Buckhead Sets Strong Development Pace

"There is definitely plenty of developable land still available in Buckhead," Pawloski says. For example, locally based Pope & Land Development Co. paid $18.9 million, or $1.5 million per acre, for its 12.5 acres at the corner of Peachtree and Piedmont streets. "About a month later, they sold two acres to Novare Group/Wood Partners for $7 million, or $3.5 million per acre, to build a 406-unit, 29-story condo tower," the researcher adds.

Another developer, Songy Partners, purchased the 1.6-acre Atlanta Art Institute site for $6.5 million or almost $4 million per acre. "Land prices per acre will continue to escalate as investors seek prime Buckhead land for future projects," Pawloski tells GlobeSt.com.

Other developers preparing for future growth are Toronto-based Trizec Properties which has sites for two more office towers near its 20-story, 100%-leased One Alliance Center building; Equity Office Properties of Chicago, owner of the 18-story Prominence Building which has nearby land for another tower; and City Center, a mixed-use development on the Peachtree-Piedmont roads corner.

"The pace of commercial development in Buckhead is still very brisk," Pawloski tells GlobeSt.com. "However, this market is more mature than the Midtown market, so the amount of activity is probably less." Additionally, the researcher notes, Atlantic Station, "which is almost certainly the largest development in Atlanta's history, is located in Midtown--thus the data for Midtown tends to be skewed."

Another difference between the two submarkets, Pawloski says, is that "many projects in Buckhead are in their initial planning stages with investors purchasing land for future development. In comparison, there are more Midtown projects that are already under construction or near completion."

Bullock Mannelly puts the overall average vacancy mark in Buckhead at 20.5% with average quoted rents at $22.69 per sf. First-quarter net absorption was a positive 111,045 sf compared to negative net absorptions in several area submarkets. The total rentable office space in Buckhead is 13.5 million sf among its 94 buildings.

"Buckhead is considered a hub for multifamily, office and retail," Pawloski says. "However, Buckhead began as a retail and office hub, and then, as more individuals sought to live close to where they worked and played, the multifamily towers were built."

The researcher adds, "Most of the recent projects have been multifamily projects because there was such a shortage of housing close to the Buckhead retail and office centers."