A Houston development firm is planning a massive mixed-use development in Sandy Springs that would be one of the largest new developments in the Central Perimeter area in many years.
Hines, a real estate investment trust, has requested a rezoning of land at Ga. 400 and Abernathy Road to allow construction of what it calls 100 Northpark. The development will include a blend of high-rise office space, as well as retail space, 500 residential units and a 250-room hotel, according to a Development of Regional Impact filing with the Georgia Department of Community Affairs.
The request to rezone 16 acres at a critical intersection in Sandy Springs comes as the office market in the Central Perimeter region has heated up, filling up more vacant space last year than any other regional submarket. That has fueled speculation that high-rise development could soon return to a metro area that in recent years suffered the hangover of a pre-recession building boom and the lack of demand caused by the financial collapse.
The office component in the Hines project — 1.5 million square feet — would be larger in total floor space than Bank of America Plaza or the combined space of more than two Equitable buildings. The filing states that Hines is seeking to build 150,000 square feet of retail.
The project is designed to be “transit-oriented” and it is adjacent to MARTA rail as well as being close to major freeways, said John Heagy, senior vice president for Hines. He added having connections to transit options is part of Hines’ strategy of development.
The Central Perimeter area of Sandy Springs and Dunwoody has been very active in office leasing. Much of it came from new tenants stemming from job growth, but some came from office relocations from other metro Atlanta neighborhoods.
The office vacancy rate in metro Atlanta was just under 20 percent at the end of 2012, according to Cushman & Wakefield, several points higher than the historical average.
The Sandy Springs and Dunwoody area filled more than 1.2 million square feet of top tier office space in 2012 — twice as much as any other office submarket — fueled by office relocations from giants like State Farm.
The Central Perimeter area “has clearly shown it’s one of the hottest markets in the city,” said Ken Ashley, an executive director at Cushman & Wakefield in Atlanta.
“Where there’s smoke, there’s fire and maybe this is the real estate party in Atlanta right now,” he said.
Ashley said with the market beginning to fill in Central Perimeter, large vacant blocks of office space in that area are now tough to find to woo large corporate relocations or new operations.
But Ashley cautioned that construction financing is still difficult to obtain and lenders want to see a strong business case, including demand from office and retail tenants.
Still, Hines’ move is a sign that developers are thinking about building again, even if it can’t be with the pre-recession mentality of “build it and they will come.”
“The most endangered species in Atlanta, known as the crane, might actually return,” Ashley said.
Hines is seeking a rezoning that would permit up to 26 stories in height, a Sandy Springs spokeswoman said. The office tower, for instance, would have nine levels of parking and 17 stories of office space.
No date has been set for a Sandy Springs zoning hearing. The project also is pending review by the Atlanta Regional Commission.