he said sales have been slow in Atlanta this past year, he does see movement. "I think it's just pent-up demand," Becker said.
Interstate Northwest, once closed, will be part of a string of office sales this year in Atlanta , including Glenridge Highlands Two; Corporate Campus on Hammond Drive ; Royal Ridge on Great Oaks Way in Fulton County ; Peachtree Dunwoody Pavilion; and the 800 and 900 North Point Parkway buildings. Interstate Northwest is a single-story office complex with some warehouse space that totals 275,800 square feet. The current owner is a group of investors fronted by Lend Lease in Atlanta , officials said.
The Interstate Northwest sale was expected to close in December, said Chris Riley with Trammell Crow. Riley and Hal Breedlove have been tapped to sell the complex. Although the price was undisclosed at press time, Boyd Simpson, president of The Simpson Organization, said he was buying the complex for less than $50 per square foot. The complex fits into his portfolio, which is mainly opportunistic properties. Interstate Northwest has more than 95,000 square feet of vacant space, according to Dorey Cos.' Web site (www.FirstCLS.com).
"Our niche in the real estate business is the opportunistic space," Simpson said. "We think this particular property is well-priced, well-located, and will respond to rehabilitation and aggressive management and leasing." Simpson is purchasing Interstate Northwest through his TSO Real Estate Fund, a fund that already has $25 million in equity and plans to raise a total of $100 million to purchase ailing office properties. The Simpson Organization already owns more than $200 million in assets, including 1401 Peachtree Street , Pharr Plaza in Buckhead and The Shoppes at Dunwoody shopping center.
Sales trickling out Simpson is one of many real estate investors -- both big and small -- that are laden with cash and hunting for office building purchases. It's a trend that has created headline office sales in other major cities, including New York , Los Angeles and Washington , D.C. , where some major trophy buildings have sold at historically high prices. For investors, commercial real estate has been an attractive option as the stock market wallowed in the economic slump.
But willing buyers didn't translate into willing sellers. With interest rates at all-time lows, landlords have been able to refinance debt to buffer against the downturn. Even buildings with 20 percent or 30 percent of their space empty were able to wait out the market doldrums, real estate experts said. That created a buyer-seller gap: Sellers wanting premium prices for properties that many buyers were unwilling to pay. Simpson said he is seeing landlords begin to ease up on their property prices.
"There's a little bit of what I call owner fatigue from people who bought assets or who have owned them through the last cycle ... who just got to a point where it's time for them to exit," Simpson said.
He said many institutional investors often purchased portfolios of buildings across the country. Often those portfolios contained struggling properties that the institutions neither have the time nor the willingness to try to turn around. "Those folks don't really have any personal connection with the real estate. They're just money managers," he said. "It doesn't really matter to them if they have maximized value or not, if they can just report some gain and redeploy the capital."
Next year's forecast So far this year, $535 million in office buildings have traded hands in the metro area, according to statistics provided by CB Richard Ellis Inc. That's slow for the most part, said Will Yowell, senior vice president of CB Richard Ellis in Atlanta . But the real factor is the potential.
There's another $900 million in office buildings in Atlanta that could potentially change hands in the next year, Yowell said. "The office [sales] market has turned the corner. I don't know that you'll necessarily see that show up in the 2003 year-end numbers," he said. "From our perspective ... we've seen an uptick in the activity level."
According to Yowell, among the stable of potential office building sales include:
Capital City Plaza in Buckhead, which could trade hands if it snags the Blue Cross/Blue Shield of Georgia renewal.
The Powers Ferry Landing West office park in Cumberland .
Perimeter 400 Center I and II.
Windward Pointe 200 and Windward Plaza 100 and 300 -- owned by Holder Properties Inc. -- which could be sold to The St. Joe Co.
The four-building Plaza 400 complex of more than 180,000 square feet, which was under contract to an undisclosed buyer at press time.
And, of course, The Proscenium, the 527,500-square-foot Midtown trophy tower that could reach a record high sales price given its strong tenant base.
Yowell said much of that is being driven by the perception that Atlanta 's economy is improving, and that could lead to strong job growth. There's already been some indication of that. Atlanta 's economy grew 5.8 percent in the third quarter, according to SunTrust Banks Inc., a big jump from the second quarter's 3.1 percent growth. And Atlanta added more jobs during the third quarter this year than any city in the nation. In September, the number of jobs grew by 65,700 compared with September 2002.
Those are the kind of facts that lead investors to feel Atlanta has turned the corner, said Riley with Trammell Crow.
"It might be a gradual climb, but it's a climb back into recovery mode," Riley said.
Office-Market Rebound Could Be Years Away
By Janet Morrissey From Dow Jones Newswires -- September 26, 2003
NEW YORK -- It could be another four, five -- even six years before the office real-estate market rebounds, according to Nicholas Chermayeff, managing principal at Barrow Street Capital LLC, a real-estate investment firm.
Speaking at an Information Management Network real-estate investing conference in New York recently, Mr. Chermayeff said rents and occupancies have been dropping like stones -- with New York City being among the hardest hit. He shakes his head when he sees trophy buildings, such as the General Motors building in Manhattan continuing to lure multiple bidders and fetching record-high prices.
The recent sale of the prestigious General Motors building in Manhattan to Macklowe Properties for about $1.4 billion, or $800 a square foot, was "completely insane," he said. "I can't imagine anyone paying that price in New York" when vacancies are rising, the economy is getting worse, tax rates are going up, property taxes are on the rise, and the threat of terrorism lingers in the air, he said.
Historic-low interest rates have helped many buyers bid up properties. But as rates tick up, and rents and occupancies continue to fall, Mr. Chermayeff predicts it's just a matter of time before a major correction occurs.
"I think these trophy buildings that are trading at these lofty prices could correct 25% to 40% within five years," he said.
"We're not investing at all in New York ," Mr. Chermayeff said. In fact, "we're not investing in office anywhere in the country right now because we're very bearish on the office fundamentals. We're selling all of our office buildings," he said.
"In our view, it's a dangerous and treacherous time" to be buying, he said.
Boyd Simpson, president of the Simpson Organization, is also avoiding trophy properties at today's overheated prices. He said pricing has been pushed up so high that he believes anyone bidding on them is doing so for "ego" -- rather than "investment" -- reasons.
Hugh Scott, managing director of CommonFund Realty, is slightly more bullish on office properties. He expects a rebound in demand in the next two years.
Several fund managers, such as Cia Buckley, senior managing director at JER Partners, said they don't expect a correction nationwide. Only certain overheated markets, such as New York and Washington , may experience sharp price dropoffs, they said.
In general, Mr. Scott avoids going after the fully leased, stabilized office properties that many pension funds and others have been chasing. He prefers, instead, to acquire underperforming properties that can be refurbished or turned around to generate bigger returns.
Simpson also sees opportunity in buying "value-added" properties. However, he cautions that investors cannot do so blindly. "They have to buy things that they know how to fix," he said.
Many fund managers at the conference said the key to real estate investment is diversification. Mr. Scott said it's important to have a good mix of different property types and geographical locations. He's nervous about apartment buildings, which he believes are pricey as a result of pension funds and others bidding up the values despite falling rents and occupancies.
He's also cautious on grocery-anchored shopping centers. He worries Wal-Mart Stores Inc.'s move into the grocery-store business could threaten the anchors at these shopping centers.
Henrik Jones, vice president of Offit Hall Capital Management, sees no "screaming opportunities" in the real-estate world today.
"We're not seeing a lot of transactions in 2003 that are real opportunities," where pricing is far below replacement cost, he said. Mr. Jones said investors should not expect to see the 20%-plus returns that investors enjoyed following the real-estate collapse in the early 1990s.
Who's who in commercial real estate S-Z
Atlanta Business Chronicle - August 1, 2003
A. Boyd Simpson President, The Simpson Organization Inc.
Experience and background: Simpson has been in his current position since 1988. He is also CEO of TSO Real Estate Fund. Previous employers include LJ Hooker Corp., BF Saul Co. and Ackerman & Co.
Other than the downturn, what trends in the real estate industry are affecting your business? Changes in technology are affecting the demand for certain kinds of space. Technical changes are also affecting the efficiency with which the real estate market functions.
Do you think investors are paying too much for investment properties in Atlanta ? Investors are overpaying for certain property types at present, particularly grocery-anchored retail.
Do you expect to see consolidation among real estate firms? It is almost inevitable, and will happen more quickly due to technology.
| Transwestern Atlanta team awarded management of 1.6 million square feet of property owned by Allianz |
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| (June 6, 2003 – ATLANTA , GA ) – Transwestern Commercial Services, one of the largest privately held, full-service commercial real estate firms in the U.S. , today announced it has been awarded the management of six Georgia-based properties owned by Allianz Life Insurance Company of North America . The assignment includes the property management of Royal Centre Two, Three and Four located in Alpharetta , Georgia . Also included in the assignment is the management of approximately 1,000,000 square feet of industrial property. Transwestern’s Atlanta team began managing the properties on May 1. Royal Centre Two and Three are high efficiency, large floor plate buildings and Royal Centre Four was designed and constructed for Atlanta Casualty, which maintains its headquarters in the facility. Greg Miller joins Transwestern’s Atlanta team as vice president of operations and will serve as the primary point of contact for the Allianz assignment. Miller joins Transwestern with over eighteen years of experience in property and facility management and over six years’ experience in the construction industry. According to Miller, “Allianz has a history of commitment to providing legendary service to its user clients. I am thrilled to join a team of real estate professionals at Transwestern with that same level of commitment to quality service. I am pleased to have the opportunity to contribute in a meaningful way to the Allianz property portfolio.” In addition to Miller, Caroline Williams joins Transwestern’s Atlanta team from the Simpson Organization where she managed a large portfolio of office, industrial and retail properties. Williams now serves as the property manager for the Allianz portfolio. She oversees the daily operations of the properties as well as maintaining customer service and tenant relations. Channell Young, who joins Transwestern as tenant services coordinator for the Allianz assignment, will assist Williams. According to Jim Coughlin, senior vice president of Transwestern’s Atlanta team, “We look forward to the opportunity to work with outstanding real estate investors like Allianz. High quality assets like those owned by Allianz enable us to attract some of the best talent in the Atlanta real estate market. This opportunity is also an important step for Transwestern as we continue to further our growth in the Southeast.” Allianz Life Insurance Company of North America is a member of the Allianz AG Group, one of the world’s leading integrated financial services providers. Transwestern Commercial Services specializes in corporate advisory, investment services, development, research, property and facilities management and leasing services for office, healthcare, industrial, multifamily and retail projects with operations in 22 cities throughout the United States . In 2002, the company leased in excess of 18 million square feet, represented clients in $1.5 billion of investment sales and financing, and oversaw management of nearly 450 properties representing more than 82 million square feet. For more information on Transwestern, please visit http://www.transwestern.net/. For more information on Transwestern’s Southeast region, please visit http://www.transwestern.net/atlanta/.
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