Welcome and Guest Introduction

SPEAKER_00 0:00

Hey guys, welcome back to the Sunbelt Developers Podcast. My name's Tim Wright. I'm a broker at Cushman and Wakefield. Uh we have an awesome guest with us, Chris Fosman. He's the founder of Westbridge. Um, really one of the pioneers of West Midtown, and here to share with us the history of West Midtown, but also where it's at now and where where it's heading. And um really excited about the conversation. So Chris,

Chris's Early Real Estate Journey and Westside Urban Market Origins

SPEAKER_00 0:23

welcome. Um I'd love, you know, just your background and give us kind of how did you even get into real estate? Are you from Atlanta? Great question.

SPEAKER_01 0:30

Yeah, grew up in Atlanta and um had a um, you know, always kind of just had an interest in in tr in trying to kind of find you know older buildings and uh and find new uses for them. Um I'm probably that entrepreneurial tract. I think I worked I worked at Winter for about 12 months. And other than that, I've always just kind of been on my own and trying to find uh you know, f find uh kind of ways to repurpose buildings. And uh and so anyway, and around the early 2000s, saw this little intersection at 14th Street and Howell Mill and really recognized that there was a lot of opportunity there. Um about at the same time, um Michael Phillips, who has now gone on with Jamestown, uh had redeveloped a uh a little uh little center and called uh Westside Urban Market. And that was kind of the interesting thing at that time, where I think Michael was really, really good at bringing, curating a great group of brands who weren't who were in maybe in Buckhead and other parts of the city and kind of creating a co-tenancy uh with Anquitrano, with uh you know Mike and Eddie from Takaria Dol Sol, and um and and just kind of creating this great little center. And it really became a thing. You had people, it was destination. And um, you know, from that perspective, it was a uh it it was something that we really felt like could uh could could be the lightning rod of growing something much larger.

Early Acquisitions and Adaptive Reuse Partnerships

SPEAKER_00 1:49

Yeah. I I didn't ask this before, but had Walton communities done their apartment?

SPEAKER_01 1:54

Because I they were they were they were 10. Okay. Yeah, they were 2010. Yeah. Okay. And this was 20 what or so West Side of the Market was probably like um 2000. Wow. Yeah. It opened around 2000. Yeah. Okay. And um we really started our um acquisition of the White Provision Building, which was an old U-Haul building, 46 loft apartments, kind of storage, U-Haul. Um West Egg happened to be there. That was the original home of West Egg, um, in 2004 is when we kind of started acquiring. And so we acquired three of the four corners uh where Mujo and Cooks and Soldiers is. We also acquired that piece as well. Wow. Um and so from, you know, and that was kind of it. And we we saw an opportunity to really just grow this uh, you know, what had kind of started. And um and thankfully, uh Matt Bromfman with Jamestown, uh they had you know Pond City Market and everything else that they're known for, all the great projects they're known for in Atlanta. Uh with Chelsea Market in New York, they kind of understood the value of these uh these loft spaces and kind of the adaptive reuse space. And I think at that time it's funny, as we look back now, adaptive reuse is you know, it's it's its own category in a lot of ways. But you know, in the early 2000s, in the Southeast, adaptive reuse really was just not what it is today. Uh but thankfully with uh Jamestown, they had seen the benefit of that in New York, and uh they came in as uh and and a partnership was formed to uh to to redevelop that site. So we redeveloped it. It was 330,000, the what was the white provision building at the time was 330,000 you know square foot development. So um it was uh yeah, pretty uh pretty it was at the time for where you looked at the and if you look at the map of kind of what what had w what was there at that time, yeah, it was all functionally obsolete industrial buildings. There was really nothing there.

Forming Partnerships and Early Development Strategies

SPEAKER_00 3:41

Yeah, I I know we were poke around I I might just bring it up just to get the context. While while I'm doing that, so I know we we're kind of just jumping right into to West Midtown, but like your your background. So you're at Winter for 12 months. Like had you done any other projects before you saw this kind of West Midtown opportunity?

SPEAKER_01 3:58

No, so what so what happened was is that I think it happens with a lot of kind of things is there's a a guy named Jay Weaver. Uh and Jay's down in Charleston now developing stuff there. He's actually partnered with Jamestown on a deal in in Charleston, uh the Navy Yards Project. Um and uh he was also at Winter. And um and you know, when you're when you're in your late 20s and you you know working for another company, you're just like, we we can do this ourselves. And so Jay. Yeah, right? You've done it for five years and yeah, yeah, yeah. And uh and so Jay had left and formed a uh a partnership with a guy named David Woodbury. And so then it was Weaver and Woodbury. And we had a great little run. So that was probably call it '98 to kind of two thousand four. And we bought different buildings in Midtown and really were just kind of value add um development company. Um and then probably st did some some industrial as well. And it's kind of funny. I I probably pushed more towards the adaptive reuse. David pushed more towards the residential, and Jay pushed more to the industrial for a while. But um, but yeah, that's that's how kind of these things happen. But yeah, it's funny to look back at that where you're just, you know, you you you you think you you think you can do it on yourselves. You know, so that's that's that's how you do it.

SPEAKER_00 5:07

Well, it's funny, you know, after all these interviews, 34 years old is like that seems to be a repeated theme. And I I've I've heard it where it's like, you know, 32 to 35 is probably the window where people are like, I've got this, I'm gonna go out. Like we had Sanji in here a minute ago. He was 34 when he went out on his own and had a couple of wins early on and was like, I got it. We had Brian McGowan. We've had we've had a number that have said that was like their their age, where it was like, all right, I'm gonna go figure this out.

SPEAKER_01 5:33

Well, sure. I mean, the I tell people all the time when I have coffee with them and they're like, I think uh you know, tell me how you did it. Like, I I'd like to do it. I'm like, um, are you married? And they're like, Yes. I'm like, Do you have kids? And they're like, uh, well, my wife's pregnant. I'm like, Yeah. You need to go home and have a long conversation that you're potentially not going to make any money for like 18 months to two years, you know, type of thing. How is that gonna go? How's that gonna go?

SPEAKER_00 5:54

Like, what about insurance? Right, yeah, yeah.

SPEAKER_01 5:56

So it's like it it's funny because like, but the longer you wait to do it, it also the harder it becomes because as your kids, you know, I have a 21 and a 16-year-old right now, and it's like, you know, you know, you get to raising families and it's it's there's never an easy time, but you made a great point. It's like you've been at it for five years, you you think you know how to do it, and you really you're the next phase of your life really hasn't completely launched yet.

SPEAKER_00 6:19

So we're like right at that. We have uh an 18-month-old and three weeks out from baby number two. So exciting times. It is. There's a lot, there's a lot going on. Um

Mapping Early West Midtown and Cultural Anchors

SPEAKER_00 6:30

all right, so I've I've got for for those listening, we have a big screen here. Maybe go to YouTube if you want to get the full the full experience. That's my first time ever giving a plug to YouTube, but um so we've got Google Earth Pro up here, and what's really cool about this is you can click back on the timeline.

SPEAKER_01 6:48

Go to 2002, that's a good place to start. Okay. See the reservoirs up there. And so that's West Side Urban Market. We're Takeria del Sol, and it was right there. So yeah, by 2002, that's developed. Um and that's really the only um the only asset in the in the submarket at this market that this point has been developed.

SPEAKER_00 7:05

Just a little oasis.

SPEAKER_01 7:06

Yeah, and it's just um you know, and and and the funny thing about Westside Urban Market at the time is that it was um it was just the it was I think Michael and his party, Kate and his partner Katie Walker did a great job of um just simple design. A lot of it, even today, look at it's just paint. It's just well, well-executed design, um, but not over the top buildings. Uh and they did a really good job. And you know, with that, bringing, as I said, kind of bringing in best in class retailers of you know, kind of pulling, pulling them into the uh the submarket. But as of uh you know, as of 2002, that's kind of what what you have right there is just a bunch of uh uh you know, just industrial buildings. If you kind of zoom out a little bit and go s go south um a little bit further, um the the most important cultural icon of the entire neighborhood is is right there at the corner, which is the Northside Tavern.

SPEAKER_02 7:56

Yes.

SPEAKER_01 7:56

Um, you know, and and so uh Northside Tavern, great story. So the the Webb family owns it, Tommy now runs it. Um his sister Ellen, who passed away, gosh, maybe a decade ago at this point. Uh but I got to know Ellen really, really well in in developing it. Um her dad basically loaned some guy uh some money uh to run a bar, and shocking, he defaulted. And uh so uh he took took it back and Ellen Webb ended up running it um for about 30 years. And uh but yeah, I think when we think about like the area and like what makes areas great, it's not all the new stuff that really is coming in. It's it's kind of leveraging those cultural icons. And ironically, a blues bar with a probably not code compliant bathroom, it might be the most one of the more important cultural icons in that in that submarket to kind of creating the environment

Stockyards History and Haunted Building Rumors

SPEAKER_01 8:52

that's there.

SPEAKER_00 8:52

Do you know if Alan Morris ever went to them?

SPEAKER_01 8:55

Has anybody I mean when they were trying to Nathan, they they went to them at one time, and you know, and I'll give Nathan Nathan is a good friend of mine. And he uh I think he did a really good job of like trying to find a middle ground of how they could build the Star Metals project, but then also continue to have the Northside Tavern there. Um But you know, it's so funny because like you think about that jux juxtaposition, right? It's like, yeah, so if you had a business dinner in in the market today, you'll say, let's go grab dinner at maybe Mujo or Marcel and then go to the Northside Tavern after. Yeah. Yeah. Really light in the mood a lot. Um but yeah, as you as you look at the neighborhood as a whole, so you know, everyone kind of wonders like why why is it called Star Metals? And so if you go to the site right there, like it was actually called Star Metals Recycling. And that's what just a bunch of rusty material, just yeah. And even uh so if if you kind of go on Street View, you can find that there was an orange caboose. Ironically, the caboose is the logo of the uh um CID. I know exactly what you're talking about. Yeah. So that that is now the uh our our and so again, it was kind of a little bit of a nod to the past, but you know, when we go back to that 2002 image, um what you see is there's just not a lot there. The 1016 Lofts projects under you know under construction. And yeah, it's uh just an old industry.

SPEAKER_00 10:12

Aaron Powell What was this okay, you're saying that so they cleared that out for the apartments that were coming. You got Hattie Bees, that's where that is today. Yeah.

SPEAKER_01 10:19

And that's our stockyards project that we did kind of on Brady, a little bit further south. Yeah. So um and then uh Brickworks, which is down kind of and that and that was really at the time, that was the neighborhood. It was this uh it was really kind of bounded by, you know, how Howell Mill and uh and and Brady and uh and and that was the M Street apartments, I think that's on that site right there. But again, not a lot there. But what you saw was is um you know, I think what really so let's talk about, you know, kind of the next steps of of the neighborhood. You had you had Westside Urban Market, which was a very kind of refined, you know, um lightning rod of kind of great operators. Um you also had large industrial um parcels of property. And when people are trying to develop, when you're not having to pick up a little tiny, assemble 14 little pieces to get a developable site, kind of works. And so you had these larger, um, these larger blocks of of um of property. Um you also had a great um building stock. And so, you know, because the area was originally a slaughterhouse area, Miller Union stockyards is really the histor the history of it. And so the the rail, um, you would have the railroads that would offload the cattle. And so then the cattle, again, you think about this today, but that's where the the uh three rail lines come together, they would offload the cattle, and then when they would go to the Miller Union Stockyards, which is located where the Marta facility is currently located on Brady Avenue. Okay. And the uh the cattle would be auctioned. And so I got a question for you.

SPEAKER_00 11:51

Sure. This came up at a meeting the other day. So Fitzco, Fischer old company. Uh-huh. Um they are co-tenants. What's the other tenant in the city? I know where this is going. You know what I'm talking about. Oh, we developed it. We put them in there. Okay. So somebody told me that there was some statement about this is a haunted location. Okay, so like this is that basement kind of area, and they like didn't want to pay rent on it because it like there's some old clause in Georgia law that's like if there were I don't know. I'd never heard that. Okay. Give me like what what actually I'm trying to get at. Because it's I think you know, the game of telephone stories get get switched around.

SPEAKER_01 12:28

So the Stockyards Project was a uh was a former slaughterhouse, again, white provision. Um if you're ever at the White Provision building, if you look at Marcel, there's the there's kind of a ramp structure that was early 1900s engineering, so the cattle would actually that was a cattle ramp, so they would walk up to the top and then they would basically process from there. Um Stockyards building also was a uh was was a slaughterhouse. And um, you know, it whether there are um cow spirits or not, I that that I don't know.

SPEAKER_00 13:00

Um, you know, but somebody tried to make the argument they didn't want to pay on that lower area.

SPEAKER_01 13:05

No, we we've we'd sold that to Clarion in 2020. During our ownership, we did not um we did not we did not have that

Office Market Risks and Adaptive Reuse Success

SPEAKER_01 13:12

conversation. Did not experience the weird email. We never experienced any of the You know, it's funny when you get in these old buildings, you find like weird things. Yeah. Um and um you know, but I've never I I someone when I said I know where the stor this question's going because uh I I've had people ask me that question before. They're like, Have you ever been in there and felt like you know, like spirits or anything? And I'm like, no, I have just getting back to it, so like the the history of the of the neighborhood was um you know, is it was this kind of slaughterhouse slaughterhouse meat packing. Yeah. And so for us, I think from a branding perspective, it was able it was early on really helpful for us to be able to you know align with like the the Chelsea meat packing. Again, that was also part of the Jamestown and then Michael Phillips connection. Is it and I think that people in it while adaptive reuse in Atlanta was not what it is today, um, I do think that most people had been to Chelsea market or been to the meatpacking district and be like, wow, this is great. And what I think what people saw also was is that like influential brands probably preferred that more than you know, trying to get that customer, that grittiness that was kind of part of that meat old meat packing industrial, you know, um neighborhood than you see you see in you know, kind of I hate to say malls and strip centers and that. So I think that was kind of our branding as well as we you know, we always wanted to be a little bit um, you know, a little bit grittier than and kind of the grittier part of the city, but then also in a very polished and refined way. So and you can point at something and say, this does work. It works. This is like yeah, it worked. Wow. And when you're dealing with kind of folks that are uh on the retail side, uh one of the things in my role is, you know, I'm product agnostic, um, meaning that um it's not like I'm just an office guy or just a retail guy or residential or you know, we we pretty much have involved with everything except probably uh hotels, which to me are their own class. It's an operating company. Um but because of that, you know, it wasn't like when we were developing it, we were like, we're just gonna build multifamily or we're just gonna build um, you know, um uh um office. It was trying to kind of build, you know, quality of life of kind of saying, okay, like X amount of F and B, the right amount of uh of of retail, we need offices as well. We need, you know, we need people working here, we need a daytime population, we need residents. So, you know, that was kind of the thing as as it kind of progressed that I think as you as you build these these these types of projects, um, you know, they they have to evolve and grow.

SPEAKER_00 15:38

Yeah. So so we've got this little oasis. I don't know how much more we want to go into the the timeline here, but um at some point you petitioned a a bridge to connect the two. Yeah. I'm curious like the back story behind that, and I mean it makes a lot of sense. You're you know rail yard.

SPEAKER_01 15:54

Yeah, but so um yeah, and I've so yeah, we so um I love design meetings. It's kind of like one of the favorite things, you know. You know, we we we deal with a lot of stuff in developing a project. It's you know, the environmental, finance, uh construction, but design is still one of those fun things for me. We're sitting in a design meeting at Smith Dahlia Architect's office, and um, you know, Mike old's there, and he owns uh West Side Urban Market. And we're like, you know what? How great would it be if we just built a bridge? Like, oh, built a bridge over the rail. Sure. Fantastic. And um, so we had this idea, and um, you know, we we we were able to pull it off uh working with Norfolk Southern, uh, who ended up being really great to work with. And um, you know, really it became an iconic um, you know, kind of uh moment in the in creating the district. I dunno I think if we don't build the bridge that the two properties don't work together as well that they as they do. It would the goal was not to keep people off Howell Mill. You know, again, on the I had someone sometimes question it and say, well, shouldn't shouldn't the existing right-of-way be where people are are walking? And at the time, Howell Mill was probably more industrial than it is today. And so for us, it was trying to create a you know a kind of a connection between the two properties that people really wanted, you know, was was great. Yeah.

SPEAKER_00 17:11

We've been over there with you know our son and actually, you know, push a stroller over a bridge and it's not the same experience on the sidewalk, you know, cars and whatnot. But yeah, and it's great.

SPEAKER_01 17:20

We you know, people the you know, we see proposals there, and so the bridge, you know, it was great. My uh my 21-year-old was four at the time, and he cut the ribbon for the bridge. And so it was just kind of like this connection. Yeah. Um and uh but yeah, the bridge was and that's where West Bridge comes from, just kind of West Midtown and Bridge. Uh it was in 20 some odd years, that's probably still one of the favorite things that you know, one one of the favorite things that I have have been part of, just because of the um just because it really became part of the community and something that people use a lot.

SPEAKER_00 17:48

Yeah, no, it's very, very utilized. Um You said it was easy to deal with Norfolk. I'm curious how that can't. Y'all just sent them a letter said, Hey, we we want to build a bridge over your rail. And I know so context, Centennial Yards, when they were building the Nelson Street Bridge, I I had heard I mean they had a very tight window to put their you know bridge over it, and it was like they paused all the train traffic, and then as soon as it was released, it was just like trains for the next 48 hours to kind of release the valve. And um I'm curious what y'all's experience was.

SPEAKER_01 18:20

Um we were lucky in that it was just a single line. So just Norfolk Southern owned that line. A lot of times it depends. Um so for example, behind Stockyards, that's a major going to Inman Yard, state of Georgia owns that. CSX is on it, um, Norfolk Southern's on it. So that it there's a lot more people that you have. So really it depends upon who owns the line and who's on it as to how hard it is to build a bridge. We were we were lucky that it was just one entity in Norfolk Southern that we had to deal with as opposed to dealing with multiple agencies. Um they give you a it was essentially they gave you a box to say, okay, has to be, what was it? I think it was twenty twenty-two feet, twenty-five feet or something off the top of the rail, and and it basically had to maintain a box. And so the camber of the bridge is basically designed to stay outside of the box. The fact that the fact that um the Howell Mill bridge is lower um didn't really matter because I made I made the argument, I was like, well, why do we have to go higher? There's already precedent for a Right. And they're like, well, because you know if that bridge is ever replaced and it's replaced higher, we want to, you know, to our standards. And so again, part of work working with a lot of these agencies, I find, is when the other side of the table, there's really no upside for them to grant what you're just find ways to say yes. And I think that's what we did there is we were able to kind of go with them, work with them, and explain what we're doing. Um they they they do they are supportive of bridges when there is like ownership on the same side to reduce at grade crossing. Um and that that history kind of goes back to Atlanta, why the gulch was built because businessmen were being hit trying to cross train tracks and it became an issue. Yeah. Um so um, but yeah, that's that's kind of the history of the bridge and how we got it done. And uh and yeah, when we when we installed it, um we that we were unable to um, you know, stop the trains. They basically gave us a window, and the window was basically from 8 a.m. until dusk. And unfortunately the Amtrak has uh right um to go whenever they want to go. And so that and so that Amtrak train was running late. And so we literally installed the bridge at like it was right it was in October, it was October of 2018 or 2008, and it was dusk. Like I mean, it was like the end of the end of the day when we got the thing in. Got it.

SPEAKER_00 20:37

And then they keep started coming. And then they started growing, yeah, they started rolling. Yeah, yeah. Wow. Coming back to our timeline, yeah, West Midtown ends up having this unbelievable run. We've got Sid Mashburn's over there, you land some office tenants, Interlock comes along. I'm curious what what was that dynamic um where that how that project came about, and did you all have a look at that site? Or was that I mean obviously when success happens, then you know the market talks and you know it attracts more investors and different parties. Like how how did that play out?

SPEAKER_01 21:08

Yeah, well I think the growth the growth was always based upon saying we kind of created this um placemaking through adaptive reuse, and then um and the the tenancy that that was initially there were non non-national tenants, really non-regional tenants, but they were really, really good at what they did. So the placemaking was kind of established with um you know with with with great tenants and um and great buildings, adaptive reuse, cool spaces. From that, the new development starts. And so, you know, when you kind of look at how these things, these these economic generators are really no different than ponts. And you know, Matt Bromfon and I you know had a conversation one time, and we were like the the one thing the probably the one mistake we made over there is not buying all the land around us, because the one thing I've learned is when you create these economic generator projects that are successful, new developers. Development will follow. And so that was really the next, the next phase is that a certain point you run out of viable adaptive reuse alternatives. And there's also now density. Now all of a sudden more regional and national developers are looking at it and saying, yeah, we can get a deal done here and financed, and there's demand. And I think that was really the next wave is you know, we we had had success, we were on the map. Um but you know, when when you really looked at it, overall it was not a very large office market. Um it was primarily kind of retail focused, you know, retail and kind of land.

SPEAKER_00 22:40

Aaron Powell Got it. And it was just y'all, I mean, how much office did y'all have?

SPEAKER_01 22:44

And white provision is 50,000 feet of office. There was some down at Brickworks, maybe I don't know, 70 Richard maybe had 70,000 feet of office down there. Um and then really before Alan Morris, Nathan and Alan Morris came on board, you know, there really wasn't, you know, and then it stock we did the stockyards project, and uh you know, that was um that was a hundred thousand, you know, roughly around a hundred thousand feet of office. So it was fairly a small in in aggregate, the whole office market was probably a half million square feet.

SPEAKER_00 23:10

Yeah. You know, they were kind of boutique y location. Very special. That's right. Um

Acknowledging Alan Morris

SPEAKER_00 23:15

shout out Alan Morris if you're listening. We we have him coming on in August. Okay, good. I'm really excited about it. Who's coming? Uh Alan Alan Morris senior. Yeah. Out of I think he's retired now. And I know he's not well, yeah. Nobody's ever really in that world. But um I it took took a little bit of uh most of the guys that listen and um or that that are in this kind of field usually I mean, we were talking earlier, you're usually more private, not wanting to be out there. It's like I know for Sanji when we had him on I guess that was last July, it was he started realizing, okay, this was a a kind of a legacy piece for him. These are stories and deals that maybe around the dinner table he was you know, his kids would hear, like, oh why is dad so stressed out, or like we haven't seen him in a couple days, or like he's just, you know, burning the candle at both ends, like what's going on. And so for them to hear really what the context was, the full story and how these things kind of interlaced and and how they became success, it's like it just it clicks. It's like, okay, this is really a legacy piece to kind of I don't want to say set set the record straight, but it's like to to document it. And um there's just I'm I'm a tenant rep, like our our deal is it is be very selective with the information that you share. It's like you just as a fiduciary duty your client, it's it's um so uh just a lot of you know interesting dynamics and deal stories just kind of get lost to time because I don't know, it's it's usually a relief when the deal is done and you don't want to think about it again until you know later on.

SPEAKER_01 24:42

But it was funny um when I was walking in, Thornton said he said, just remember, he goes, Tim's Tim's like 30 years old, so like you gotta be careful when you're telling a story. He goes, he goes, You assume that he's gonna he he's gonna know it, but like you're talking about something happening 20 years ago. He was 10. He probably was not he probably was not there. Trevor Burrus, Jr. I was four months old during the Olympics. And there you go, that's right. So um but yeah, um so Alan Morris comes in and and really builds a great project. I think Star Metals from an architectural design did an unbelievable job. And you know, Nathan and I became friends at that point and you know served on served on different different committees and boards together. But you know, we were really happy to see, you know, I was from a from from a landowner and developer and kind of being a as we talked about, pioneer in the in in the area. I think Star Metals for us was like what a great project. You know, well designed. I mean, just it's very unique. Different level. Different level.

SPEAKER_00 25:34

Yeah. So okay, so we've got Star Metals, Interlock came along, Interlock's done great. We've got Interlock Tower, which has been phase two, which is getting leases done as coming along. Um and then y'all your group did Westside Paper. West Side Paper, yeah. When what year did that deliver?

SPEAKER_01 25:51

So we closed on the um basically closed with um the the seller um in uh November of 2019. Okay. Um, you know, pre-just literally right before COVID. So, you know, from a timing perspective, you know, West Side Paper probably, you know, was just one of those where it it was kind of where everyone was. Yeah. As you look back at risks, on the development side, all we can do is there's certain risks that you can't necessarily overcome. Um at White Provision, I'll tell you we had a we had an issue uh on condominiums. We had uh we had 95 condominiums on that project. If you would have told me when we started developing that project that the federal government who was um guaranteeing uh you know the the mortgages would say that we'll no longer guarantee mortgages unless the building is 50% sold, that wasn't a risk that I thought I was that we were going to be dealing with. At Westside Paper, I was not thinking that there was gonna be a worldwide pandemic that would not only shut office down, but really change how office space was used. And again, like those are risks as in a as on the development side,

Risk Management and Tenant Mix in Development

SPEAKER_01 26:54

you just can't you can't underwrite them. And sometimes you can't, you know, you have to learn how to um uh how to solve them. But I think you know, kind of coming out of, you know, call it 2020, um, you know, as we talked about the the adaptive reuse that was done was um kind of was the lightning rod. It kind of led in. We had this uh you know great retail tendency, great food and beverage. Um even today, our food and beverage, you know, whether it's Michelin or James Beard, some of the highest concentration of um some of the top operators uh in the southeastern United States, and that's really been like that for 20 years, that type of tenancy is what also fueled a lot of the office development. You know, we had Microsoft being announced going kind of at what was called quarry yards and uh we had Georgia Tech just to uh just to our um our east, and we really kind of sat in the middle of it. And so kind of the you know, the the million two square feet that was developed during this time of office space, you know, when you look back, it made sense. It made all the sense because you had you had Microsoft here, you had Georgia Tech here, technology, like you're right in the middle, you kind of have this, you know, really fantastic little developed

Analyzing Overbuilding and Development Timing

SPEAKER_01 28:03

space. So you know again, I think in the development world you look back and to say, like, why are things overbuilt and kind of how do they how how do we get to that point? And I think when you when you look back at the data points that you have, there's a lot of it that it actually made sense. I think Microsoft not moving forward, you know, had a had a very negative impact of uh especially on the uh, you know, my guess is is is their logo was on every one of the decks of every one of the buildings that was being built as to why w the justification.

SPEAKER_00 28:31

Yeah, like we'd be dumb if we didn't pull the trigger because other people will. You know, just as you're talking, so we had Colin Conley on last week and um he was talking about I can't remember there was another wreath that they were kind of like competing with. Anytime that they would go into a new market or buy, you know, a new class A building, it was like this other group would just come right in and buy one like across the street and stuff on this. So it's like it just kept happening where they ended up we're like, what are we doing? We're like competing with each other. So they ended up merging. But what I'm getting at is like there's there are a lot of smart people in real estate. And if you're picking up on a trend, there's a good chance other people are picking up on it. And again, with this with the not sharing of information, it's like you sometimes get further along down the road and multiple people will, and they're all you know pulling the trigger at similar times. And it just timing seems to be a repeated theme that we have with like the development and and all that.

SPEAKER_01 29:24

But coming back to the Well, let me yeah, let's stop there real quick because they're just yeah, you uh you had asked me earlier, uh, talking about kind of like how I got into real estate. And like so the reality of it is when you're entrepreneurial working with a bunch of guys, trying to figure out how you're gonna find your spot in the world. The reality of it is is in Atlanta, Georgia, at the time, I wasn't gonna build office buildings. Heinz, cousins, a lot of other people can do that, a whole lot better, better access to capital, better exit access to tenants, um, retail, same thing. There's other people that can do it multifamily, nope. Um adaptive reuse is really where I found the ability to play, is again going to other cities and seeing how these older buildings were utilized and um and how it really wasn't being done in Atlanta. Uh at the time, King Plough Art Center was probably the only adaptive reuse deal done, and that was done um for the 96 Olympics uh really. And that was where Adidas headquarters uh for the 96 Olympics. And so um like but that was kind of it. There really weren't other any other uses. And so now when you think about the, you know, adaptive reuse is is is more of a commodity type class, you know, these great projects like Pont City Market that, you know, really have just, you know, again, that was uh an um another lightning rod, but I think that the the adaptive reuse allowed me to enter into an asset class that really didn't exist um and be able to be, you know, um go out and get deals done. Right. Just because if I was trying to do just retail deals and uh th there was no way I would have I would have competed with the uh the known quantities.

SPEAKER_00 30:54

Yeah. Well we were talking earlier. So West Side Paper, y'all had a major pivot. And I think this is like really brilliant about this project and like how y'all you've adapted. You've and not just adaptive reuse, but like adapted twice. Yeah. We've like, hey, what's what's we got to pivot? If if it's not selling, like let's try something else. I'd I'd love to, you know, kind of hear how like when did y'all say, all right, we've got this glut of office, like we need to hard pivot and how how that messaging got out there and um just how you did it.

SPEAKER_01 31:23

Yeah. So and you know, again, what you started to realize is we um you know, when when office as an asset class, uh clearly capital markets was impacting it with um, you know, rates, um, you know, cap rates getting wide, uh, you know, you had TIs you know going up, you had rents going down. So let's just say in, you know, um in the if if you know on under the thesis of math don't lie, uh which is what we always talk about, you know, cap rate it it was not working. And you know, even if there was folks where even if you if there was a large sense of tenancy, the cost to put those people in based upon what the the values you were seeing, it was really a question of is is that good, is is that a good use of money, right?

Retail Pivot Strategy and New Tenancy

SPEAKER_01 32:05

And so, you know, in 2023, uh late 2023, had a uh our our one of my longtime investors, FCP, uh had a uh we had a conversation and we said, what are we gonna do? What what are we gonna do? And we kind of looked at history a little bit. Um historically, 30 years before, really before everything changed, um, it was a lot of showrooms in the submarket, taking those functionally obsolete uh warehouses and using them into showrooms. And so, you know, one of the things that we saw is that we had this opportunity with this existing single-story building to um go, you know, use that. And we had a we we made a retail pivot and engaged uh Bridger properties and um to come in and we kind of put a whole new merchandising plan together of how we were going to uh to do it. And um, you know, we were thankfully it it was we were able to find some success with it, kind of hit the road and found some uh some wellness tenants as well uh in carbon performance is based in Nashville. Um Paddle House is based in Brooklyn, and um, and kind of was able to kind of bring in, you know, take the spaces that we had that we had probably envisioned more for office uses, creative loft office type type uses, and convert them back to retail. Um construction resources, um, which was a um, you know, and then proof of the pudding. And then most recently with pack size. So um, you know, great, just kind of great was able to kind of make that pivot

Downtown Evolution and Modern Office Amenities

SPEAKER_01 33:30

there.

SPEAKER_00 33:30

Yeah. I think that's just my prediction about downtown, especially where we're at here at the center. Like they just had the food hall finally get unveiled, and now you have all this activity happening. And it's hard for an office tenant to kind of become the flag in the ground. Like they they want energy, they want amenities, they want they want that energy already there before they decide to sign a 10 or 12 year lease. And um we just had um an interview with the the founder of Very

VeriDesk Model and Enhanced Office Amenities

SPEAKER_00 33:55

Desk, Jason McCann out of out of Dallas, and um they so he started buying office buildings out there. I don't know if you're familiar with with him or his business model, but I mean they so the Very Desk, you know, originally it was like this thing you throw on your desk and you can stand and and do whatnot. Now they have like 300 different products and all these service lines and whatnot. But so they bought these office buildings and now they're like I think they're they they don't have an official loss factor, but I'm I think like a third of the building is now amenities. And so they'll create I don't know there's a couple build like Bridge did it here, and there's a couple buildings that have um created those very rich amenity environments. Um so it's it's just really helped them go from I mean they bought these vacant buildings and now they're eighty, ninety percent leased.

SPEAKER_01 34:37

So yeah, we're um I think what's also happened in that is kind of the the spec suite concept has kind of moved in in in DC. Our our FCP, our partner in DC, is called the town hall concept, where it's a uh you know, a much more amenitized version of that with a lot more, again, there's reason there's reasons to be there other than just your office space.

SPEAKER_00 34:57

But um, you're saying this is another iteration of the spec suite approach, or are you saying just Yeah, well it's just more amenitized.

SPEAKER_01 35:03

I I think that what's what's happening now in the world of in the world of kind of office space is we all think about it, we all think about it in dollars per square foot, right? Everything is like and um but a lot of times the you know the the tenants I find think about as what their their monthly occupancy or annual occupancy cost is. And so I think that when you have these these highly amenitized, which is where we're seeing kind of more demand you know going towards in the in the world of office that's being successful, um tenants are less focused on the you know, maybe the common area factors and the things that we've all maybe focused on. And they're just kind of like if I get all this, like that's great. Right. That's great.

SPEAKER_00 35:38

I'll stomach it because I can recruit better.

SPEAKER_01 35:40

And yeah, that's well, and and the other thing is it's like as opposed to previously, you have someone who maybe was in, I don't know, 40,000 square feet, and now they're probably gonna be in 15,000 square feet. So their real estate occupancy cost is already going down. Yeah. Um, but it's just again, I think those are the types of office as I look at places like downtown or where you're trying to kind of reposition for for you know what he's doing in Dallas, I think that that's what you're gonna have to really put out there as opposed to just um, you know, just saying, as I hate to say it, putting putting putting a sign in the yard and saying like uh we're you know, we're open for business.

SPEAKER_00 36:11

Yeah. So question for you on West Midtown. I I think question for you about just restaurants and retail in general. It might have been about a year ago, maybe eight months ago, there was a ton of posting online about how retail in these markets were all these retailers were shutting down and as a ghost town. And I I love your take. You're from a landlord's take, like what what was that all

Retail Saturation and Cultural Icon Impact

SPEAKER_00 36:32

about?

SPEAKER_01 36:32

Aaron Powell Yeah, I you know what um is in the office world we can say that we probably grew a little too fast too quickly too fast. Um I'll say in the in the retail and restaurant world we probably grew too too quickly and too fast. Um you I think that a lot of the a lot of the free parking lots that were probably there got replaced by, you know, $10 an hour or $10 to park. So I think it it's it's again, it's it's a little bit of a perfect storm where you have um you have a lot of new people who are moving into the neighborhood who are maybe seeing what some of the legacy operators are doing, the sales per square foot they're they're doing. And you know, the rents, the rents are for the new buildings are higher. Uh there's now paid parking that's that's in it. Um I think that you know you have all these office buildings that when fully loaded um provide a lot of daytime traffic to kind of replace some of the destination traffic that was lost um by a lot of the surface lots being you know converted to new buildings. Um so yeah, I think, you know, was it hard to watch? It absolutely was. Uh I saw people that I know um had pri you know have um businesses that failed. Um and uh but I I I think at the end of the day, uh you it was just what we see in Atlanta and you see in any real estate market is when there's just um a lot of growth in a short period of time, you have to have demand growing as well. And demand didn't grow. Um, you know, one of the things we saw is we would see, let's say, pick a concept, pick um, you know, uh bowls, uh, you know, health-driven bowls. Uh let's say there's you know four million dollars worth of sales of that product when you put four people in that that are doing the same thing, when maybe there uh once was just one, now all of a sudden you're kind of splitting those sales. The demand and the growth this those sales didn't grow. It's just you had more operators that are saying, oh, they were successful doing this, we can be successful too. Um and I think you all that was another concept that kind of happened as well is just a little more of a cannibalization. Um, you know, when it when we first, going way back, we we tried before you have a whole bunch of ownership that that's moving in with new buildings, what kind of protected us for the longest period of time is that the functionally obsolete warehouse buildings that were our neighbors were great neighbors because it allowed us to somewhat kind of manage the tenancy. Uh the number of people that came to us and said, you know, I want to do a taco restaurant. Like, well, we're not gonna do one because Tacaria del Sol is crushing it and they do a really good job. And but you know, when you have multiple ownership comes in and they're they're like they're like, oh, well, this guy will pay a lot of money now because um Tacaria Del Sol is crushing it. Now we're spreading those taco sales over a um a much wider. So I think that, you know, but that's that's just what happens when neighbors uh or neighborhoods mature. Yeah. It's just it's kind of what happens. Um but you know, the it the flip side of all that is that you know you the neighborhood is still a hotbed of of creative talent. Um, you know, um Mujo, um, you know, multiple Michelin stars. Um, you know, Ford did a great job of rebranding on um JCT, which had kind of run its course and with you know, with with Little Spar Sparrow and Bar Blanc, um AVs, which, you know, number 29 New York Times uh for North American restaurants. I don't know that. That is like those are like like major, like um, you know, uh Miller Union,

Zoning, Connectivity, and BeltLine Influence

SPEAKER_01 39:48

like the the the quality, and then you still have the the mainstays of Miller Union Optimus that are still there. So, you know, for i it it's it's unfortunate that a lot of the growth that was that happening you know was really um the demand wasn't there to support it. Um but as far as an overall, you know, the you know, the quality and kind of the the operators are in the submarket, you know, I think a lot of that that legacy is still there and those folks are s are still thriving.

SPEAKER_00 40:14

Yeah. You know, Matt Matt Bronfman came on that was a couple months ago, and the one thing that stood out more than anything, there was a lot of really interesting things about that interview. And I would encourage anybody to listen to it. We talked a lot about Chelsea Market, negotiating with Google, and he said he loves markets that have restrictive zoning. And he was like, I know that's not what a developer, especially a Sunbelt developer, likes, because the Sunbelt, it's you know, that's just a part of the plan. Like you gotta go through entitlement and you gotta this is what is coming to the neighborhood. But he was like, if we if we know what we're buying is not gonna be competed with, we don't have any threat of a new entrant or somebody that's gonna like they just have a lot more control and predictability. And I think that's ex exactly the opposite of like now West Midtown, now you have city council, everybody's really excited about this new neighborhood that's thriving and coming up and um just a lot of new entrants.

SPEAKER_01 41:05

So yeah, so we didn't, you know, we didn't necessarily have zoning um because but what we did have is is um it it it it was what made it made it really work at the beginning and then it kind of became a little bit of a of a you know the the the connectivity. So you know when I think of great cities, there's typically some kind of natural barrier, right? Typically it's water or mountain, yeah. New York, for example, you know, my Miami, you know, and so we had the waterworks to the north and the east of us. Um and so with Matt's comment is spot on that you know, when the harder the zoning can be, the the better it can be for the the lasting um, you know, for for an area to kind of maintain its its um uh just just maintain what they're trying to do. As I said earlier, that all of the neighbors south of kind of you know West Side provisions that have now been developed into all these projects, they're all old industrial buildings. And so those are owner users that are holding on to them and they're not really, you know, so we did we didn't necessarily have the um while it wasn't necessarily a zoning, um, you know, you were really buying in order to get that site, you're gonna have to buy the the pay for the land and also typically buy the buy the company as well, because that person was pretty much gonna be shutting down their their their company. Um so that that was for a long time, that was kind of the benefit, you know, of of of that market.

SPEAKER_00 42:21

Aaron Powell I've heard a rumor that Halmill is considering going to a one-way just with infrastructure traffic and all that. Um I'm curious what your take is there.

SPEAKER_01 42:29

Aaron Powell Yeah, great, great question.

Howell Mill Streetscape and BeltLine Integration

SPEAKER_01 42:31

And you know, Howell Mills, it seems like we've been under construction with the complete street project with ATL D OT for over a couple years now. Um it's not going one way. It is being converted into a complete street to allow uh alternative modes of transportation. Uh one of the things that the neighborhood has not had is we've not had belt line connectivity that is now going to be opening um in the next uh in the next year. So what what from the um the CID's perspective, what we really wanted to do was is build a connected um network for bikes and alternative forms of transportation so that folks can who are traveling on the belt line could easily and safely get into the core neighborhood uh without without being in the middle of the streets. Um and so what you're gonna find is that um Howell Mill will continue to be two lanes, uh, but there'll be uh additional um ways to uh you know for um uh cycle tracks for for bikers to get through. One of the other things that kind of comes with that project is you know, talking about the CID real quick, is that we recognize that it's an old industrial neighborhood. We had zero green space, like just zero. Uh why would you? Because it's a bunch of old industrial buildings. Right. Um so that was one of our initiatives with the CID uh for solving a lot of transportation issues, but also getting green space. And so right at the water at the waterworks right now, we have what's called the Hill. Um and it's um we just uh we just expanded a large sidewalk connecting on 17th Street, um, which will also So kind of come into the complete streets that's also going that's under construction right now, and it all ties into the belt line. So for this industrial little area that really was kind of um, you know, with not a lot of green space, not a lot of connectivity over the next couple of years, why we're bullish long term about the neighborhood is that a lot of the a lot of the infrastructure that has been so successful in the east side of town with belt line and parks, I think a lot of the planning and and focus that the CID has been doing and as those projects get executed, um, you know, you'll still be able to, you know, you'll soon be able to uh you know treat the uh you know the west midtown uh similar to the east side and going from you know uh uh you know the waterworks to down to sealings, the works, um, and and really just have much more of connectivity of a trail network that doesn't that uh has never existed.

SPEAKER_00 44:49

Right. You know, maybe I can coin a new term, urban vertigo. First time I went to the Grove, shout out Monday night with just that that project and what they did with the belt line little

BeltLine Benefits and Neighborhood Accessibility

SPEAKER_00 44:59

section there. The fact that Northside can now connect you with kind of Helm Mill and like that was I remember the first time we went over there, I was like, what? I can drive straight through here, and they don't encourage people driving through the the back there, but like it's a it's a road. And our neighbor so we just moved, but we used to live in a townhouse. I was like right there. So it was like, okay, do we spend 20 minutes driving all the way around the block or shoot the gap? Yeah. I don't encourage anybody to do that. But

Consulting on Myers Carpet Building Redevelopment

SPEAKER_00 45:24

yeah.

SPEAKER_01 45:24

Tim the good news is that we we're actually working on the uh the old Myers carpet building as a consultant to Atlantic companies who've been working with them out in Roswell as well, been great. You know, we we in addition to developing, we do some consulting as well. And uh and uh we're actually uh converting that into a two-way street. Um so yeah.

SPEAKER_00 45:43

What is the plan for that building?

SPEAKER_01 45:45

Um the building, you know, uh the the building is gonna be uh is is gonna be reused and uh probably put some some some restaurants, some showroom space in there. Cool. Yeah. And um but yeah, it's kind of funny.

Future Growth Prospects with BeltLine Expansion

SPEAKER_01 45:56

You see that little piece of the belt line, and we start to think about how you know what the belt line has done in other parts of the city, and you think about the West Midtown market that really was able to it was able to um grow without you know with without the belt line. And that's where I'm excited about as the belt line comes through. You think about going from the grove, you know, to the works to, you know, to Takeria, and it and it all finally will start peaking, you know, be, you know, again, I I think people I think one of the things about the belt line is uh that I found when they first before it was built when they would take um they would take you on kind of tours of what it was supposed to be, is is the takeaway was is you don't realize how close things are when you don't have to use the the road network. To your to your point about, you know, you used to live there and like to actually get there, you would have to be like a a 20-minute drive that could now all of a sudden be a a five-minute walk. Uh I think that is that's something where the core West Midtown market has not done very well up until this point. And I think that, you know, the the kind of the planning and infrastructure that's being put in place will really help it grow over the next you know 15 years.

SPEAKER_00 47:04

Yeah, we lived in a townhouse off of 26th Street. So there's that belt line section that goes around Bobby Jones. And we so we we moved a couple months ago, but the next section of the belt line was gonna go right through our backyard. It was gonna go around the Atlanta Technology Center, Georgia Tech owns it under that rail, and just how close that was. It was just unbelievable. So I'm I was trying to hold out, but you know, our family's growing, so we needed more square footage. But um it would be been very cool to be that accessible to the Grove and West Side. You just jump on an e-bike or how to get over there.

SPEAKER_01 47:35

And I think one of the things where, again, where I'm also kind of long-term bullish is you think about the Georgia Tech property, um, you know, so the belt line's running right through the middle of that. That's ultimately going to be housing. Um, you know, it it's sometimes you look at all the redevelopment opportunities along the and I say it's ultimately gonna be housing. I believe that, you know, that a lot of these older and industrial or kind of single-story flexi office buildings have the opportunity to provide housing. Right.

SPEAKER_00 48:01

And um, yeah, single-story office with free parking is not a thing in in Midtown, but it is there. So it served its purpose, right? Trevor Burrus, Jr. That's right. That's

Career Advice for Emerging Real Estate Professionals

SPEAKER_00 48:11

right. You mentioned earlier you're helping with this Myers carpet building and doing some consulting. I'm I'm curious what what else you're working on these days. And um maybe also part two of the question is where do you see opportunity right now? Trevor Burrus, Jr.

SPEAKER_01 48:22

Great. Um yeah, so we're yeah, West Side Paper's taking a ton of our time, which is in in the goal there has been just to finish the drill. Um when you kind of develop a project, kind of strike out the first time of of on the office, pivot to a new, it's there's a lot of time on it and kind of learning things along the way. Um so that's been taking a lot of time. Um, where we see opportunity right now is we're looking at maybe um a lot of existing assets that are, you know, existing buildings. It's it's hard right now to new construction costs are just are just punitive. And I don't care what you're trying to build right now, it is extremely hard to make those numbers work. Um we see maybe some of the the value in some of the stuff that we developed um, you know, 10 years ago, 15 years ago, still really like the adaptive reuse product and you know, trying to maybe see is there ways we can kind of now, you know, reposition those buildings again. Um one of the things you get with uh these old adaptive reuse is what allowed us to kind of pivot with uh with West Side Paper, you you see different opportunities there. So cool.

SPEAKER_00 49:25

So speaking of the commercial real estate group, uh we again have a lot of college kids and and young guys that are trying to get in the industry.

Emphasizing Reputable Firms and Networking

SPEAKER_00 49:33

Do you have any advice for them? Or I mean you kind of went out on your own pretty early on. I'm uh very uh traditional path.

SPEAKER_01 49:41

Um would love to hear your You know, the probably the best advice I was given, and maybe I didn't take it a lot on my own, but I still tell it to people all the time, is find find a great company to work for and get involved. And and then when you get involved with that group, you're gonna start on the on the low end, find a way to kind of work your way up the totem pole. I mean, it's just it's hard, it's very it's a very hard business to get into. And I will say that being the on the entrepreneurial developer is is even harder than it probably was when I did it, just because there's so many people that are so well capitalized. And so, you know, if I were young getting in the business today, I would go and work for like a Cushman in Wakefield and work um, you know, in in and get on a team and find something that you like, whether that's leasing or that's that's investment sales. You know, the neat thing about commercial real estate to me is that there's so many different things that require so many different skill sets. And you know, you can be in in marketing and you know, get on a team and not realize that you know how marketing affects um um you know uh commercial real estate. So you know, I just think that that when you're younger, it's easier to figure out what it is that you enjoy doing when you're on a larger team and potentially have the opportunity to see you know what someone else in your office is doing and might be able to say, you know what, I actually like that better. You know, like I I want to train I want to get over on that side.

SPEAKER_00 51:02

So go somewhere established and go

Closing Remarks and Upcoming Episodes

SPEAKER_00 51:05

to somewhere established that's reputable.

SPEAKER_01 51:06

Yeah. It's just um, you know, as a po it's just um yeah, that's probably gonna just help building building networks. Yeah. So that's good stuff.

SPEAKER_00 51:14

Well, Chris, thanks so much for coming up. Yeah, thank you. Thanks for having me. Yeah. Um, y'all, thanks for listening to another episode of Sunbelt Developers. We've got a lot more in the docket and a lot of really exciting speakers that are on their way. And um, thanks for listening.