A Silicon Valley start-up valued at more than $900 million is about to choose a building for its East Coast operations in Atlanta.
Flexport, which closed a $110 million funding round last fall, has narrowed its search for the 300-employee office to two Midtown properties, the 55-story Bank of America Plaza and 715 Peachtree.
Bank of America Plaza has emerged as the favorite, according to sources familiar with the process.
A decision could come by the end of the first quarter. Flexport is expected to need at least two floors of office space.
Atlanta Business Chronicle reported plans for the startup’s $100 million expansion here last year.
It will be interesting to watch how Flexport, which plans to take on giant Amazon.com in the freight forwarding business, expands its operations in Atlanta, one of nation’s largest logistics hubs. Amazon is also growing its transportation services unit in Midtown’s Atlantic Station, putting the potential freight-forwarding rivals in close proximity to each other.
Flexport, which is currently housed in WeWork coworking space at Midtown’s Colony Square, is being represented in lease negotiations by Taylor Senter, with Newmark Knight Frank. Senter could not comment. CBRE, which is leasing Bank of America Plaza on behalf of landlord Shorenstein Properties LLC, also declined comment.
Mooney new market leader
Cousins Properties Inc. has named a new managing director for Atlanta.
Cousins, Atlanta’s largest owner of office space with more than 6.8 million square feet, promoted Matt Mooney, who had been leading the Phoenix regional team for the past two years. He also held that role with his previous company, Parkway Properties, which Cousins acquired two years ago in a $2 billion deal.
CLOSER LOOK
Largest leases of the fourth quarter:
1. Kaiser Permanente, 187,000 square feet, Piedmont Center 9 and 10, renewal, brokers: JLL team including Josh Hirsh and Nicole Littleton
2. Secureworks, 141,299 square feet, 1 Concourse Pkwy NE, 141,299 square feet, renewal
3. Floor and Decor, 106,051 square feet, 2233 Lake Park Drive, renewal and expansion
4. Hall Booth Smith, 76,520 square feet, 191 Peachtree, renewal/expansion
5. Cox Communications, 58,000 square feet, 7000 Central Parkway,
Source: Market data, CBRE Inc., JLL
In Atlanta, Mooney will have responsibility for leasing, property operations, investments and business development.
During his 11 years in Phoenix, his team completed large leases with Amazon, ADP, Silicon Valley Bank and Symantec. Mooney also sourced more than $400 million in acquisitions and new developments.
“The strongest market that we’ve had is Tempe (Ariz.) within the Phoenix area,” said Cousins Chairman and CEO Larry Gellerstedt.
“Tempe drives the highest rents in our entire portfolio,” he said. “It sits right on the Arizona State campus. It’s the part of Phoenix you can get to by rail. It is land constrained. And, it has been a mecca for technology companies.”
Mooney will find similar qualities in Atlanta’s Midtown, where Georgia Tech and NCR Corp. are expanding in a walkable neighborhood connected to MARTA rail and Piedmont Park.
In Buckhead, the affluent Atlanta neighborhood known for luxury shopping, million-dollar homes and glossy high-rises, the remaining number of undeveloped sites for office towers continues to shrink.
Cousins is Buckhead’s largest office landlord and maintains its headquarters there.
Thad Ellis, Cousins’ previous Atlanta market leader and one of the city’s top commercial real estate dealmakers, will refocus on leasing the company’s nearly 6.9-million-square-foot Atlanta office portfolio. He will be part of a team including other longtime Atlanta brokerage leaders, Jeff Dils and Bill Hollett.
Condo conversion
Here’s a blast from the past — a new Atlanta apartment tower is converting to condos.
Preserve Properties broke ground last year on The Sutton, a 21-story for-rent project in the Buckhead Village. The 151-unit tower at 2965 Peachtree was underway near a spate of other, new apartment high-rises.
Preserve will now offer one-to-three bedroom units starting at $500,000, with the most expensive units at $1.4 million. It’s also increasing the size of the average unit to 1,700 square feet. PNC Bank National Association is providing $49.9 million in construction financing, according to Fulton County property records.
The conversion is a reminder of the early 2000s, when apartment developers shifted to for-rent projects and the intown condo market started to take off. It’s worth noting that today’s construction lending environment for condo towers is vastly more constrained.
It will be interesting to see how demand for The Sutton unfolds.
Preserve’s John Draper said the idea is upscale condos at an attainable price. At $500 a foot, The Sutton is just over the entry level Buckhead market for new mid-or-high-rise residential towers, which is closer to $450 a foot.
Preserve’s timing of the project may be solid. For now, Buckhead condo owners don’t have many opportunities to “move up” to relatively affordable towers. The supply of those units has been kept in check since the recession ended, as high-rise residential developers tested demand mostly at uber luxury prices.
The intown apartment market will also be closely watched. It has been saturated by thousands of new high-rise units, and even though growth is expected to drive demand for that supply, rent growth, which has averaged 5 to 7 percent in recent years, is likely to slow.
If Preserve is able to generate sales at $500 a foot, it may convince other developers with apartment towers to convert to condo projects.
Reese Vanderbilt & Associates is the project architect for The Sutton. Barrett Design is the interior designer.
Gilbane Building Co. is the general contractor.
Atlanta Fine Homes Sotheby’s International Realty is handling the sales and marketing.
Morgan Stanley office growing
A financial giant is once again expanding in one of Buckhead’s trophy towers.
Morgan Stanley upped its total square footage in the 27-story Terminus 100 building by more than a full-floor, or about 33,000 square feet.
It now leases almost 20 percent of the 655,000-square-foot pinstriped tower at Peachtree and Piedmont Roads, which was designed by HKS Inc. and Duda/Paine Architects LLP.
It’s the second expansion for Morgan Stanley at Terminus 100 in barely over a year. In December, 2016, the company signed a 10-year renewal and expansion for 86,000 square feet.
It’s been a tenant there since 2006.
The latest deal with Morgan Stanley continues leasing momentum for the tower, which was developed by Cousins Properties Inc and is one of almost 7 million square feet of Atlanta office projects owned by the real estate company. In December, WeWork Companies signed a 14-year lease at Terminus 100 for 48,000 square feet.
The property is now 94 percent leased.
Cousins, however, will eventually have a big hole to fill after one of the tower’s largest tenants, CBRE Group Inc., confirmed last year that it will move to a newer Buckhead building, Three Alliance Center.
Cousins is Buckhead’s largest office landlord, with properties that include Terminus 100 and 200, 3344 Peachtree, Tower Place 200, and Capital City Plaza.
A new price record in Chamblee
Sarofim Realty Advisors has purchased the new Whole Foods-anchored shopping center in Chamblee for almost $68 million.
The Dallas, Texas-based real estate company, representing an undisclosed an out-of-state institutional investor, paid about $639 a square foot for the project, known as Peachtree Station. Tenants also include Starbucks, The Cook’s Warehouse, Zoe’s Kitchen and Chipotle Mexican Grill.
The purchase price of Peachtree Station is notable, considering that Shops Around Lenox, next Buckhead’s Lenox Square mall, sold almost four years ago for $71.8 million, or $575 per square foot.
It shows that trophy retail properties on Peachtree aren’t limited to Buckhead anymore. Peachtree Station is at 5001 Peachtree Boulevard, for years better known as Peachtree Industrial Boulevard.
S.J. Collins Enterprises developed and sold the property. Fain Hicks of Cushman & Wakefield represented S.J. Collins in the transaction.
“Peachtree Station was a fantastic project for us in the fast-growing Chamblee market, “ said Jeff Garrison of S.J. Collins.
A development renaissance has come to Chamblee — an industrial area long shaped by planes, trains and automobiles — that’s transforming the once blue-collar town into a walkable community with a blossoming cultural identity.
A year ago, Atlanta Business Chronicle reported that more than $360 million worth of new projects were in the works for Chamblee. That included about 1,200 apartments, townhomes, senior housing, and office, retail and restaurant space.
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