Development: Unpredictability in the Process

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 0 1822

Development: Unpredictability in the Process My last blog, “The Importance of Timing on Real Estate Investment,” focused on the unpredictability in investment, on what can happen over time once you own a property. In development, there is the added unpredictability during the process. For a broker selling a property or an investor buying a property, the complete process can be done in 90 days or less. But that is not the same with development, not even close. Process Derailment Developers have many considerations—they need time for inspections, site tests, neighborhood forums, entitlement or zoning processes, permitting, and soil boring tests, to name a few. While some of these can be controlled, others cannot. For example, everything could be moving forward smoothly and one ruffled neighborhood group at a zoning hearing or one difficult inspector could stop the project dead or at least create a significant delay, with the developer having

Old Malls, New Opportunities?

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 0 2639

Lately, it seems that one retailer after another is announcing massive store closings or potential bankruptcy. It’s no secret that Macy’s is closing stores, Sears is contemplating bankruptcy and JCPenney’s is struggling. But what happens when a mall anchor closes or the mall itself dies? It affects everyone. Dying malls, especially in small towns where they are the central economic hub, impact the community that live and shop at the mall; the employees that work at the mall; the small tenants that rely on the larger anchors’ foot traffic; the properties surrounding the mall; the investors and developers that own the mall; and the lenders that hold loans on the mall. A dying mall can absolutely create an economic hole in the center of a small town or suburb that once relied on its vibrancy for tax income and as a social gathering place. Last year, in my blog “How

The Atlanta Beltline: Will the Westside Trail Match the Eastside Trail’s Success?

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 1 2961

In a recent blog, I introduced the current sensation that is the Atlanta Beltline. The official website defines the beltline as “a sustainable redevelopment project that is transforming the city… [and will] ultimately connect 45 intown neighborhoods via a 22-mile loop of multi-use trails, modern streetcar, and parks – all based on railroad corridors that formerly encircled Atlanta.” The completed Eastside Trail has already enjoyed tremendous success as most visionaries and developers expected it would. Now, the Westside Trail is being developed, which is indeed exciting, but has led some developers and investors to question whether it will garner the same success and reception as its Eastside counterpart. Let’s take a look at both projects. Eastside Trail Since its inception, $860 million has been invested within a half-mile of the Eastside Trail, which is a two-mile segment that connects Midtown and Old Fourth Ward neighborhoods. The Eastside Trail has gained

Georgia State University Spurs Downtown Atlanta Development

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 0 2899

Georgia State University (GSU) has been experiencing unprecedented growth. It’s recent acquisition of Georgia Piedmont College has boosted the student population from 36,000 to 50,000. And as we know, with any population growth comes development. A recent Atlanta Business Chronicle article states, “And during the past two decades, roughly since Atlanta’s 1996 Centennial Olympic Games, the school’s evolution has been accompanied and exemplified by sustained growth of GSU facilities in Atlanta’s core.” Let’s take a look at the impact GSU’s population and development growth has had in downtown Atlanta. The growth impacts many different real estate types, including: Student Housing Student housing is a major component of GSU’s facilities growth. The same Atlanta Business Chronicle article notes that GSU recently added 1,152 with the opening of Piedmont Central in August 2016, located on the corner of Piedmont and John Wesley Dobbs Avenue. Private developers are active in GSU student housing

Top Takeaways from GSU’s Views From the Top 2017

By Stan Sonenshine in Real Estate Development, Real Estate Investing

7 years ago

7 years ago 0 0 3860

Each year, I start the new year with an economic conference hosted by Georgia State University’s Department of Real Estate, and it rarely disappoints. This year was no different. Views From the Top 2017: “Connectivity & Atlanta’s Urban Transformation” delivered insightful viewpoints on a variety of economic topics. First up was Sun Trust Economist KC Conway. Here were his top comments: Real estate sector predictions: Housing and Industrial are real estate’s strongest sectors, with commercial storage and manufactured housing yielding the best returns. Retail is regressing, and Hotel is overbuilt with declining values. Cost for new or renovated Office space is extremely high. Atlanta + Southeast predictions: The Southeast region, including Atlanta, will outperform the nation in 2017. Atlanta will continue to be plagued by traffic This is a “Must Solve” problem. Millennials will move elsewhere if not resolved, resulting in stymied growth. General insights: Capital for commercial real estate

2017: A Mature Market

By Stan Sonenshine in Real Estate Development, Real Estate Investing

7 years ago

7 years ago 0 0 2838

Entering 2017, the investment community finds itself in a Mature Market. Gone are the days of distressed sellers, foreclosures and properties which could be purchased at steep discounts. Today, properties are cash-flowing, occupancies are high and rents have recovered to peak levels. Combined with cheap debt and investors flush with yield-driven capital, the result is fewer opportunities coupled with property values at pre-recession levels (or, in some instances, even higher). So, what happens when investment opportunities diminish and the market tightens? Development becomes an increasingly attractive option for value-added investing. Historically, seven years into a recovery, speculative development has already begun, but that has not been the case. This cycle is unique for several reasons: The depth of the recession The impact of new regulations on financial institutions The headwinds to demand created by online retailing and office-sharing concepts To be sure, infill, mixed-use urban retail concepts; mega, mixed-use projects

How Can We Solve the Absence of Affordable Housing in Atlanta?

By Stan Sonenshine in Real Estate Development

7 years ago

7 years ago 0 1 2895

Equity and affordability. The lack of these two imperatives is what initiated the departure of Atlanta Beltline Partnership board members Ryan Gravel and Nathaniel Smith in late September. Ryan, the urban planner who proposed the Atlanta BeltLine in his Georgia Tech Master’s Thesis, and Nathaniel, founder of the Partnership for Southern Equity, left the board with concern that too little was being done to promote affordable housing off the popular beltline, a 22-mile corridor circling central Atlanta. An Atlanta Business Journal article states, “Gravel said the vision for the BeltLine has been one of inclusivity – making sure its success does not prevent people of all income levels from being able to live on all parts of the 22-mile corridor.” Even the corridor’s tagline, “Where Atlanta Comes Together,” suggests this underlying vision. But affordable housing is an issue across Atlanta, not just on the BeltLine. To anyone has driven around

Private Real Estate Investing: A Game of Risk

By Stan Sonenshine in Real Estate Development, Real Estate Investing

8 years ago

8 years ago 0 0 3194

Most people invest in equities, like stocks and bonds. They are liquid. They are transparent. The markets are regulated. With equities, you can follow your investment though various channels. And you are betting on companies more than individual people. Private real estate investing is different. The investment is illiquid. Current value of the asset owned is not easily determined. Often there is a sponsor or promoter who has discretion with regard to major decisions, and finally, debt is typically used to purchase the asset. These factors combined increase risk and put private real estate investments in the category of Alternative Investments. Getting Started To invest in a private real estate deal, an investor must be accredited. This means he or she can afford either to lose all equity or not have access to it for an indefinite period of time. Once this hurdle is cleared, I recommend all investors ask

Atlanta’s Achilles Heel: Traffic Congestion

By Stan Sonenshine in Real Estate Development

8 years ago

8 years ago 0 0 2634

Like the mythical Greek God Achilles, Atlanta is strong and vibrant, but has one vulnerability that could stall its growth or dramatically change development patterns and quality of life. And that is traffic congestion. If you live in or visit Atlanta, you know this is true. A 2016 Atlanta Business Chronicle article claims Atlanta was ranked no. 9 on a new Top 10 list of 100 US cities with the worst traffic, and that statistic is not surprising. The article also touts that Atlanta drivers “wasted an average of 59 hours in gridlock in 2015”. That’s a whole week’s vacation sitting in traffic! Some of the Problems: A street network designed for low density Proliferation of high-density, mixed-use real estate developments Good, but limited public transportation Connectivity Atlanta’s street network was just not designed for high-density development. It has one primary north-south boulevard, Peachtree Street, and poor east-west connectivity. Contrast

Development Regulations: Has Protecting the Public Gone Too Far?

By Stan Sonenshine in Real Estate Development

8 years ago

8 years ago 0 0 2685

When do development regulations, building codes and zoning regulations transcend protecting the public welfare and instead slow the progression to building a community that better suits today’s rapidly changing lifestyles? Think about it. Are regulations necessary? Of course they are. Can regulations strangle creativity and vision? Of course they can. While some jurisdictions seem more responsive to market demands and changes, others are hell-bent on keeping things the way they are. The relationship between developers, city planners, code enforcers, local politicians and neighborhood activists has always been somewhat adversarial. But how these relationships work in today’s world is particularly important since development has accelerated and looks much different look than it did ten years ago. What Are the Problems? Outdated zoning ordinances and codes which don’t address the high-density, mixed-use development trend Code enforcement officials’ tendency to read and adhere strictly to document language The regulator’s lack of empowerment for

Previous page Next page

Development: Unpredictability in the Process

Old Malls, New Opportunities?

The Atlanta Beltline: Will the Westside Trail Match the Eastside Trail’s Success?

Georgia State University Spurs Downtown Atlanta Development

Top Takeaways from GSU’s Views From the Top 2017

2017: A Mature Market

How Can We Solve the Absence of Affordable Housing in Atlanta?

Private Real Estate Investing: A Game of Risk

Atlanta’s Achilles Heel: Traffic Congestion

Development Regulations: Has Protecting the Public Gone Too Far?

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