But it’s only a temporary setback for the concept, said one development veteran involved with Atlantic Station. The desire for less sprawl and more efficient living will outlive the recession, he said.
“There was a reason the butcher, the baker and the candlestick maker all lived around the corner from each other. It made sense,” said Brian Leary, vice president of AIG Global Investment Group, which operates Atlantic Station. “And we now have to make decisions about being more efficient and providing more efficient uses of our resources, both built – meaning infrastructure – and natural.”
Had the economy not taken such a dive, several live/work/shop/play mixed-use centers might be thriving right now, said John H. Moore, a Marietta real estate attorney who represents such projects.
“I think they were a good idea and I still think they are,” he said. “I think there is proof that the concept works, and think it will work again.”
While banking analysts did not want to speculate on the future of financing mixed-use developments, Moore said there’s a good chance the residential side could be difficult to nail down.
Fannie Mae and Freddie Mac’s lending guidelines require a development to be more then one-half occupied before their loans can be used to buy homes there. That means buyers who want to purchase in a new development must use a different loan – an issue that will continue to be a hurdle for developers marketing multi-family residential products, Moore said.
Mixed use developments can turn a blighted area around, something that will be useful in the future, said Roy T. Black, a professor at Emory University’s Goizueta Business School.
On the other hand, he noted, successful projects “require a large amount of entrepreneurial skill, vision, and cooperation between the developer and the government.”
“The benefit is that ... you don’t get any haphazard growth patterns or more than an occasional small out-of-place land use,” he said.
A look at several metro Atlanta projects shows mixed results:
● Atlantic Station, a 138-acre site that is being developed in stages, opened in 2005. Residential units, for sale and lease, soon followed. Earlier this year, condo developer Lane Co. auctioned off more than 40 units of its Element project because of slow sales. After the auction even more units were sold, below original asking prices.
Overall, the development is doing fairly well, Leary said. It is 45 percent built, he said, with more than two-thirds of its office space leased, and 90 percent of its retail and residential space occupied.
“I’ll take that in the worst economy in 80 years,” he said.
● Homes in the Lindbergh City Center, a 47-acre development built around the Lindbergh MARTA station, hit the market in 2007, just as the flame on a white-hot housing boom was flickering.
Residential developer Harold A. Dawson Co. was able to convert one set of condos into apartments. It has tried to convert a second, Eon at Lindbergh, but talks with the projects lenders haven’t been successful. As a result, foreclosure proceedings were started on the five-story, 352-unit building, in June, but it has not gone to auction yet. The retail segment at Lindbergh, managed by Carter, is 80 percent leased, said a company spokesman. Apartments are more than 90 percent occupied, according to Dawson Co.
● Glenwood Park, a 28-acre development off I-20 at the Glenwood Memorial Connector, opened in 2004. It had more time to get established before the downturn, said Katherine Kelley, president of Green Street Properties, the project developer.
“We were fortunate in our timing,” she said. “But the tail end of our project was definitely affected by the recession. Some of the final phases of the residential component is what we have left.”
She said 92 percent of homes built have been sold, and those that remain were built recently. Additionally, 90 percent of the land for the entire project has been sold, and the rest is residential land.
“Fortunately we have patient equity capital, and they’re going to wait for the right time and right price to sell it,” she said of the remaining land.
Dozens of projects have stalled – some after they were announced, some before they left the drawing board.
Among the former is Emory Point, a mixed-use development, announced in mid-2008 by Cousins Properties, as a joint venture with Gables Residential. Cousins spokesman Cameron Golden said the project is not dead but developers are waiting for a more favorable market.
● In Alpharetta, Stan Thomas’s Prospect Park has been on hold for months. The opening date, initially fall 2007, was pushed to 2010 but the 90-acre site remains largely undisturbed. Thomas did not return calls but last fall blamed the economy, saying, “We’ve had to slow down because of things out of our control. But we’re still moving ahead. We’re definitely doing it.”
● Also waiting for the economic recovery is Mountain View Village, a proposed 40-acre mixed-use project along the Highway 78 corridor. Developer Emory Morsberger said plans call for 200 residential units and 100,000 square feet of office and retail space. City Hall East, which is being redeveloped by Morsberger, is making progress, he said.
● The bankruptcy filing of Opus South Corp., an Atlanta-based unit of Opus Group, put a question mark over the future of a massive project in Suwanee.
Opus was the developer of the 148-acre Terraces at Suwanee Gateway, but since its April Chapter 11 filing officials in the Gwinnett County city aren’t sure where it stands. The bankruptcy has “impacted a significant portion of the project,” said Josh Campbell, Suwanee’s planning director. He said a new road is open and a five-story, 125,000 square-foot office building and a Lowe’s have been completed. But he’s seen no progress on the site since the bankruptcy announcement, and has no idea when work might resume.
Opus officials said the development company no longer owns the property. According to public records, the site was foreclosed upon and scheduled for auction earlier this month.
● Work on Aerotropolis Atlanta, a mixed-use project on the site of the closed Ford plant next to Atlanta’s airport, should start soon, says Jim Jacoby, chairman and CEO of Jacoby Development Inc., which also developedAtlantic Station.
The project doesn’t have the “live” part because it won’t include residential units, but Jacoby said he expects the office-retail mix to draw residential nearby. The uses will be “airport friendly,” he said, without elaborating.
“When you have a driver like the airport, something that’s going to feed the development, you don’t want to stray too far from that,” he said. “You don’t want to be competitive, you want to be complimentary. Then the people will come.”
How we got the story
This story was developed through interviews with the Atlanta Regional Commission, developers, housing analysts and past articles from The Atlanta Journal-Constitution.