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[Atlanta-Native]

The 1405 Spring Street tower, which will sit on 1/2 an acre, sold last year for $4 million. How do you get the greatest rate of return, you build a 31 story, 300k sf building with 325 apartments.

https://urbanize.city/atlanta/post/m...t-architecture

[cwkimbro]

Originally Posted by Atlanta-Native

The 1405 Spring Street tower, which will sit on 1/2 an acre, sold last year for $4 million. How do you get the greatest rate of return, you build a 31 story, 300k sf building with 325 apartments.

https://urbanize.city/atlanta/post/m...t-architecture

That is what they bought the land for before building...

It has a conference center on that site. It was this little building that was $4 million: https://www.google.com/maps/place/14...!4d-84.3887846

[cwkimbro]

Originally Posted by bryantm3

I will agree with you about the empty retail spaces. However, I don't think it's for lack of demand. They are continuing to build huge retail slots to try and force a Magnificent Mile thing that just isn't happening. The spaces are too big and the rent is too high.

I'm not going to discuss, whether or not they will be successful attracting department stores or whether it makes sense to build retail at the rent prices.

But... I will comment they could drop rent prices and fill the space. I think they are empty now as a strategy. Across the US intown properties are sitting closed or vacant in central business districts. The daytime population is much lower than normal with office workers remote working more still. This harms the retail spaces in business districts.

My guess is they don't want to put in a lower rent retail tenants in for the short-term, rather they want the space to seem empty and high-end for the recovery of daytime population back into town.

One issue these large residential buildings have is many people do not want to rent a first floor unit in a high-intense area. The retail space takes up space residents don't want to occupy (without a discount). Inversely having retail nearby is appealing to residents, so there is a conundrum where developers working together are ok having retail spaces trying to increase value for the buildings in the future, beyond the retail rents.

When they don't put in retail, it is often a over-sized underused lobby. Now an outlying residential building (like around 17th street in Atlantic Station or in streets just out of the core, like Juniper/Piedmont) you will see more mid-sized residential buildings with bottom floor units.

[Atlanta-Native]

Originally Posted by cwkimbro

That is what they bought the land for before building...

That's my point. If you were to quarter that parcel, it's still $1 million per. That doesn't include a new structure etc. The amount of time it would take to break even would be significant for such.

With 325 apartments in a high rise, you would see your return so much quicker. Build the building, lease it out and then sell it. That's what a ton of developers do. Many developers don't want to be in the business of property management.

[cwkimbro]

Originally Posted by Atlanta-Native

That's my point. If you were to quarter that parcel, it's still $1 million per. That doesn't include a new structure etc. The amount of time it would take to break even would be significant for such.

With 325 apartments in a high rise, you would see your return so much quicker. Build the building, lease it out and then sell it. That's what a ton of developers do. Many developers don't want to be in the business of property management.

That averages to $12,300 per unit, not including retail income.

The housing market has gone through the roof and is really expensive right now and apartments are following.

The other side to this, is that property wouldn't be so expensive if a developer couldn't afford it. That building isn't worth $4 million. The land is, but the land only holds the value what a developer can pay for.

These apartment towers change hands typically in the $250k~$400k per unit range. One example: https://whatnowatlanta.com/midtown-a...r-115-million/
Those sold for $340k/unit. That would mean on the same site, the units would have to be profitable to build and market under $328k/unit as a rough comparison.

So to find a property that only costs $12.3k/unit is good. The harder sales are when a smaller, but more functional building is on-site and it costs $20 million.

[waronxmas]

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