New Apartments Coming to Downtown Augusta and implications to Rental Rates

 

Rendering of  54 unit mixed-use development ‘The Atticus’ planned for 10th at Ellis.

 

Damon Cline reported on Monday that Downtown Augusta will see one of the first downtown multifamily projects in decades at the corner of 10th and Ellis next year.  Known as “Connell’s Corner”, and long home to the local favorite “Sandwich City”, the property will soon be the home to a new high-end four-story apartment building. 

‘It will boast a covered and gated 57-space parking lot, ground floor retail/restaurant space, a rooftop patio and high-tech features such as keyless entry – the types of amenities that appeal to urban-minded young professionals migrating to the downtown area.’

 

The story was broken by Damon Cline, who also shared some statistics and details about the overall rental market in Augusta.  Overall, apartment rents are rising quickly, and what was once considered a “Class-A”  apartment renting at $1.15-$1.25/SF/Month, has been eclipsed by new super-luxury apartments renting at $1.30-$1.40/SF/Month.  This new class of apartments come equipped with similar finishes found in luxury homes, including granite and high-end appliances.

 

We recently discussed charting rent curves and what they tell us about rent rates and forecasting rent rates.  I think this is a great case study.  Here’s what the rent curves for downtown apartments looks like:

You can download the spreadsheet here.   These are asking rates at the major downtown apartment complexes vs. downtown lofts and upstairs apartments.  You can see a big difference between the two.  I think what we’re seeing is that the curves are moving out–driven by a higher demand for downtown apartments like Canalside and Ironwood.  My guess is that the Atticus could probably plot a new curve–maybe ask $2.15 for their smallest units, and maybe $1.50-$1.65 for their larger ones.  If they’re successful with this project, I think we’ll start to see redevelopment of buildings that have up to now been impossible to redevelop with existing rental rates.  

 

What are your thoughts?  What are your observations about Augusta’s rental market?  Do you think Downtown will continue to grow and develop?  

Lessons from Sharedspace in Augusta

Today we’re going to talk about SharedSpace and Coworking with John Cates, COO and General Counsel at Meybohm Real Estate

 

Jonathan Aceves (JA): Tell us a little about your prior experience with the coworking business model.

John Cates (JC): When i was in Atlanta, coworking was just starting to take off.  Not just from a office space model but also as a model of entrepreneurship.  Coworking space like WeWork and others that were purely office tenant landlords but also incubator space.  We were involved with helping the Atlanta Technology Village to get started.  We got to see in Atlanta over a six or seven year period,  the coworking model take shape in all its different forms.  

JA: What was your connection to SharedSpace?

JC: I was approached by the SharedSpace group before they got started as they were looking for different space in Downtown Augusta.  We had some mutual connections from my time in Atlanta.  And they really reached out to me to try to get some advice as to pricing and location and what I thought would work and what wouldn’t work here. I guess a little bit like a sounding board.  They actually approached us about potentially getting involved both from a personal and company standpoint. 

JA: What was your advice at the time in setting up that business?

I think the first thing is that coworking takes different forms depending on the area that you’re in.  So coworking in place like Augusta or you call a secondary market is very different from coworking in Atlanta.  Your pricing needs to be different. Your sizing needs to be different.  The companies yo are going to attract are very different.  And pricing is probably the most important because when you’re dealing with a space like SharedSpace over on Greene Street when you can go over to Broad Street and get a comparable office space.   So i think Coworking is an asset class in and of itself outside of office space and is very unique.  And one of the things I really tried to explain to them was that Augusta is not like Atlanta. That’s not a good or bad thing–it’s just a fact.  Some of the other things were that you need to be really, really careful about how you program the space, because coworking space really only works when it’s programmed properly.  Nobody wants to be in a coworking space by themselves.  You have to create a pretty inviting and exciting entrepreneurial community where you’ve got several people doing different things.  There has to be a good energy there.  And so i think that you really have to do a good job of programming certain events to give people a reason to want to be there, because a lot of people who are there are likely either working at home or they’re working somewhere else.  So you want to build that community, I think that was it.  And one of the parts where I initially tried to offer some advice in addition to that was getting the size correct.  

JA: Do you think we’re seeing a paradigm shift in the coworking space?  Are consumers changing the way they office?  We’ve seen the fall of WeWork, and now this.  What are your thoughts in general about the coworking model?  

JC: I don’t think so. I don’t think it’s the model. I don’t think wework’s struggles through their IPO are really a true reflection of the health of the coworking space and the coworking industry.  Again i think it works, but it has got to be done smaller, then growing larger. That was one of the biggest things that I didn’t necessarily agree with about SharedSpace was that I thought they went too big too fast.  Nobody wants to go into one of these spaces to be alone and what my advice was initially was pick a smaller space, maybe 3000, 4000, 5000 square feet–to be bursting at the seams.  Program it, get people in there, and have a waiting list.  Then once you’ve got that demand there and that community built, then you can transport it to a bigger space.  But by not having the right programming up front, by taking a space that was too big, I think this deincentivized people from wanting to be in there, because nobody wanted to be in there and hear their own voices echo.  So you’ve got to balance the cultural aspect of coworking space with the size of it itself.  Then the other thing is that if someone can go to Broad street, which is two blocks from there and a potentially more desirable location than Greene Street,  and get a location for about the same price for a company of three or four people, then that’s what they’re going to do.  So there’s still a decent amount of good office like that one on Broad Street.  So I don’t know how appealing it would be to me as a small business or as a freelancer to locate my business in there.  And I think what happened was that they ended up getting a few smaller versions of call centers.  And that goes against the whole entrepreneurial atmosphere that you’re trying to create.  

JA: What implications does this business case have for downtown business and retail?  

JC: Well I think the first thing is to understand why it happened.  Just because the concept didn’t work, doesn’t mean that coworking can’t work in Augusta.  There’s a significant demand for it.  And I think one of the things that we saw when I was involved in the Augusta Innovation Zone was that we also got to the point where we were almost going to be in a place that was too big.  And that’s why it didn’t work in the Woolworth building when we were were looking at that a few years ago, and we felt that there was a huge need for it.  And we had a waiting list.  But you had to start smaller to prove out the concept.  So I don’t want people to take away that this model doesn’t work in a market like Augusta.  It does.  You just cannot start to big and your pricing needs to be reflective of the market–it’s got to be lower than what you can otherwise get on Broad street or somewhere else.  The other thing is that the model really should work when you’re trying to also use the space to create new businesses.  So i think it’s one thing that the Clubhou.se has done really well.  And you know–they’re bursting at the seams, and as you know they’re located in the Cyber Center and doing great.  But that’s because the pricing is right.  The location is right, and I think they’ve proven that if you can partner with the right people and get entrepreneurs in that space and activated, that it works.  So that would be my only big takeaway is don’t look at this and say that the concept doesn’t work because it is working.  It just has to be done right.  The Clubhou.se has done a really good job proving that the concept does work. 

JA: Those are great lessons.  

 

A big lesson is the value of good advice–and how important it is as advisors to tell the hard truth to our clients.  What other lessons can you learn from this business case?  What are your thoughts about Coworkign in Augusta?  What is working?  What are lessons you’ve learned in launching a new enterprise? 

GA Power gives $50K to DDA for Downtown Storefront Improvements

Georgia Power is starting off 2020 with a pledge of $50,000 toward storefront improvements in downtown Augusta.  This is more than triple what they have donated in the past. For the previous two years they have donated $15,000 each year which was used to create a  facade matching-grant program. It has helped with projects but it has gone quickly.

 

The company’s regional external affairs manager, Stephen King, presented the Augusta Downtown Development Authority with the symbolic check.  He said, “It doesn’t come with any stipulations other than for the growth and development of downtown.” The program developed is a matching-grant program that offers up to $5,000 to downtown business owners who invest an equal amount in exterior improvements to their spaces.

 

For more details see Augusta Chronicle Article: https://www.augustachronicle.com/business/20200109/georgia-power-donates-50000-to-downtown-improvements?template=ampart

 

Contact the DDA for more information on how to apply for the grant: 

http://www.myaugustadowntown.com/

Downtown Rental Market Update

 

Today we’re going to be discussing the Olde Town Rental market update. Click here to download the Rental Study.   

 

Overall, we’ve seen the rental rates in Olde Town (Downtown Augusta’s primary residential neighborhood) climb from an average of $.67/SF to just under a dollar per SF over the past four years.  That’s a 32% increase, about 8% per year. What’s going on?

 

Well, as we’ve already mentioned, Cyber and Medical young professionals are choosing to live downtown.  That’s driving up rents and housing prices.  Also, investors are renovating properties, and so we are seeing more available rental properties that are in in decent condition.  

 

A decent case study is 107/105 Fourth Street.  We recently helped a buyer from Virginia acquire those apartments.  The previous owner had owned them for over 15 years, and they were in pretty rough condition with low rents. The new owner is going to make an investment into renovating the units, and with the help of professional property management, they will lease them at market rates.  The location of the property is great–the condition was terrible.  Now that complex (surrounded by young, professional homeowners) will probably target young professional or medical tenants, and we’ll see it on our rent study next year, my guess is on the higher end of our graphs.  

 

You’ll also see in the graph a strong correlation between the “Score” and the price per foot.  Our scoring system is a somewhat arbitrary numbering of properties by both location and condition from 1 to 5, and then averaging these two numbers together.  Thus, a property with location of 4 and condition of 5 scores a 4.5 in this measure.  The number again is somewhat arbitrary, but the correlation is quite strong.  So I would assign a property in rough condition and poor location an estimated rental rate of .65/ft, while a property with a good location and great condition an estimated rental rate of .95/ft.  Note that this measure doesn’t take into consideration size, which the first graph makes clear is highly correlated with the rental rate.  

 

I think this is great news for our Downtown rental market.  Augusta is changing, and I believe that the rising tide will lift all ships.  

 

What are your thoughts?  What has your experience been in the rental market?  

SharedSpace closes Coworking facilities at 901 Greene Street

SharedSpace announced last week that they were closing their 15,000 SF facility on Greene Street.  The Atlanta-Based co-working company still has two facilities in Atlanta.  The property is located on the corner of Greene Street at ninth, and has been listed for sale at 3.975M, or roughly $260/SF, and advertised for lease at $23.95/SF/Yr.  This is a beautiful facility, fully renovated, with 63 parking spaces.  

 

I think the situation is instructive about the true cost of occupancy downtown.  The number many use to calculate historic renovations is ~$150/SF.  If you purchase shell space at $50/SF, and have to find parking, you could end up with $250/SF invested in a space very quickly.  

 

For more information, see Damon Cline’s Article: https://www.augustachronicle.com/business/20191230/sharedspace-closes-augusta-office

 

What are your thoughts about the Downtown Market?  Or Co-working in general?

 

155-Unit Downtown Opportunity Zone Apartment Project Moving Forward–Continued Growth Downtown

 

Artist Rendering of Millhouse Station
Artist Rendering of Millhouse Station

 

Downtown Augusta continues to announce new projects and developments! Developer Ivey Development announced Friday they had closed on the land for a new downtown apartment complex.  This new development is in the immediate vicinity of two other ongoing development projects on Telfair Street, and three blocks from the newly completed Georgia Cyber Center.  

 

Ivey Development, developer for the 155-Unit Apartment Complex at 11th and Fenwick in Downtown Augusta, announced on Friday December 6th that they had closed on he land and were moving forward with the project. McKnight Construction has been selected as the General Contractor.  The land was purchased by Ivey Development from Jeff and Joey Hadden, who also own Phoenix Printing across the street.    

 

1024 Telfair Street – Augusta Office Solutions

This project is 500 feet from Augusta Office Solutions’ new building at 1024 Telfair,and a block from the city’s new fire station at 928 Telfair Street.   RD Brown is the general contractor on 1024 Telfair Project, which appears to be moving along nicely. 

 

This is great news for the City of Augusta!  155 high-end apartments will help fill in the housing gap created by continuing downtown developments, and will continue to press demand for retail and office space in the Central Business District.  

 

Congrats to Beman Group and Ivey Homes on what looks to be an incredible project! McKnight Construction Company, Inc. will serve as the general contractor. Trotter-Jordan represented the seller.  

 

What is your opinion of the downtown momentum?  What do you think we will see in 2020?

 

Augusta Chronicle Article: https://www.augustachronicle.com/business/20191206/ivey-development-acquires-downtown-land-to-build-155-unit-apartment-community

 

MKnight Construction Website: https://www.mcknightconstructionco.com/#1

 

Ivey Development Website: https://www.iveyhomes.com/

 

Article about the new fire station: https://www.augustachronicle.com/news/20190109/new-fire-station-slated-for-telfair-street

 

Update from RD Brown on construction of Augusta Office Supplies’ Telfair Street Building: https://www.browntrusted.com/overview/awards-accolades/

Parsons Corporation to lease space in Georgia Cyber Center

Parsons Corporation–A Defense, Security, Infrastructure and Intelligence Company with 16,000 employees and $3.6 Billion in Revenue–is the latest company to lease space in  the Georgia Cyber Center.  It is estimated that they will create twenty-six jobs with the potential for more in the future.  

 

According to Wikipedia, Parsons Corporation provided jet propulsion facilities during the cold war, and worked with nuclear, chemical weapons, as well as working in systems design for aircraft, missiles, and rockets.  Today Parsons focuses on defense, infrastructure, and security, and handles many federal and municipal agencies along with private customers. 

 

According to their website, Parsons has worked with the US Government for over 30 years providing technical and cyber intelligence solutions.  The Cyber Center will be a great match for them and they will be a welcome addition to Augusta!  

 

What are your thoughts about Parsons coming to Augusta?  It seems the nation’s intelligence and cyber contractors are coming to Augusta!  Do you think they will bring their whole operations here or just small teams? 

 

Additional Links:

Cyber Center Website
Press Release

 

 

3rd Quarter 2019 Olde Town Market Update

There are a lot of good things happening in Olde Town!  I had the privilege of turning over the role of President of the Olde Town Neighborhood Association to Bob Trescott, who’s been serving as Vice President.  As the father of five and brand new twins, I needed to trim my commitments, but I was encouraged to see lots of new and excited people with fire and energy to move the neighborhood forward!   

As far as real estate goes, many homes are under renovation and we’ve seen some notable sales driving up the prices.  The Renaissance Apartments at Third and Broad were foreclosed on by HUD last week, and likely will be sold as market-rate apartments in the next few months–that will be great for the neighborhood. We’ve definitely seen the prices rising–in 2016 and 2017 the average price per foot was (38) per square foot, and in 2019 so far it is (72) per square foot!  We are definitely seeing Gentrification is coming to the neighborhood. Also Olde Town Apartments is continuing to renovate and lease units.  

 

Recent Notable Sales in Olde Town:

102 Third Duplex, Sold to Jeremy Rueggeberg for $165,000 on 5/16/19

222 Ellis, Sold to Kelsey Kalyta for $122,870. (Not yet Recorded, should be soon)

220 Broad Sold to James Demons for $61,465.  They are already renovating and this will be a great home.  

224 Greene, Sold to Emily Beatty for $139,000 (Not yet Recorded, should be soon)

235 Broad. Sold to Shivaun Delisser for $115,000 (Not yet Recorded, should be soon)

Under Contract: 307 Broad.  This was listed by Atul Sinha, appears to be under contract at almost full price.

Under Contract: 224 Broad.  This duplex is under contract at almost full price, and should be closing in the next two weeks. 

 

Rents are also rising.  We’re estimating a $0.20 PSF increase on average across rental units in Olde Town over the last 2 years.  

 

Here’s links to two properties we have listed in Olde Town:

407 Third Street

260 Reynolds Street 

 

What are you seeing in Olde Town?  Are you a resident or tenant?  How has the neighborhood changed?  What changes have you seen?

 

 

Downtown Market Update–3rd Quarter 2019

It looks like the market in Downtown Augusta is continuing to improve!  There have been some notable sales downtown, with murmurings of decent deals being considered and hunted for.  It appears that the investors are bullish on Downtown, and that prices have not peaked.  It also appears that although there is talk of a recession, most people don’t believe Augusta will be significantly impacted.  It appears that some notable buildings are potentially transacting–Bonnie Ruben has put her portfolio on the market, and the Lamar building and the Marion building are both said to be under contract.  Ironwood Apartments sold the first week of August, and 1500 apartments are either just delivered or in development.  

 

Recent Notable Sales:

714 Broad Sold to Rafy Bassali at $39.66 per foot

1109 Broad: Security Federal bought the Geneological society for $900,000, or $126.30 per foot

1361 Broad: The Kendrick Group bought this at $170,000, or 42.92 Per foot

401 Greene: Heard Robertson purchased the building at 401 Greene Street to develop into Apartments

701 Greene:  Street sold for 2.5M from DWT Properties (Donnie Thomson) to Greene St Real Estate Investments.  

46 Thirteenth Street–the new Domino’s Pizza sold to Lead Dog LLC

 

Recent Notable Leases:  Notable leases include

Toaste of Augusta @ 722 Broad

State Farm @ 1126 Broad Street

Constantine Engineering @ 608 Broad

Best Lawyers at 801 Broad. 

Not included in the report are leases from the GA Cyber center.  

 

Here’s links to some of our downtown listings:

305 Eighth Street

822 Broad Street

1427 Broad Street

1295 Broad Street

King Mill Industrial

502 Greene Street

 

What are you seeing downtown?  What are your thoughts about the downtown market?  Are there transactions or activity that we’ve missed?  

 

Lease Report

https://presleyrealty.sharepoint.com/:b:/s/PresleyRealtycomTeamSite/EVIesZVZnEhAltvco0V8-FwB-Ce6iFAfIm_06kpH6n6yfw?e=gaAo2Z

Sale Report:

https://presleyrealty.sharepoint.com/:b:/s/PresleyRealtycomTeamSite/EVIesZVZnEhAltvco0V8-FwB-Ce6iFAfIm_06kpH6n6yfw?e=gaAo2Z

 

Downtown Augusta’s Luxury Apartment Boom

Downtown Augusta is experiencing a luxury housing boom.  Over 1500 luxury apartments have just been delivered, are under construction or in planning in and around Downtown Augusta:

    • Ironwood, Downtown North Augusta, 280 units Website
      • Ironwood apartments are adjacent to SRP Park–the Greenjacket’s stadium, with an upscale hotel and retail space, connected to Hammond’s Ferry subdivision. 
    • Residence at Riverwatch, Riverwatch Pkwy: 260 Units Website
      • These apartments were delivered in 2018, adjacent to the Costco Regional Shopping Center, and will walking distance to Topgolf.  
    • Beacon Station, Wrightsboro Rd: 220 Units  Website
      • These apartments are adjacent to the Medical College of Georgia, and a landmark as one of the first market rate apartment projects to be built in the Laney-Walker Neighborhood.  
    • King Mill, Broad Street: 250 Units
      • This is a luxury apartment complex that will be built in the King Mill utilizing historic tax credits and connected to the Augusta Cyberworks.  
    • Train Depot, Reynolds Street: 140 Units
      • The city of Augusta is partnering with BLOC Development to bring these units to market. 
    • Historic Cotton Warehouse, Wrightsboro Rd, 190 Units
      • Burt Development of Albany, GA, bought these in February of 2018.  
      • Plans for Historic Tax Credit development
    • Ivey Apartments, Fenwick Street, 165 Units
  • What do you think is driving the growth downtown?  Do you have any more details about any of these projects?   Have we forgotten any upcoming multifamily projects? What impact will 1500 luxury apartments have on Downtown Augusta?
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Update: Damon Cline at the Chronicle published a great story that goes into more detail on this.  Link

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