One of Atlanta’s most prolific high-rise residential developers wants to build its latest tower on a prime corner in the red-hot Midtown market.
Novare Group intends to buy a nearly 1.5-acre site at West Peachtree and 14th streets, near One Atlantic Center and Atlantic Center Plaza, according to several sources familiar with the plan. The property today houses low-rise buildings with tenants such as Einstein Bros. Bagels and Zipcar.
Novare could acquire the land and raze the building by the end of the year.
It plans to build a residential tower in its place.
The company declined to comment.
Novare has looked to build at 14th and West Peachtree for eight years or more. In 2006, the company filed plans with the state for a 405-unit condo building with nearly 30,000 square feet of retail. But that was before the market collapsed and credit dried up because of the recession.
If the deal goes through, it would mark Novare’s third Midtown project in the current development cycle.
The company was at the forefront of the intown apartment boom with its Skyhouse Midtown, a 23-story, 320-unit tower with 8,500 square feet of retail that opened early last year on West Peachtree Street. Already, Novare is fetching rents of more than $2 a square foot at that project.
Novare also developed Skyhouse South at 100 Sixth St., located next door to the company’s Viewpoint condo building in Midtown. Novare now is underway on Skyhouse Buckhead and similar projects in Orlando, Fla., and Austin, Houston and Dallas, Texas.
The new development in Midtown could be the “next generation” of Skyhouse, according to sources familiar with the plan.
It’s unclear whether it would contain apartments or condos. So far, lenders in Atlanta have been only willing to finance new apartment and townhome construction. Condos were overbuilt in the last cycle, and developers and lenders haven’t forgotten that ill-timed development boom.
But now that the intown condo inventory is drying up and resale prices are starting to rebound, new condo development could be on the horizon.
Atlanta homebuilder John Wieland recently revived his long-stalled luxury condominium project across from Midtown’s High Museum of Art.
Former Aaron’s Inc. CEO and now full-time real estate developer Robin Loudermilk has an eight-story condo building with 21 luxury units at 867 Peachtree St. Loudermilk is working on the project with fellow developer Dwight Bell.
Already some property owners are considering converting their units from apartments to condos, such as Crescent Heights. It’s looking to put units at Atlantic Station’s The Atlantic back on the market for sale. It will offer one-bedrooms for around $240,000 and two-bedrooms for $330,000. That price range was the sweet spot when condo developers began to sell units after the downturn.
Midtown has become a busy market for developers as young professionals flock to the city’s center in pursuit of an urban lifestyle.
At the start of 2014, there were more than 6,400 residential units in the pipeline for Midtown and downtown, according to The Reid Report, a publication that tracks multifamily development.
OHM Atlanta LLC, a New York-based development group that includes Olympia Heights Management LLC and Ashkenazy Acquisition Corp., has filed plans for a $650 million mixed-use project with three towers at the former “symphony center” site at 98 14th St. The project could include 1,300 residential units.
AMLI Residential wants to build a 26-story apartment tower on the former Trump site at 15th and West Peachtree streets with 350 units and 3,400 square feet of retail.
Developers Daniel Corp. and Selig Enterprises Inc. recently said they want to break ground this year on two residential buildings for their 12th & Midtown mixed-use project on Peachtree Street.
Those could add more than 800 apartment and condo units to the market.
Developers continue to bank on the growing demand for luxury rental units in the city’s urban districts. Rents for high-rise residential towers in Midtown have soared to more than $2 a foot. Recently, Atlanta ranked as the ninth-most-active market for apartment investment, according to the latest data from Real Capital Analytics.
But, there’s growing concern that rents may begin to plateau or decline by 2015 as thousands of units are potentially added to the market. Almost any developer launching a new apartment project now is entering late in the cycle, some investors say.
“Developers continue to bank on the growing demand for luxury rental units in the city’s urban districts. Rents for high-rise residential towers in Midtown have soared to more than $2 a foot.”
9th: Atlanta’s rank as the most active market for apartment investment.
Amy Wenk covers hospitality, retail and restaurants.
Douglas Sams covers Commercial Real Estate
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