Wednesday, November 12, 2008

Is anyone really surprised by this?

The most recent ULI report on market conditions says that Atlanta, particularly Buckhead, is overbuilt. Um, you think? The key stat from the article:
Buckhead absorbs less than 500,000 square feet of office space annually, but more than 2 million square feet is under construction, the report points out.
So, that is talking about office development specifically, but the general conditions pretty much apply across the board. So what is Tivoli thinking by going ahead with more condos in Midtown?
[Scott Leventhal, Tivoli’s CEO and president] said construction could begin next year and finish in late 2011 if condo presales and financing fall into place. Soaring more than 700 feet, the tower would be built on just under an acre. Tivoli bought the land then conveyed it to the Fulton County Development Authority to offset future property taxes.
Those are some pretty big "ifs". Also, how did they manage to convery the land to Fulton County Development Authority? It's not like that is typical. I can think of plenty of developers who'd love to be able to unload land to the government while in pre-development. Paging Thomas Wheatley - this calls for real reporting! What sort of deal does Tivoli have with Fulton County? Is this some program I am unaware of?

2 comments:

  1. Fulton Co. Development Authority actually uses this strategy on a lot of development around the county, and the Atlanta Development Authority recently got the authority to do the same thing. The program is called "lease-purchase." It actually makes the Development Authorities lots of $$$ so they're incentivized to use it on as many developments as possible, and the developer is incentivized by only paying 50% of property taxes in Year 1, then 55% in Year 2, and so on. Once the taxes are being paid in full, the ownership goes back to the developer.

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  2. As you correctly point out, this one sentence blows one's mind:

    "Buckhead absorbs less than 500,000square feet of office space annually, but more than 2 million square feet is under construction, the report points out."

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