The entire build-out of Atlantic Station is anticipated to have 15 million square feet of residential, office, hospitality, retail and entertainment space. It is located in the heart of Atlanta's Midtown sub-market where it was built on the site of Atlantic Steel Mill, a formerly environmentally-contaminated property, at I-75 and I-85.
AIG has been selling real estate assets so that it can pay its debt to the federal government, which bailed out the insurance conglomerate at the height of the financial crisis.
Atlantic Station's Town Center has a nearly 13% vacancy rate, the result of a downturn in the economy says Dean McNaughton, senior director, Cushman & Wakefield in Atlanta, who specializes in retail. Although Target, IKEA and Dillard's own their locations, AIG and Jacoby own the rest of Town Center.
The project has seen its share of turnover, says McNaughton. "The restaurants are having a tough time, because the market is bad. There are also vacancies in the Lenox Square Mall in Buckhead, a premier mall in Atlanta, as an example, he says.
Material put out by Eastdil Secured on Town Center at Atlantic Station acknowledge that the property has its problems. It notes: "Between the existing vacancy and the number of tenants currently paying reduced or no rent, an investor will be rewarded by applying an aggressive asset management strategy to the project."
The owners of Town Center at Atlantic Station expect to have a strong response from would-be buyers, says Tony Wilbert, publisher of Skyline Views, an Atlanta-based real estate blog. The buyers will be operators or operators with capital sources behind them, perhaps even the Simon Property Group or another REIT. Simon already owns Phipps Plaza and Lenox Square Mall, the highest profile malls in Atlanta, he says. The REIT dominates the Atlanta retail market.
If Simon can't buy General Growth Properties, it is more likely to buy Atlantic Station's Town Center, says Wilbert. He doesn't believe that Jacoby Development, AIG's partner in the project, will buy out the whole development, even though Jim Jacoby told the Atlanta Business Chronicle last June that he wanted to buy a larger stake in Atlantic Station. Jacoby did not respond to GlobeSt.com inquiries by deadline.
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