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ATLANTA-In what may turn out to be the most challenging commercial real estate venture of the decade, Gwinnett County developer Emory Morsberger and his Ponce Park Group are buying the two-million-sf, 77-year-old, 75% vacant former Sears Roebuck Co. catalog warehouse at 675 Ponce de Leon Ave. from the city after months of speculation on who would be the winning bidder for the property.

The Morsberger investors plan to redevelop the property as a $400-million, mixed-use asset consisting of 100,000 sf of office space, 250,000 sf of retail and 1,300 apartments or condominiums, according to brokers following the project for most of the year. The undertaking will take about seven years to complete, Morsberger has told city officials.

Mayor Shirley Franklin did not immediately disclose the purchase price. In a prepared statement, Franklin says “terms of the sale and redevelopment will be negotiated over the next several months” by her and the city council. Brokers previously had estimated City Hall East would be sold for about $6 million or $3 per sf. But they now tell GlobeSt.com the estimated price of the deal could be $15 million or about $7.50 per sf. However, other brokers, knowledgeable in Ponce de Leon Avenue property appraisals, tell GlobeSt.com the final aggregate value of the deal could be as much as $30 million, since the city still owes about $13 million on $18 million in loans it took out in the 1990s to renovate the property. The city bought City Hall East from Sears Roebuck Co. in 1991 for $12 million or $6 per sf.

Morsberger’s investors beat out Atlanta developer Stephen Macauley’s Phoenix Group and local developer Jerrold Millers’ Chess Partners. Macauley’s investors were considered favorites in the bidding. The Ponce Park team is comprised of Lane Investment and Development Corp., the Integral Group, the Morsberger Group, Adams & Community Real Estate and the Atlanta Neighborhood Development Partnership.

A panel of external advisors, chaired by A.J. Robinson, president, Central Atlanta Progress, assisted the city in analyzing and assessing the three proposals. Panel members included Samuel G. Friedman, chairman, AFCO Realty; Sherman Golden of Golden and Associates; Bob Hunter of the Metro Group; and Catherine Ross of Georgia Tech’s Center for Quality Growth and Regional Development.

“The city also conferred with the impacted Neighborhood Planning Units and interested council members to understand the neighborhood’s preferences for the site,” the mayor says. “Environmental assessments, traffic studies and other analyses will have to be completed before the financial and other development terms are finalized.”

The three-winged building that comprises City Hall East has housed the Atlanta Police Department and several other city administrative departments for the past 14 years. The city is looking for an undetermined amount of leased space to house the police department and the other city staffers.

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