Charlie Brown, the developer
proposing Dunwoody Crown Towers off Ashford-Dunwoody Road, said he is not
concerned about not having enough office space for his proposed project.
The sudden burst of skyscraper plans
in Perimeter Center—10 new towers proposed in addition to several already in
construction or approved in rezonings—has sparked questions for local residents
and businesses: How will they impact traffic? Will they change the character of
local cities?
But some experts say that many of
those towers won’t do anything because they will never exist anywhere except on
paper. The actual demand for Perimeter Center office space is far lower than
the 10 million square feet or more proposed in all the grand plans, they say.
“Some of it’s not going to happen,”
said Lee Sobel of the Washington, D.C.-based real estate consulting firm RCLCO,
raising the issue at the Sandy Springs City Council’s annual retreat in
January. Sobel’s firm is part of the team creating Sandy Springs’ new zoning
code and land-use plan, a process triggered partly by the City Council’s
concerns with the recent flood of mega-projects.
Sobel projects the demand over the
next 20 years for new office space in the Sandy Springs side of Perimeter
Center at about 2.8 million square feet. But developers are already building or
proposing around 10 million square feet, said Sandy Springs Mayor Rusty Paul.
It’s a similar story in Dunwoody, where city data shows 4.5 million square feet
of Perimeter Center office space in the pipeline or zoning books—more than
two-thirds the amount that exists today.
“We’ve got a potential here for a
tremendous bubble,” Paul told Sobel at the council retreat. “If we allowed 10
million [or] 5 million square feet to be constructed, you’re saying there’s not
demand for that.”
Sobel assured the mayor that the
city can approve whatever it wants because the market will sort it out and kill
many of the tower dreams. A two-decade projection can change with the market
and infrastructure improvements, Sobel acknowledged.
But, he emphasized, there’s
“absolutely” not enough demand to fill 10 million square feet in more than a
dozen skyscrapers.
A history of paper towers
Bob Voyles, who’s building one of those new office towers on Perimeter Summit Parkway in Brookhaven, agrees with Sobel.
Bob Voyles, who’s building one of those new office towers on Perimeter Summit Parkway in Brookhaven, agrees with Sobel.
“I think the Sandy Springs
[consultant’s] projections are much more in line with reality,” said Voyles,
principal and CEO at Seven Oaks Company and a founding member of the Perimeter
Center Improvement Districts board. Years ago, he also was on the team that
built Dunwoody’s Ravinia tower.
Voyles said the burst of skyscraper
plans—like five proposed at 1117 Perimeter Center West in Sandy Springs and five more in the Dunwoody Crown Towers—echo a similar 1980s boom in even bigger paper towers. He
recalled plans for a 60-story skyscraper on Sandy Springs’ Glenlake Parkway; a
50-story tower on a Sandy Springs site Hines is still trying to build a smaller
tower on; and several 30-story towers on what is now Cox Enterprises’ Dunwoody
headquarters.
“
What happened is, a lot of that
stuff didn’t get built,” Voyles said. “When I see plans like the once advanced
at 1117 [Perimeter Center West], I chuckle, because if you live long enough,
you see these things come around again.”
That goes for Seven Oaks, too. The
firm’s new 350,000-square-foot tower is the latest addition to a 1.8
million-square-foot complex—on a site originally zoned in 1988 for 3.5 million
square feet. “So 28 years later, we’ve only built out half the zoned
density,” Voyles said.
The office market boom
But Charlie Brown, the developer proposing Dunwoody Crown Towers off Ashford-Dunwoody Road, said he isn’t concerned. “We’re in a very dynamic area. Dunwoody, Brookhaven and Sandy Springs really don’t cause me any problem,” Brown said. “The amount of office space need is finite, there’s no doubt about it. However, if we put the best product on the market in the best place, I don’t see any problem.” There’s no question that the metro Atlanta office market is booming and a big driver in local tower plans, even though most include mixed uses. Local office vacancy rates are under 10 percent, Voyles said, and Cox Communications’ new Dunwoody tower was the biggest metro Atlanta office building to open last year, according to a report from the real estate investment firm Colliers International.
But Charlie Brown, the developer proposing Dunwoody Crown Towers off Ashford-Dunwoody Road, said he isn’t concerned. “We’re in a very dynamic area. Dunwoody, Brookhaven and Sandy Springs really don’t cause me any problem,” Brown said. “The amount of office space need is finite, there’s no doubt about it. However, if we put the best product on the market in the best place, I don’t see any problem.” There’s no question that the metro Atlanta office market is booming and a big driver in local tower plans, even though most include mixed uses. Local office vacancy rates are under 10 percent, Voyles said, and Cox Communications’ new Dunwoody tower was the biggest metro Atlanta office building to open last year, according to a report from the real estate investment firm Colliers International.
Atlanta’s average office rents are
the highest since 2008, that report says, and the total amount of newly leased
office space hit a 15-year high. But that figure was 4.8 million square feet
for all of metro Atlanta—just a little more than proposed to be built in
Dunwoody alone—and includes new leases in existing buildings.
A similar lesson in new office
demand can be seen south of Perimeter Center in Buckhead. The total amount of
rentable office space in that neighborhood is about 21.1 million square feet—a
figure that has stayed basically unchanged since at least 2011, according to
Buckhead Coalition data.
‘Shock and awe’ or ‘flip and sell’
So why would developers propose such enormous plans that go well beyond current and projected demand? Sobel said it’s a “run on the bank” to see who can be first to build the handful of towers that will fill the demand. Voyles suggested other possibilities as well.
So why would developers propose such enormous plans that go well beyond current and projected demand? Sobel said it’s a “run on the bank” to see who can be first to build the handful of towers that will fill the demand. Voyles suggested other possibilities as well.
“One of the old negotiating rules
is, go in and ask for twice what you need and use shock and awe…and maybe get
half of what you ask for,” said Voyles, quickly adding that Seven Oaks avoids
that tactic. “They’re either trying to do the shock-and-awe—come in for review
and expect to get less. Or they’re trying to increase the value of the land to
flip out of it and sell it because it’s got more density [approved] on it,
which is an old game they used to play in Atlanta.” A final possible motive
behind the skyscraper plans, Voyles said: “This is really what [the developers]
want to do.”
Charlie Brown said he’s sure he’ll
be the developer whose plan works out. “If we keep the pot boiling, I’ll get my
cup of my soup, and this area is particularly easy to keep the pot boiling,”
Brown said. “This area has good people, good government and good
transportation, and that is hard to beat.”
Dyana
Bagby contributed to this story.
Comments
Not long
ago we saw 45 minute traffic back-ups on Ashford-Dunwoody Road from Mt Vernon
to I-285. If the traffic studies are independent, they should show what kind of
highway and road system it would take to accommodate an additional 1500 condos
and 1500 apartments at rush hour. I’ve
heard nothing about this project that would indicate that there is an effective
solution. High density creates traffic gridlock. Projecting demand in this
economy is extremely hazardous.
Norb
Leahy, Dunwoody GA Tea Party Leader
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