Carter says Streets of Buckhead strong

Atlanta Business Chronicle
by Douglas Sams Staff Writer

Amid scuttlebutt that his landmark "Streets of Buckhead" project faces financial trouble, developer Ben Carter said construction on the $1.5 billion Madison Avenue-like development is moving ahead "full-bore" and that it's even ahead of schedule.

Carter, speaking by phone from New York on June 17, told Atlanta Business Chronicle that his mixed-use project is well-stocked with funding from real estate giant CB Richard Ellis Inc. and his own cash.

Carter, angered by speculation that his firm couldn't secure construction financing, said the concerns were fueled by rumors -- and that he would deal with them.

"We are building this out of our equity," said Carter, the founder and chairman of Ben Carter Properties LLC, developer of the Mall of Georgia, among other projects across the Southeast.

"It is a very tough [retail] market for some, but projects in great sites like ours are getting done."

The project promises to transform the historic Buckhead Village into a ritzy shopping and dining mecca.

The development has a nearly 600,000-square-foot retail and restaurant component with commitments from luxury retailers Hermès, AG Adriano Goldschmied, Bottega Veneta, Borrelli, Domenico Vacca, Etro, Loro Piana, Oscar de la Renta, Optical Shops of Aspen and Vilebrequin.

Contractors are pouring concrete for foundations and starting work on the parking deck, Carter said.

Recent speculation about Carter's project has roiled a real estate market that is extremely sensitive to lenders' behavior.

In recent weeks, some Atlanta developers, architects and construction firms gave anecdotal accounts of banks that reneged on construction financing for commercial projects.

Meanwhile, the housing market's crash has slowed retail sales at every level, though the luxury niche has been somewhat cushioned.

But, despite the resilience of that retail bracket, if a developer wants financing for a new project, lenders want to see retailers' names on the dotted line.

Streets of Buckhead is about 50 percent preleased, with the project's first phase set to open in November 2009. The project would need to be about 65 percent leased by the end of the year before Carter would need to worry, say retail brokers.

"It's all about having them locked up with no contingency," said Matt Winn, of the brokerage firm Cushman & Wakefield of Georgia Inc.

"In recent years, lenders were more willing to accept letters of intent and leases with conditions."

Not anymore, Winn said.

The buzz over Ben Carter's project is also being fueled by the fast-paced development of Buckhead -- the only part of the city with four new office towers under construction.

Another, 3344 Peachtree, was recently completed.

Buckhead, with its access to MARTA rail and the Georgia 400 interstate, and its tradition as Atlanta's ritziest section, is a safe real estate bet.

But lenders and investors have raised questions over whether Buckhead is on the verge of overdevelopment.

Land prices on key Buckhead parcels soared by at least $100 per land acre last year, said Alan Wexler, president of the real estate data firm Databank Inc.

The building boom also includes hotels, one of the components of Streets of Buckhead.

Several competing hotels are in the works, including Kronos Hotels LLC's Crowne Plaza and Sandcastle Resorts and Hotels' Buckhead Hilton.

Two hotels were originally planned for the Streets of Buckhead's first phase. Now, Carter said, he will probably build a Baccarat Hotel & Residences -- a subsidiary of Starwood Capital Group -- in the first phase, with a 1 Hotel & Residences to follow in the second.

Recently, a new competitor jumped into the fray -- Robin Loudermilk, newly named CEO of Aaron Rents Inc., who also sold land to Carter for Streets of Buckhead and has known Carter for much of his life.

Loudermilk wants to build a 15- to 18-story hotel beside the Roxy and across from the Streets of Buckhead.

Loudermilk said "there is some uncertainty in retail and "banks are nervous." He also said the Streets of Buckhead appeared to be moving forward.

Carter, who grew up in Buckhead, is seen by its leadership as the man to turn around what had become a seedy and sometimes dangerous bar scene in that part of Atlanta.

Carter began assembling land for the project in the early part of the decade to transform eight blocks of Buckhead's bar district into something like Beverly Hills' Rodeo Drive.

The Streets of Buckhead won Atlanta Business Chronicle's Best Overall Deal of the Year Award.

But tough market conditions have taken some of the luster off of ambitious new developments.

The Streets of Buckhead was one of several high-profile projects that was unable to make a big retail announcement at the recent International Council of Shopping Centers conference in Las Vegas, where such announcements have been abundant in recent years.

Carter will have another chance to pull off a major retail coup later this year when the International Council of Shopping Centers holds its regional conference in New York.

Streets of Buckhead
What: A $1.5 billion mixed-use development and luxury retail center, with hotels and offices
On board: Oscar de la Renta, Hermes, Etro, Bottega Veneta, Domenico Vacca, and Loro Piana; restaurants La Goulue Bistro and Bottega del Vino; hotels: Baccarat Hotel & Residences and 1 Hotel & Residences
Where: Peachtree Road at East Paces Ferry Road
Opening: Fall 2009
Developer: Ben Carter Properties LLC