By Stewart Voegtlin
February 08, 2006 07:26 pm
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In late January, the Industrial Development Authority Board met with Wit Truitt and Chip Watson of Trammell Crow, a commercial real estate company in Atlanta, to discuss the marketing of its most significant asset, a 298-acre tract located off Highway 36 West. Purchased in 2003, the tract spreads over three counties: Lamar, Spalding, and Butts, with the majority of the land – 186.10 acres – falling inside the Butts County line. The acreage includes the northern part of High Falls Lake where the Towaliga River feeds into the lake, and is partially bordered on the west by Short Road.
The shopping for a marketing firm continues, as the IDA Board met with Tommy Hughes and Harold Wyatt of commercial real estate firm Carter last Tuesday. Carter, the Southeast’s oldest and largest privately held real estate firm, is a full-service firm with four business units: investments, development, transaction services and property and facility management.
Where the meeting with Trammell Crow was marked by optimism and a celebration of the site’s selling points – proximity to the interstate and rail; short drive to Florida – Carter brought a somewhat sobering vision to the table, as both Hughes and Wyatt shied away from the Board’s proposal to use portions of the property for residential development, urging patience during the sale and warming to few of the site’s selling points.
“Well, industry is about to become a misnomer unless you are in China,” said IDA Board Chairman Bill Jones. “We are really an economic development authority; we’re here to build the tax base. And when we’re looking at the [298-acre tract], the thing is that it overlaps three different counties, with the majority of the acreage in Butts County. Residential is probably a feasible possibility left for this property. This is where we are at this point.
“We’ve had several suitors for the tract, mainly for the frontage property for residential. The main thrust is to use a company like [Carter] that could dispose of the property, and we’d like to use a developer to realize this, if possible,” said Jones.
“How quickly would the Authority want to sell the property?” asked Harold Wyatt. “Are we looking at a six to ten week period, or something like two years?”
“It would depend on what we could realize in six to ten months,” said Jones.
“Is there any reason for the IDA to warrant unbonding part of the land?” asked Wyatt.
“Are you referring to the lakefront property?” asked IDA Board Member George Weaver.
“Is this an all or nothing type situation, or can we subdivide?” asked Tommy Hughes.
“We’re open to that, but we do have some notes to pay at the end of the year,” said IDA Board Member Bill Hart.
“Traditionally, land does not move quickly,” said Hughes. “Is this residential portion set in stone? I would think that the best use for this property is industrial. But, like [Bill Jones] said, there are no manufacturing jobs to be had. The I-75 corridor to Florida, however, is appealing.
“Ultimately, your distribution jobs today are very different from 10 years ago: higher wages, higher skill level. And contrary to what people are saying, there’s still a lot of land left in Henry County. You do see a lot of rooftops, but there are plenty of buildings that you can go to,” said Hughes. “Any developer is going to look at this: the absorption; it’s because the carry cost is what kills you. On a macro level, you’re looking at competition from Atlanta, on a micro level, Henry and Butts counties. The competitive advantages are different: you are closer to the ports – Miami, Jacksonville, Savannah; that may play a factor. Then there’s the infrastructure on Highway 36; no one else has that.
“But you’ve got to think: Who’s the buyer? It’s one of three scenarios,” said Hughes. “It’s either a merchant builder, or one of the old timers – the buy and hold types like Patillo or [the] Rucker [Group], or it’s an institutional buyer – someone that’s going to put a sophisticated package together. The value of the land is in the density. [A potential buyer] will look on a Floor Area Ratio (FAR) basis.
“We recommend that the IDA spend some money on a civil engineer,” said Hughes. “Determine the maximum density. Basically, the more education the Authority can provide regarding the site, the quicker it sells.”
“So, [Carter’s] main thrust is pure marketing, not development?” asked Jones.
“We’re very much in development,” said Wyatt. “But we are here to market this land. Our internal knowledge about development sets us out from our competitors. We’ve got in-house development capability.”
“Do you actually build or hire contractors?” asked Hart.
“We hire contractors,” said Hughes.
“Would [Carter] look purely for what the market is for this property as it sits?” asked Jones.
“We would definitely show the property to Carter Investments,” said Wyatt. “We would expose this property to all of the capital sources we have, but if Carter Investments bids the highest, more power to them.”
“From a development side, would you be interested in closing something like [the merchant building] you’ve done in Douglas County?” asked Jones.
“Absolutely. We’ve been looking at Butts County for a while,” said Hughes.
“We do have bonding capacity and that’s one of our strengths with this property,” said Jones. “The natural exception is that we are further south from metro Atlanta. Basic utilities are in place, but we do need marketing – we’d like to think it would be more than a sign or a phone number.”
“You’re certainly not going to get a buyer that way,” said Wyatt.
“The goal is to make it as easy as possible to navigate the waters,” said Hughes. “You’re going to create a flyer, post a sign, put the property in CoStar, so on and so forth. Beyond that, we would go to the database of local and national developers that we have. It’s awareness that’s key; once we get people interested, [the site] is going to sell itself.”
“What you buy with Carter is our relationships from being in Atlanta for 45 years,” said Wyatt. “The buyer is coming from us picking up the phone and calling Industrial Developments International, Duke Realty – any of the big players.”
“And the thing is, you don’t know how much the property is worth until density studies are done,” said Hughes. “That’s the way land works.”
“Every piece of land is different,” said Wyatt.
“The biggest thing is the infrastructure on Highway 36,” said Hughes. “If I’m a user, I don’t know why I would want to buy on 155 if I can go a few miles down, hit I-75 and not have the congestion.”
“We’re going to have plenty of capacity for vehicles,” said Jones. “We don’t have an airport, but we’re working on that with the state prison. Bill, what was that about the airport?”
“[A runway strip length] of 5,000 feet – enough for a small jet,” said Hart.
“Still, I think the land worth is dependent on the kind of density you can get,” said Hughes. “Realistically, we’re likely looking at closing within in the next nine to 36 months. Of course, someone could show up and you could sell a portion of the site. Really, it comes down to what the Authority is trying to accomplish. Industrial developers would look for improvements for Short Road. More than likely, industrial developers are the market. And you’ve got to ask: What does the market want? – Big bulk real estate?”
“What do you see as the pros and cons of this site?” asked George Weaver.
“Perception is a funny thing – it drives business,” said Hughes. “The state pen is something that you’ll fight against.”
“Versus trailer parks?” asked IDA Vice Chairman Pam Browning.
“It’s extremely competitive,” said Hughes. “At the end of the day, the building that someone like Cousins [Properties] builds is hardly different from anyone else’s building; it’s a perception thing.”
“One thing we have here for sure is water,” said Hart.
“And that will definitely benefit you,” said Hughes. “Is the lake used as a drinking source?”
“No, we pull out of the Ocmulgee River,” said IDA Board Member Mitch McEwen, who is also on the Water Authority Board.
“The lake, though – this whole area in question about residential is really only a foot deep,” said IDA Board Member Bart White.
“[The Water Authority] has a moratorium on residential sewer,” said McEwen. “We really don’t want to go that route; we’re looking to further the tax base. If you’re talking about a big box type development, you’re looking at low water and sewer use. Residential development will put a burden on services, school system; industry will create the most bang for the buck.”
“We have too much residential as it is,” said Hart. “We need industrial – that’s why the taxes are so high.”
“There’s a lot of people in Henry County that want to get out; it’s just the natural progression of things,” said Hughes.
“The big thing is that it’s built around starter [homes],” said Jones. “If you’re going to have residential, you want the next step – the empty nesters. Do you have any models for joint developments, or is it an either/or situation?”
“If you want to sell this land, that’s probably not the route you want to go,” said Hughes.
“Carter Investments might pay the highest price,” said Wyatt. “If you want us to take them of the table, it’s up to you.”
“I don’t think we have a lot of time to waste,” said Hart.
“The toughest pill to swallow is patience,” said Hughes. “It’s not going to happen overnight. I think time is the biggest thing. You have the City of Atlanta and the ports; you’re not far from Macon and you’re well within the reach of the Atlanta airport.”
“What about the one day drive to Florida?” asked Weaver.
“That’s very hard to measure,” said Hughes. “It’s a marketing tool that sounds good.”
“[Carter’s] marketing thrust would be what?” asked Jones. “What image would you paint? Would you pitch it as a site or sites?”
“If we’re pitching to developers, as a site,” said Hughes. “If we’re pitching to users, as sites. But, we don’t want to get into a process of lopping off an acre at a time.”
“What about the fact that the site overlays three different counties?” asked Jones.
“That probably would make a difference in regard to incentives,” said Hughes.
“We didn’t have the choice to just buy the Butts property, you see,” said Jones.
“We’d definitely have to engage the other counties,” said Wyatt. “Butts County’s driving this, though.”
“You see cross county deals all the time,” said Jones. “The magic of a county line has disappeared.”
“We want the Authority’s business,” said Hughes. “We’ll do what it takes to get your business and we thank you for this opportunity.”
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