Developer Betting 500,000-SF Spec Office Park Will Pay Off

The Gwinnett County route leads directly to the state's largest mall, the 1.9-million-sf Mall of Georgia. Known locally as Sugarloaf, the area near I-85 and Sugarloaf Parkway is already home to the 1.2-million-sf Discover Mills mall and the 1.2-million-sf Gwinnett Place shopping center. Gary Holding Group purchased the 54 acres from an undisclosed seller.

Area industrial brokers tell GlobeSt.com the tract's price was probably in the $100,000-per-acre range, making it an estimated $6 million investment. Brokers familiar with office park construction in Gwinnett County tell GlobeSt.com the park will probably built at $80 per sf, putting the estimated hard construction cost of the project at $40 million.

The Atlanta office of Cushman & Wakefield of Georgia Inc. is the park's leasing agent. The first building is slated to open in first quarter 2006. Competition for tenants is expected to be brisk since Duke Realty Corp. of Indianapolis is also building a $10-million, three-story office building on Sugarloaf turf, Atlanta office leasing brokers tell GlobeSt.com.

Atlanta-based ColliersCauble puts the 15.3-million-sf Northeast Atlanta office submarket at an overall 19.3% vacancy. Class A space, totaling 56 buildings and 5.5 million sf, is 14.9% vacant; class B's 211 buildings totaling 9.1 million sf are 18.9% vacant; and the 20 class C buildings totaling 580,000 sf are 19.1% vacant.

Class A space enjoys the best leasing performance with net absorption last quarter of 337,833 sf. Class B and C properties both suffered negative absorption--class B, a negative 40,161 sf and class C, a negative 12,303 sf. Class A rents average $17.84 per sf; class B, $14.35 per sf; and class C, $10.57 per sf.