Rivals Join to Build Buckhead Towers

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Rivals join to build Buckhead towers
Four firms to put up mixed-use high-rises

By WALTER WOODS
The Atlanta Journal-Constitution
Published on: 03/31/06

Call them the Fantastic Four.

A league of extraordinary developers, from Atlanta's condo king to one of Gwinnett's top office players, has joined forces to raise a two-towered office and condo complex on one of Buckhead's sweetest corners.

Normally competitors, the four companies, Duke Realty Corp., Post Properties, Novare Group and Pope & Land Enterprises, teamed to catch up with a growing local demand for high-rise condos and offices that workers can actually get to.

And, as Pope & Land President Larry Kelly put it, the site was just too good to pass up.

Thirty-Six Thirty Peachtree Road, a $300 million project at Peachtree and Peachtree Dunwoody roads, will have a 36-story tower with 425,000 square feet of offices topped by 84 condominiums. A second 29-story high-rise will have an additional 200 residential units. Developers want to start shoveling dirt by late summer and open the project by 2008.

The Duke-Post-Novare-Pope & Land deal is the most recent project to try to get a foothold in the Buckhead office market. Cousins Properties reached the summit first; its Terminus 100 building is under way and should open by 2007.

But several developers have scrambled to be second. Regent Partners, Tower Place's developer, said a year ago it would build a 47-story office and condo skyscraper on Peachtree. Chicago-based Trizec Properties plans a second tower at its Alliance Center complex (home of Emeril's Atlanta) on Lenox Road. But neither of those projects has announced major tenants to start construction.

Thirty-Six Thirty will also be the latest in a local wave of "vertical mixed-use" projects, a popular concept in larger cities that blends offices, homes or hotel rooms in a single tower. The 1992 Four Seasons Hotel Atlanta pioneered the concept here, but in the last year developers have proposed a handful of such high-rises from Buckhead to downtown.

The 3630 complex is also the most recent example of developers making nice, even with competitors, to get their projects out of the ground.

Joint ventures of developers aren't new. But partnerships have become more vital as mixed-use clusters of offices, homes and retail have become the development trend. Developers increasingly need to coax a condo guy or an office player or a retail expert into their deals to make them happen.

"We like competition, but we also like development opportunities," said Duke Senior Vice President Kerry Armstrong, referring to 3630 Peachtree. "It's a rare chance to combine all our talents in one project - and I'd rather be partners with somebody as good [as these guys] than be a competitor any day."

The project started with Pope & Land's Kelly, who had been sitting on the 4-acre site next to the Wieuca Road Baptist Church for 21 years. But with condos booming and Buckhead's office market posting Atlanta's lowest vacancy (14.7 percent at the end of 2005), Kelly started looking for partners to get something going.

The team does not have a tenant for the office portion, and it will be competing for a limited number of tenants with players like Regent, Trizec and Cousins, which is talking up a second tower at its Terminus complex.

But Kelly believes Cousins' success - Terminus 100 is nearly half leased - proves there's demand for suites in Buckhead.

"The strength of Terminus is a good bellwether," Kelly said. "Terminus has validated ... that corporate America is in a growth mode rather than a contraction mode, which we've seen."

For Indianapolis-based Duke Realty, one of the largest landlords in markets like Alpharetta and Gwinnett, 3630 Peachtree means moving to town.

"We've really been looking since 2000 for the right opportunity to move into the urban market," said Duke's Armstrong. "Buckhead is so clearly the important submarket ... and we really need to be there. This a good opportunity to get in - a great opportunity to get in."

Post, the longtime apartment developer, has been aggressively moving into the for-sale residential game.

The 3630 project gave Post a chance to build a condo high-rise across the street from "the best retail in the Southeast" and a "fabulous" residential neighborhood, said Tom Senkbeil, Post's executive vice president.

Novare has become the city's leading condo developer, building high-rise homes for young, first-time home buyers in Midtown and Buckhead.

But the demographic will be different on this corner. The office tower units will start at $650,000; the second building's homes will start at $300,000.

Baby boomers, many of them wealthy, are increasingly shedding their large, child-rearing homes for condos, and this project will target them, said Jim Borders, Novare's CEO. "This lifestyle has become much more accepted than even five years ago," he said.

But in the end, Kelly said, the site - it has access to Ga. 400 and, via Druid Hills Road, I-85 - brought the team together. The site's location and other aspects "made it relatively easy to garner [their] attention," Kelly said.