The development team leading one of several transformative projects in Downtown Atlanta has expanded its vision.
Newport RE has acquired 1 acre of parking lots along Peachtree Street and a historic building at 175 Trinity Avenue, the company confirmed this week. The two properties border buildings that Newport acquired years beforehand. There are no existing tenants in the 175 Trinity building.
It’s still too early to determine plans for the properties, said Newport Senior Vice President April Stammel, but the company will stay “focused on continuing our pursuit of more neighborhood focused housing and retail options.”
The Georgia Municipal Association was the seller. Atlanta investment firm Tioga Capital provided the acquisition financing. There are no existing tenants in the 175 Trinity building.
The new properties grow Newport’s holdings in South Downtown, where the development company is now re-energizing 10 blocks of historic buildings and vacant lots. Two components of the project are underway, including the rehabbing of:
Last week, Newport unveiled plans for its first two residential towers. The two apartments, which are 18 and 21 stories, will offer 650 studios, one-bedroom and two-bedroom units. Newport expects to begin construction in 2023 and to complete the project in 2025.
New era for construction
Further construction in the South Downtown project is unfolding during an uncertain time for Atlanta’s real estate market, which is beginning to feel the weight of inflation and repeated federal interest rate hikes. All commercial real estate projects coming out of the ground in Atlanta are impacted in some way by the current economic climate.
The cost of acquiring construction financing is higher. U.S. lenders are becoming more selective and issuing fewer new commercial property loans. And though there is more equity waiting to be deployed than ever before, institutional investors (think: Blackstone Inc., Fidelity Investments) are sitting on the sidelines until more positive economic indicators emerge.
Prices of construction materials are volatile, too, and higher than pre-pandemic indices. More expensive construction costs lead to higher rents on available space, but there’s a limit to which developers can charge without hurting leasing prospects.
The transformation of 222 Mitchell could stand to better weather the slowdown than other office buildings in Downtown. Buildings completed after 2015 have seen more leasing activity over the last eight quarters than any other type, according to a study from real estate services firm Jones Lang LaSalle (JLL).
Though 222 Mitchell is not a ground-up building — it dates back half a century — the renovations Newport have led over the past few quarters are turning it into a completely new structure. The only ground-up components of Newport’s project so far are the recently-proposed apartment buildings.
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