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ATLANTA-After reaching the 50% pre-leasing level, AIG Global Real Estate Investment Corp., a division of the American International Group of New York, and Atlanta developer James F. Jacoby have broken ground on the first office tower in the planned $2 billion, mixed-use Atlantic Station venture in Midtown.

The 20-story, $75 million structure is called 171 17th Street to blend with the new $38 million, 17th Street bridge over Interstates 75 and 85. The building is tentatively scheduled for completion in April 2004.

Triggering the ground-breaking were the first two office leases signed by the developers. SouthTrust Bank of Birmingham, AL is taking 95,000 sf to house 300 employees on the first five floors of the building. Atlanta law firm Arnall Golden Gregory LLP is leasing 135,000 sf for its 130 lawyers and staff on the top seven floors.

CRB Realty broker Charles Brown, who is handling leasing for the project, wouldn’t disclose terms or details of the two transactions. But Midtown office brokers, in a position to know, tell GlobeSt.com on condition of anonymity the two leases are among the largest ever signed in metro Atlanta’s recent commercial real estate annals.

Brokers tell GlobeSt.com both leases are probably for 10 years at an estimated average annual gross rent of $30 per sf. That would make the SouthTrust Bank lease valued at $28.5 million and the Arnall Golden lease at $40.5 million.

The combined lease value of $69 million almost approaches the estimated $75 million construction/development cost of the building itself, brokers tell GlobeSt.com. Atlanta-based Hardin Construction Co. is the general contractor. Smallwood, Reynolds, Stewart, Stewart and Associates Inc. of Atlanta is the architect.

The project has received a total $57 million to date from the city for road and sewer construction, making it one of the largest private-public enterprises in a decade in metro Atlanta and clearly stamping Midtown as the next major growth area, area brokers tell GlobeSt.com.

Atlantic Station is being built on the 138-acre site of the former Atlantic Steel Mill. Scheduled to open in late 2004, the development at buildout will comprise 6.5 million sf of office; 1.4 million sf of retail and entertainment centers; three hotels totaling 1,000 rooms; 2,500 homes; and 11 acres of public parks.

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