2005 Land Deal of the Year

Centergy North
Prime Midtown tract trades for great prices;
includes one of few high-visibility sites left on Connector

CoStar’s Atlanta Property News
Published on: January/February 2006

There may have been larger land sales in 2005 but few were as high profile – or as obviously savvy – as the $19.1 million purchase of the 7.1-acre Centergy North tract by Atlanta’s Brookdale Group (with development partners Kim King Associates Inc. and Seven Oaks Co.).

Excluding the fact that the Spring Street tract contains one of Midtown’s last high-visibility sites along the downtown connector, simply buying urban land for $19 million and then selling half of it for an expected minimum of $18 million demands recognition. Throw in the story of a well-known developer joining forces with the son of a late Atlanta icon and you’ve got CoStar’s Atlanta Property News’ 2005 Land Deal of the Year.

The deal actually took shape years ago when Georgia Tech football star turned real estate developer Kim King optioned a long stretch of land along Spring Street from The Coca-Cola Co., which owned the land. The land sat dormant until five years ago when Georgia Tech (with prodding by King) announced an ambitious move across the connector that included office and classroom space, a hotel and conference center and ground-level retail. King announced his own adjacent office project, Centergy One, and a residential project called MidCity Lofts. The Tech-King projects have helped revitalize Midtown south of 10 th Street.

But with King’s passing in 2004, plans for the next phase at Centergy ground to a halt. Enter Bob Voyles, Hines’ former top man in Atlanta who had ventured out on his own in 2004, forming Seven Oaks Co. With Centergy North, Voyles saw not only an opportunity to establish Seven Oaks as a major player but also a chance to give King heir Beau King the support he needed to step out of his father’s shadow.

“We feel like it’s really going to be a signature development for both of our companies,” Voyles said. “It is Beau’s chance to make a statement for himself and for my company, it’s our first large infill opportunity.”

Perhaps Voyles’ greatest contribution to the partnership so far was bringing in The Brookdale Group as an investment partner. Brookdale in an Atlanta-based real estate investment fund founded by Chip Davidson and Fred Henritze, who just happen to be the guys that brought Voyles into the real estate business at Hines. Development is a new venture for Brookdale, which to date has specialized in buying and selling existing real estate.

One aspect that surely caught Brookdale’s eye was the price. King’s long-standing option on the land held the price down, meaning the land could be purchased for about half of its current value. Early on, the team made a decision to sell approximately three acres of the land to a residential developer, regaining nearly all of the original acquisition cost, Voyles said.

Shawn Sudderth, managing director with Transwestern Commercial Services, said Centergy North’s residential land should fetch a pretty penny.

“[The price for residential land in Midtown] is $5 million to $6 million an acre now, maybe more,” Sudderth said. “At three acres, you’re probably looking at $18 million.”

Next up will be heavy pre-leasing efforts to get a new office building – probably in the 25-story range – out of the ground. Voyles said Georgia Tech figures into the mix prominently.

“We are completing a master plan process with Georgia Tech right now. We want to make our buildings Tech-friendly and Tech-tenant friendly,” he said. Tech-related tenants, such as the Advanced Technology Development Center, were important early tenants at Centergy One.

It also doesn’t hurt that Centergy North has one of the most visible office sites this side of the Atlantic Station development.

“It’s one of the few sites that have exposure on Interstate 75-85…west of the connector is already occupied by Tech,” Transwestern’s Sudderth said.

Voyles said, “Our last building is going to have similar prominence on the downtown connector to the Wachovia building at Atlantic Station.