Site activity, permits suggest towering ‘Midtown Union’ project is a go

Multi-tower development aims to activate parking lots at corner of Spring, 17th streets

The latest rendering for Midtown Union’s multifaceted first phase, with glassy office towers at left and residential/hotel pieces at right.
The latest rendering for Midtown Union’s multifaceted first phase, with glassy office towers at left and residential/hotel pieces at right.

Cooper Carry renderings, via JLL

For anyone who applauds the demise of surface parking lots in prominent intown places, a reader recently spotted something that should come as welcome news.

Where 17th meets Spring Street in Midtown, a block-long site where past development proposals have fizzled, an assemblage of parking lots is now fenced off and vehicle access is disallowed.

Proposed for the site is the first phase of the massive Midtown Union project, a multi-tower complex bisected by a pedestrian promenade that’s been put forth by MetLife and JLL.

Project reps haven’t responded today to Curbed Atlanta’s inquires regarding construction, but a building permit related to plumbing and sewer work was issued for the site in late June, city records show.

The 1.3-million-square-foot project’s first phase was approved last year.


The site’s inaccessible parking lots, as of this morning.

Photos courtesy of Carol Payne

 

 

The assembled site includes parking lots along Spring Street, behind the Artmore Hotel, the Arthritis Foundation building, and a small office building.

All told, the two-phase venture could consume acreage on both sides of the street.

Earlier this year, Midtown Union signed global asset management firm Invesco to take about half of its 600,000 square feet of offices in glassy towers fronting 17th Street.

 


The office towers, as seen from the northwest.

 

For Invesco, the relocation across Midtown from Two Peachtree Pointe will also entail the addition of about 500 jobs, as Bisnow Atlanta first reported.

Midtown Union’s first phase would also include a 250-key hotel, about 350 residences, 100,000 square feet of retail, and almost 1,800 parking spaces, per announcements last year.

The development team, a partnership between MetLife Investment Management and Granite Properties, expects to start opening Midtown Union in 2022.

Have a look at the latest project renderings and site plans below.


Inspired by European boulevards, this component, Arts Center Way, is described in marketing materials as “a central passageway and gathering place linking workplaces, creative spaces, specialty shops, public art, and enticing eateries.”

 


Broader vision for Arts Center Way.

 


The two proposed phases, bisected by Spring Street.

JLL

 


Specific site plans for the initial phase.

JLL

 


Both phases, as seen from west of the Connector.

 

Stuck In The Dirt: After Years Of Promises, Atlanta’s Fabled Luxury Skyscraper Clouded In Mystery

Five years ago, a New York developer bought a plot of land in Midtown Atlanta, declaring its intentions to build the tallest residential tower in the Southeast, with prices and finishes more in line with Midtown Manhattan.

Brokers for the project — called No2 Opus Place — say they have dozens of buyers who have committed to buying units in the building, some of which are being offered for north of $10M.

But many real estate brokers and experts who Bisnow spoke to have doubts that it will ever get built.

Perkins+Will Olympia heights Management

ArX Solutions Rendering for the proposed No2 Opus Place, designed by Perkins+Will and being developed by Olympia Heights Management

Several announced dates for an official groundbreaking have come and gone, the developers continue to refinance the land with short-term loans, and the construction firm working on the site told Bisnow there are no plans to go vertical anytime soon.

“Opus, which we call ‘Nopus,’” said Jeffrey Taylor Johnson, the founder of Above Atlanta Brokers, among the top condo brokerage firms in Atlanta. “It’s a joke.”

After purchasing the property at 98 14th St. for $22M in 2014, developer Olympia Heights Management has reshaped plans for the project three times. In the latest iteration, unveiled last year, Olympia Heights envisions a 53-story building with 182 condominium units and more than 200K SF of office space, still the tallest residential tower in Atlanta at 730 feet.

No2 Opus Place could be the project that gives Atlanta one of its first glimpses of luxury and lifestyle typically found in markets like New York, Tokyo, Miami or Los Angeles. Its residents would have sweeping views of Midtown and Downtown Atlanta and access to a resort-style pool, high-end restaurants, a spa, a wine tasting and storage room, an IMAX theater and 24-hour concierge services.

Since buying the land and announcing the ambitious project, the New York developer behind Olympia Heights was investigated by the attorney general in his home state for fraud and shoddy workmanship on several condo developments. Three years ago, he agreed to a two-year ban from selling condos in a deal with the attorney general.

That developer, Shaya Boymelgreen, built thousands of luxury apartments in Manhattan and Brooklyn in the 1990s until his business essentially collapsed amid the Great Recession.

Olympia Heights has maintained that the building is moving forward, and that they have pre-sold dozens of units. It still predicts a 2021 opening, despite the fact that foundation work has not yet begun. But the development team’s shifting dates and marketing tactics have led some buyer’s agents in Atlanta to steer their customers clear.

“I don’t think that project is viable,” a local broker told Bisnow. “Because it just doesn’t seem to go anywhere, and the story changes all the time.”

A Luxurious Plan

Olympia Heights
The $3M sales center operated by Berkshire Hathaway and Olympia Heights

Olympia Heights spent $3M building out No2 Opus Place’s sales center, located on the property, which contains a wall filled with video screens showing models of the skyline views, inside a model of a condo unit.

The units are being designed by Champalimaud Design, which has designed condos and hotel rooms for the Waldorf Astoria and The Plaza in Manhattan and Ritz-Carltons and Four Seasons overseas. They range from one to three bedrooms, with Falakron marble countertops and backsplashes, Miele appliances and airy and spacious bathrooms lined with marble.

Residents in the building would be members of The Opus Club, a three-story amenity with two pools, a wellness center, a spa and Mozart’s 41st, “the ultimate lifestyle club with private lounges, chef’s table, and screening room,” according to the project’s website.

Asking prices in the building, designed by Perkins+Will, range from $600K to $12M, according to Berkshire Hathaway’s website. Prices start around $600 per SF for lower-level units, but will rise to above $1K per SF for the homes closer to the top.

The prices Olympia Heights is targeting have rarely ever been achieved in Metro Atlanta, a market where the average first-generation condo unit sells for around half as much per foot, Engel & Volkers CEO Christa Huffstickler said. On the highest end, condos have sold for $800 per SF, she said.

 

Yates Construction
A poster hanging on a construction trailer at the No2 Opus Place site details where cranes will be positioned for future construction.

JPX Works founder Jarel Portman knows the difficulties of getting a luxury condo project off the ground in Atlanta.

His firm pursued a project in Buckhead called Emerson. He designed the 41-unit project with the influence of Frank Lloyd Wright’s Fallingwater and chased a price point of $1,100 per SF. Units in the building started at $2M.

Portman was a known quantity in Atlanta. He is the son of the late, renowned architect and developer John Portman, and has developed two successful commercial projects in his own right: the mixed-use Inman Quarter project and the Lili apartment tower. But even after pre-selling 32% of the units, JPX Works was unable to land financial backing to go vertical.

In 2018, Portman pulled the plug on the project and sold the land to another developer.

“Clearly, we thought Emerson was going to be sold out even before we opened the design office, but maybe that’s because we fell in love with the design,” Portman said. “It’s very difficult to build the kind of product that we were trying to build and [the No2 Opus Place developers] say they’re trying to build in Atlanta right now.”

Stuck In The Ground

Yates Construction
A digger was excavating Olympia Heights site in Midtown in early June

Stolz Partners founder Will Stolz, who is developing two luxury condo projects in Texas, said lenders today typically require between 40% and 50% of the proposed units locked in, with buyers putting down at least 10% of the purchase price before granting construction funding.

He sold half the units of his Giorgetta project and 40% of the units on The Sophie, both mid-rise projects in Houston, before securing construction financing, he said. Convincing customers to buy units before any actual construction begins is difficult, and can make pre-sales slow going, Stolz said.

“If you’re realistically doing one a month, then you’re doing as well as you can expect to be doing,” he said. “Now in a high-rise, that could change. You could pro forma more aggressive absorption in a high-rise.”

Despite having financed projects for Olympia Heights in the past — including an apartment project in Brooklyn and an office project in Nashville — Terra Capital Partners Managing Director Dan Cooperman said Terra has no interest in financing the construction of No2 Opus Place.

Terra Capital previously held the mortgage on the property for two years prior to Ardent Cos., which currently owns the debt on the land.

“I think we saw a package from a broker on it,” Cooperman said. “But we’ve done a number of deals with them, and we’ve been in that land for a couple of full years and we sort of went full circle on it, and that was a good result for us.”

Cooperman said it will be difficult for Olympia Heights to find construction financing for their project, especially at their hoped-for price point.

“The for-sale market in Florida or New York is one that is much more sort of proven,” he said. “So I think the condo component and the size make this a challenge from a financing standpoint for the best of developers.”

At the end of 2018, there were 82 condo projects on the market in Atlanta, either under construction or delivered, according to multifamily tracking firm Haddow & Co. Nearly 40% of the more than 4,100 units in those projects remained unsold.

In No2 Opus Place’s neighborhood, Midtown Atlanta, there were nine active condo projects and more than 400 unsold first-generation units, Haddow & Co. reported. Of those, 64 were under contract by year’s end. Haddow & Co. Managing Partner Ladson Haddow said that No2 Opus Place is not tracked among those statistics since it has not officially gone under construction.

Olympia Heights’ plans for 182 condos are part of the submarket’s 407-unit future pipeline. On May 13, Olympia Heights’ Roni Avraham — who is spearheading the development in Atlanta — told Bisnow the developer had pre-sold 70 units, which would be 38% of its proposed stock.

Olympia Heights’ debt on the property is coming due shortly. The developer secured a loan for $22M from Ardent Cos., which matures in January 2020. It has an option to extend the maturity date by three months, according to Fulton County deed records. Officials with Ardent declined to comment.

The Ardent loan refinanced Olympia Heights’ previous loan with New York-based Terra Capital Partners. It initially borrowed $24.5M in 2017, and in June 2018, Olympia Heights refinanced that loan with Terra, this time for $27.5M, which matured at the end of the year, according to Databank. That loan was fully satisfied, Cooperman said.

 
View from North American Properties managing partner Mark Toro’s balcony at The Four Seasons in Midtown Atlanta
Courtesy of Mark Toro View from a balcony at The Four Seasons in Midtown Atlanta

Moving Targets Throughout all this time, Olympia Heights officials have publicly insisted its project would deliver by 2020, even as the dates for construction’s start shifted in the media and its overall plans changed.

In various media reports, Olympia Heights offered various dates that construction would begin:

In July 2016, What Now Atlanta reported construction was to start that fall.

In February 2018, Atlanta Magazine reported that the firm had short-listed general contractors and would likely break ground later in the year.

In a May 2018, Avraham told Curbed Atlanta that the developer would start going vertical in September or October.

In February of this year, Atlanta Magazine reported that construction would start in the middle of this year with delivery now pegged for 2021. Midtown Alliance’s website, which tracks new commercial developments in the area, shows No2 Opus Place as “under construction,” having started in 2017 and finishing in 2020.

When Olympia Heights first announced plans in 2014 for the project on the site, which was once targeted by the Atlanta Symphony Orchestra for a potential new music hall, the developer envisioned a three-tower project that would include a hotel and a condo skyscraper that would rise 60 stories, the tallest building in the Southeast, surpassing Bank of America Plaza.

Since then, Olympia Heights has tinkered with its plans, condensing the project into a single tower, nixing a hotel component, reducing the height to 53 stories, shrinking some of the units and capping the project at 182 condos.

When asked about when the firm would break ground, Avraham told Bisnow, “You should see some action next week. Probably [in] June, July, we’re going to start with the foundation.”

Since that brief May 13 exchange, in which Avraham said to have pre-sold more than a third of the units in the project, he has not responded to multiple calls and emails from Bisnow seeking comment for this story.

It is difficult to verify pre-sales in Georgia. A sale is not typically recorded in local deeds until it is fully consummated, according to Haddow.

Earlier this month, Berkshire Hathaway HomeServices Managing Broker Lori Lane, who is leading sales marketing efforts for No2 Opus Place, told Bisnow that she would provide an update that’s “really positive” after a meeting with stakeholders in the project over the past week. She also said the sales team “met our quota” with pre-sales, describing them as traditional.

“[The buyers] all put money down,” Lane said, but couldn’t verify how many buyers put down hard money or refundable deposits.

After that meeting, in an email June 19, Lane wrote, “the sales team is not able to answer questions as much as they would like to … I can tell you everything is moving forward and we are very excited about the future of No2 Opus Place … If you can bear with us I will make sure you get the accurate info when I have it to share.”

 

No2 Opus Place Olympia Heights site
Bisnow Yates Construction inserted a trailer and installed fencing around the site that is being pushed by Olympia Heights for a condo tower

Behind The Curtain

While Avraham has served as the public face of Olympia Heights Management, alongside Eugene Zlatopolsky, who signed the loan agreements for the mortgages, a New York developer with a spotty reputation is involved in the company.

Cooperman confirmed to Bisnow the Boymelgreen family was involved in the project. And Sarah Boymelgreen, the wife of Shaya Boymelgreen, is the authorized signatory for the LLC registered with Georgia for the property — OHM Atlanta Owner — according to state documents.

The Boymelgreen name is well-known in New York real estate circles. According to the New York Times, patriarch Shaya Boymelgreen’s “break came in 2001” when he met diamond magnate Lev Leviev, and they built more than 2,400 apartments together.

By 2009, the Israeli-born Boymelgreen had trimmed his staff to 15 from 200, was in the process of being evicted from his Brooklyn office and was already facing lawsuits from his buyers over unfinished work at their buildings.

The New York Attorney General’s office starting investigating him in 2013. In 2016, Boymelgreen entered into a settlement agreement with then-Attorney General Eric Schneiderman. The deal meant Boymelgreen couldn’t sell any condos in the city for two years. Boymelgreen also agreed to repair issues at six of his projects.

The settlement put “an end to Mr. Boymelgreen’s perpetual fraud and abuse in New York City real estate securities,” Schneiderman said at the time.

The investigation found that Boymelgreen and Leviev had, in one instance, made $360M by selling out a Lower Manhattan condo project, 15 Broad, then “abandoned efforts to finish the work and drained the escrow funds, while assuring buyers that the money had been set aside,” the Times reported.

While Boymelgreen was being investigated in New York, his Olympia Heights company was pitching No2 Opus Place. While multiple people involved in the project have confirmed then Boymelgreens’ involvement in No2 Opus Place, they have not been mentioned in any of Olympia Heights’ public statements or plans.

“That’s part of some of the challenges with the site,” a source close to the project, who was not authorized to speak to press, told Bisnow. “If you’re the developer and you have a questionable equity partner, you’re going to do all you can to defer attention away from that partner.”

Bisnow offered numerous opportunities to Olympia Heights Management for further comment on the story.

“They don’t do press,” Lane said.

What Comes Next

Yates Construction was recently tapped to perform site work for No2 Opus Place, a move that spawned local chatter that perhaps the tower was finally breaking ground. But a source familiar with the contract said Yates is undergoing design assist work, in which it is assessing the potential cost to develop the project, as well as digging out dirt at the site all the way to the bedrock.

No one has been hired as a general contractor as of press time. Officials with Yates Construction declined to comment.

A handful of senior real estate professionals told Bisnow that Olympia Heights and Berkshire Hathaway have used activity on the site in its marketing outreach to insinuate that actual construction had begun.

The No2 Opus Place sales office posted a 28-second video to YouTube in December 2017 called “No2 Opus Place Groundbreaking” that shows dirt shooting out from the ground like geysers, but no people or construction equipment on the site. Another video, posted in July, shows excavators hauling dirt into trucks. The page has not been updated in 11 months.

The repeated false starts have made it difficult for brokers to sell their clients on committing to a unit at the project. One broker, who spoke on the condition of anonymity, said she had a client back away from putting a down payment on a unit.

“I did have one person make an offer. [But] they got cold feet because they felt they weren’t getting a straight story from the sales office,” said the broker, who has sold homes in Atlanta for 20 years. “It was really just based on lack of confidence in the sales office.”

If clients ask today about No2 Opus Place, the broker said she still takes them to the sales office, but will have a word of caution after the tour.

“I [tell clients], ‘Let’s go have a look,’” she said. “And then I tell you, ‘Let me be honest with you. I don’t think that project is going forward.'”

The site was quiet when Bisnow visited it this week, a digger sitting idle on the dirt. It had been raining the previous day, and it would shower later that afternoon as well.

But there were signs that at least some work had recently been done. Olympia Heights’ contractor had dug the hole where No2 Opus Place is supposed to go even deeper.

If you have bought a unit at No2 Opus Place or represent clients who have been interested in the site, email Jarred Schenke at jarred@bisnow.com. All correspondence will be kept confidential.

June 20, 2019

By Jarred Schenke, Bisnow Atlanta

 

FDA to head south, leaving behind prime Peachtree Street property in Midtown

The building at the corner of 8th Street could be ripe for redevelopment along the Midtown Mile 


Could this Midtown lot soon have a new look?

Google Maps

As first speculated in 2017, the Midtown office of the Food & Drug Administration has indeed given notice it will relocate.

The FDA will move 350 employees to the southside, where they’ll set up operations at the Fort McPherson facility in the former forces command, or FORSCOM, office building, the AJC reports.

One of 13 FDA field labs, this particular location will serve as the Atlanta district office as well as the FDA’s Southeast Food and Feed and Southeast Tobacco labs.

The new facility joins Tyler Perry Studios, which bought approximately 330 acres of the former military base from the McPherson Implementing Local Redevelopment Authority, or Fort Mac LRA. The latter group purchased the decommissioned post in 2015.

However, in the wake of this move, the FDA leaves behind its low-slung, nondescript building on the corner of 8th and Peachtree in Midtown, and, in doing so, opens the door to redevelopment for a property more in line with the neighborhood’s burgeoning cityscape.

With new high-rise apartments, office towers, and mixed-use developments already in the works, logic says this could be a site for Midtown’s next big idea.

That all depends on what the property owners decide to do, of course, now that their government tenant has moved south.

Vision surfaces for proposed Midtown condo project ‘The Ansley’

Dewberry Group development is pitched as a modern-day classicist landmark on Peachtree Street

The initial project sketch.

Dewberry Group

A development group founded by a man coined “Atlanta’s Emperor of Empty Lots” appears to be planning a significant condo build on one of its many Peachtree Street parcels.

Developer Dewberry Group, founded by former Georgia Tech quarterback John Dewberry, recently posted early sketches on its website for “The Ansley” condo development. Alongside projects such as Midtown’s J5 and Buckhead’s The Charles, it could be one of the clearest signifiers in recent years that for-sale condos have made a comeback in Atlanta. Dewberry owns scores of high-profile acres along Peachtree Street, in and around Midtown

Named for the adjacent Ansley Park neighborhood, the Dewberry condo concept promises “stunning views of the city skyline, as well as the lush greenscapes on display in nearby Ansley and Piedmont parks,” according to a blurb about the development. “For Atlantans, think a modern-day classicist Midtown bookend to the Reid House, the Neel Reid and Philip Shutze-designed masterpiece which still stands proudly on Peachtree and 16th streets across from the High Museum,” the page states.

Where exactly the residential development would be sited isn’t clear, although property records indicate it could be replacing a gas station at 1521 Peachtree Street, which is owned by “Dewberry Ansley LLC.” Dewberry officials have not yet responded to Curbed Atlanta’s request for comment.

Dewberry Group owns several lots in the northern reaches of Midtown, including the one at left.

Google Maps

The condo complex would feature 80 residential units and ground-floor retail, according to the website. Dewberry Group is also the firm behind the long-awaited expansion of the Campanile tower at the corner of 14th and Peachtree streets in Midtown. Officials told Curbed in April that more details about that project, which is well underway now, would surface in coming months.

Emory scoops up more Midtown land for campus expansion

Area around the shuttered Peachtree-Pine Homeless Shelter is being primed for a makeover

 

Part of Emory’s campus expansion plan entails the creation of a 3,000-space parking deck with 
street-level retail.

Atlanta Department of City Planning

Emory University could be becoming the development catalyst for Atlanta’s so-called SoNo district that Georgia State University and Georgia Tech have long been for downtown and Midtown. Emory has recently been on a roll, scooping up property around the former Peachtree-Pine Homeless Shelter with plans to expand its already massive Midtown campus footprint.

Last month, the institution procured almost an acre of land around the shuttered shelter in the 400 blocks of Peachtree and Courtland streets, according to the Atlanta Business Chronicle. That $8 million buy comes six months after a $6.2 million purchase, which netted the university 477 Peachtree Street, the former home of Peachtree-Pine. Emory has said the property could become an “innovation hub” for arts, sciences, and humanities programs, according to the paper.

What could become of the rest of its newly acquired land remains unclear, although Emory officials have said they want to transform the campus into a sprawling “active urban hub,” according to Atlanta’s Department of City Planning. Those ambitions include, among other developments, the creation of a 3,000-space parking deck, which, at first glance, seems ironic for a densifying urban setting.

But officials say the proposed structure, which is slated to include abundant base-level retail, will allow Emory to consolidate neighboring parking lots. Doing so, Emory officials hope, would free up those nearby lots for future redevelopment.

By: 

Link to Original Article: https://atlanta.curbed.com/2019/6/17/18682066/emory-university-midtown-land-campus-expansion

The Strange Story of a Murdered Banker in Puerto Rico

Maurice Spagnoletti was hired to clean up Doral Bank. Did he uncover something that got him killed?

Doral Bank

On the day Maurice Spagnoletti was murdered, his black Lexus sedan was full of balloons. It was June 15, 2011, the day before his wife’s birthday, and he was planning a celebration.

Spagnoletti, 57, was the No. 2 executive at Doral Bank in San Juan, Puerto Rico. Once flush, the bank had been almost ruined by a fraud scandal, and in 2007 it was rescued by Bear Stearns, Goldman Sachs, and a group of hedge funds. The Wall Street investors had put up $610 million, but Doral continued to lose money, and they were losing patience. In late 2010, Doral hired Spagnoletti, a New Jerseyan experienced in managing large banks, with orders to reduce costs and get Puerto Rican operations under control.

When the banker arrived on the island, he made a good first impression. At 6 feet 2 inches and about 250 pounds, with a strong Jersey accent and hands that he used to punctuate his sentences, Spagnoletti reminded his new colleagues of Tony Soprano without the menace. He’d walk through the Doral office, stopping at underlings’ desks to get up to speed on who ran what and how.

The sun was setting on another muggy San Juan day as Spagnoletti pulled out of Doral’s bland office park downtown. His wife was waiting at home with their 6-year-old daughter. He’d flown his sister-in-law in for the party, too. The drive to his condo on palm-tree-lined Condado Beach took just 15 minutes when there wasn’t traffic. But a few minutes after Spagnoletti got onto the highway, he slowed for a backup on a bridge over a canal. Another car pulled up alongside his. Someone fired at least nine shots from a .40-caliber handgun, shattering his windows, and four bullets hit him in the head. Spagnoletti’s momentum sent his car veering off the highway, and it came to a stop in a thicket of tropical brush. The police arrived, and at 7:21 p.m. they pronounced him dead.

The identities of Spagnoletti’s killers are still a mystery, and the bank overhaul that he was hired to lead didn’t work without him. Doral collapsed in 2015, the biggest U.S. bank failure since 2010, done in by bad loans and Puerto Rico’s decade-long economic spiral. The Wall Street investors who hadn’t already sold were wiped out, and the U.S. government spent $700 million to cover depositors’ losses.

Today, almost everyone in San Juan banking circles has a theory about the murder. Some believe only Colombian hit men could pull off such an assassination. Others say Spagnoletti had enemies in the U.S. who caught up with him. His widow, Marisa, revealed her own theory in a 2013 lawsuit: She said he was killed because he uncovered fraud at the bank and fired an executive he suspected of embezzlement. Doral’s lawyers called her claims ridiculous, and after Marisa admitted in a deposition that she had no evidence, she withdrew the suit.

Since then, new details of the killing have emerged. And according to former Doral executives and people working on the criminal investigation, the widow was onto something. “Let’s use our common sense for a second,” says María Domínguez, who was in charge of an investigation into Doral as first assistant U.S. attorney in San Juan until she retired last year. “This guy was brought by the bank to put the house in order. He starts uncovering certain things that are irregular at the bank. He starts to take corrective action. These circumstances strongly suggest a financial motive to get this guy out of the way.”

But this wasn’t the usual Puerto Rican corruption. The real story of Maurice Spagnoletti’s murder may be more bizarre than anyone knew.

Doral Bank’s founder was Salomon Levis, whose Jewish father fled Poland to escape the Nazis. The family settled in Cuba, where Salomon was born, then moved to Puerto Rico. In 1972, Levis and his siblings started a mortgage company that would become Doral. The bank took off as the island prospered, and by 2001 it was originating almost half the home loans in Puerto Rico. Its profits peaked at almost $490 million in 2004. Around then, the Levis family’s 8 percent stake in the bank was valued at $355 million, making them among the island’s richest people. Salomon Levis, who had become a corpulent playboy, was a fixture at high society events, and the gossip pages chronicled his divorce and remarriage to a much younger blond lawyer.

Then it all unraveled. In 2005 the bank revealed it had inflated its earnings by about $1 billion, prompting investigations. Levis wasn’t charged, but his nephew went to prison for fraud, and the Levis family was forced out of the bank.

“We had a real mess,” says John Ward, who was appointed interim chief executive officer in 2005. The bank didn’t have enough money to pay off $625 million of debt coming due. The board wanted a CEO from outside Puerto Rico to clean house and attract new investors. In 2006 they found Glen Wakeman, who was running GE Capital’s consumer credit business in Mexico and the rest of Latin America.

Wakeman, then 46, had graduated from the University of Scranton and spent more than 20 years working for General Electric around the world. In Mexico he’d taken a stagnant business and more than doubled its size, according to Mark Begor, his boss at the time, who calls Wakeman an “energizing and passionate leader.” To lure him to Puerto Rico, Doral offered a minimum of $5 million in pay over the first two years, plus $1.5 million in stock and $6 million to make up for his GE pension.

Wakeman believed fervently in the GE management philosophy. He liked to talk about Six Sigma, the quality mantra popularized by former GE CEO Jack Welch. He hired bankers from Bear Stearns to find new investors, shuttled to New York to meet with hedge funds, and replaced most of Levis’s deputies.

Lesbia Blanco, then 59 and a human resource director at Johnson & Johnson, was one of the new executives. As Doral’s new chief talent and administrative officer, Blanco was part of Wakeman’s inner circle, with an office near his on the ninth floor of headquarters. She soon realized something strange was going on at Doral. One Saturday in 2006 or 2007, she says, when she was working overtime to help prepare the bank to court Wall Street investors, a security guard came by her office. He told her there was someone in Wakeman’s office he didn’t recognize and showed her a security-camera picture of a man wearing a beaded necklace and clothes that were unusually casual for the executive floor.

Blanco walked over to investigate. Wakeman’s secretary was there with the stranger. She told Blanco that the man was her Santeria godfather and that he was helping the bank with its recapitalization.

The religion known as Santeria emerged in the 16th century among people from West Africa, called Yoruba, who were enslaved and brought to the Caribbean. Co-opting the Catholicism that their captors tried to impose, they picked saints to represent their deities and continued to worship them in secret, with drum circles and animal sacrifices in the woods. The religion now has about 70,000 followers in Puerto Rico, according to Joaquín “Kimmy” Solis, president of the island’s Yoruba association.

The man Blanco saw in the CEO’s office was Rolando Rivera Solis. Kimmy Solis says Rivera, a distant cousin, is a babalawo, or Santeria high priest. As a babalawo, Rivera can initiate others into the religion, conduct sacrifices, and divine the destinies of his followers by tossing coconut rinds on the ground.

Blanco started seeing Rivera on the executive floor more and more. “He had access to Glen’s office directly,” she says. She says her secretary once had to clean Wakeman’s clothes – it’s not clear of what – after a ritual at the Santeria priest’s house.

Blanco wondered why the American CEO was dabbling in the local religion, but kept her questions to herself. Wakeman was close with his secretary, Nancy Vélez. Other than his driver, who doubled as a bodyguard, she was the only person allowed to ride in the executive elevator with him. She would walk him out of the building, carrying his briefcase, then kiss him goodbye on the cheek as he got into his chauffeured car, according to two people who saw them. Such embraces aren’t uncommon in Puerto Rican culture.

Other Doral employees started to notice unusual things. Juan de la Cruz, the bank’s vice president for security, says someone told him Vélez and Rivera were conducting Santeria rituals in the boardroom. There was no security camera there, but de la Cruz checked the footage from one in the hallway. “I looked in the camera and saw Rolando,” he says, “walking with the luggage and some bottles in his hand.” De la Cruz says he dropped his inquiry after another employee who practiced Santeria told him that the rituals were sanctioned by Wakeman.

A former administrative assistant, who asked for anonymity because she’s afraid of the babalawo, says Vélez told her about one ritual involving a caiman, an alligator-like reptile native to Puerto Rico. Rivera, Vélez, and another Doral employee drove the caiman to the parking lot early one Sunday, the former assistant says, and used Vélez’s access to the executive elevator to bypass security. Dressed all in white, they took the caiman into the conference room and invoked the names of each board member, the former assistant says she was told. She adds that she thinks the creature wasn’t killed, because she didn’t see any blood the next day.

Lizzie Rosso, Doral’s general manager for consumer banking at the time, says someone who was at the caiman ritual told her about it the following Monday. Other former Doral employees declined to discuss the subject. “Maybe they are afraid of the Santeria and the consequences,” Rosso says, laughing nervously. “I don’t want to be killed.”
Solis, the Yoruba association president, is skeptical that a caiman would have been involved. “We sacrifice rams, goats, chickens, roosters — all this is part of the ancient religions,” he says. “I don’t believe that the caiman has the power to do anything.”

If Rivera did perform a ritual, it was apparently successful. In May 2007, Doral announced it had sold 90 percent of its stock for $610 million to a group of investors including Bear Stearns, Goldman Sachs, Marathon Asset Management, D.E. Shaw, and Perry Capital. Eleven months later, Rivera was given a contract to clean Doral’s headquarters and branch offices. The head of the previous janitorial service says she’d never heard of Rivera in her 17 years in the local cleaning business. Rivera’s company, SJ Tropical Maintenance Services, wasn’t registered until the month he won the contract. And while the old cleaners charged $23,000 a month, SJ Tropical was given $27,350.

Blanco says the contract was sanctioned by Wakeman. “It was a reward for helping Glen [keep] the bank afloat,” she says.

Wakeman, who’s been working as a consultant in Miami since Doral failed, denies any allegations he’d been involved with Rivera, practiced Santeria, or rewarded the high priest. “This is both shocking and untrue,” he says. Wakeman’s lawyer declined to comment further.

Rivera’s lawyer, Melanie Carrillo-Jiménez, says that while her client is a high priest, he didn’t perform any ritual for the bank. “He wasn’t getting paid for any Santeria whatsoever,” she says. “Where the hell did this come from?”

Doral’s vice president for property and facilities, Annelise Figueroa, oversaw the new, more expensive maintenance contract. She says the contract included additional services and was approved by Wakeman, who, Figueroa says, did practice Santeria. “Wakeman used Rolando,” she says. “When I found out, obviously I thought it was weird, but then again you can’t mess with people’s religions.”

Figueroa and Blanco, her boss, didn’t make an issue of the janitorial contract. But in 2009 and 2010, they accused each other of inflating the costs of other services. Blanco says she investigated her subordinate and told Wakeman that the bank should fire Figueroa. Wakeman overruled Blanco, without saying why, she says, and began to freeze her out. “Since that day, my life was miserable there,” Blanco says. “He didn’t involve me in any meetings. I was just there like a piece of paper that you move from one side to another.”

Blanco left Doral in October 2010. By then, Wakeman had already given some of her responsibilities to a new executive: Spagnoletti. “He had access to all the information in my computer,” Blanco says. “All the details on what had happened to that investigation. Perhaps he got suspicious and started digging.”

Blanco says she feels lucky she escaped with her life. “I thank my Lord every day,” she says. “That person didn’t go there to be killed, but to work. It’s bad.”

Marisa Spagnoletti now runs a handbag boutique in Morristown, N.J., called Lucy’s Gift, named after her daughter. The handbags are displayed by color — blue and pink on the left, orange and white on the right. A photo of Maurice with his arms around Marisa and their daughter sits on a mantel, surrounded by pink cloth roses and Christmas lights. All the profits go to charities to honor Spagnoletti’s memory.

“When Maurice was killed, it took so long to get on my feet,” Marisa says on an April morning, her eyes filling with tears. “Do you know what it’s like for a girl to cry every day, ‘Who killed my daddy?’ ”

Two women walk into the shop to browse. Marisa has never met them but tells them a little about Maurice’s murder. She says she still cries herself to sleep every night. With a reporter, Marisa won’t discuss her lawsuit against Doral, other than to say the bank hasn’t given her any money. When she withdrew the suit, she did so in a way that allows her to refile it later. When the truth comes out, she says, it will show that Maurice was a hero. “My husband would die with honor rather than live a life of dishonesty,” she says.

Spagnoletti started working as a bank teller in New Jersey as a teenager, according to his widow. He got a business degree at night and worked his way up in the course of 20 years, eventually becoming president of Summit Bank’s Pennsylvania division. He raised two children with his first wife. Then, in 1999, Maurice reconnected with Marisa. They’d worked together at a Summit predecessor but didn’t know each other well and had been called to testify in a court case about the bank. Maurice and Marisa were both Italian and Catholic. He’d grown up in Jersey City, and she was from Bayonne, just a few miles away. Spagnoletti was 11 years older. On the last night of the trial, he asked her out. They were married the next year.

Marisa says Maurice would cheer her up when she had problems at work. “Go look outside,” he would say. “The sun’s out, the sun’s going to always come out. Everything can be solved.”
In 2000, Spagnoletti joined Fifth Third Bank. He became head of its central Indiana affiliate, presiding over branch openings and organizing field trips for schoolchildren. He won over his new colleagues with jokes but held them accountable for meeting the goals they set. Spagnoletti would invite them and their spouses to his home for bocce and pasta. He said the word “great” so incessantly that it became a running joke at the office.

After a few years at another bank in South Carolina, the Spagnolettis moved back to New Jersey around 2008 because Marisa’s father was dying. Maurice used the free time to dote on his daughter, who was then 3. Bruce Balmas, who worked with him at Fifth Third and Doral, says his friend would call him from the park and say, “I never could have done this before.”

Two years later, recruiters contacted Maurice, asking if he’d consider moving to Puerto Rico. The package at Doral included, in addition to a $400,000 salary, a $300,000 target bonus, making him among the highest-paid people at the bank. Spagnoletti was hired as executive vice president for mortgage and banking operations, responsible for what happened in Puerto Rico day to day.

When Spagnoletti arrived in September 2010, Wakeman was battling the Federal Deposit Insurance Corp. The CEO was saddled with billions in loans the bank had made under its previous owners; as Puerto Rico tipped into recession, Doral had to keep marking the loans down, eroding its capital. The FDIC blocked Wakeman’s plan to buy assets from Doral’s rivals, and without a clear plan for growth, some of the bank’s Wall Street investors bolted. Goldman Sachs lost at least $30 million, and the hedge funds Marathon, D.E. Shaw, and Perry lost about $50 million each, filings show.

After the killing, Marisa was hysterical. The bank sent armed guards to walk executives home.
Spagnoletti admired Wakeman as a CEO and believed the bank could be turned around. “I’m working harder than ever, but I must say I love it,” Spagnoletti wrote in an e-mail to a friend on April 22, 2011. “I make significant contributions and feel very appreciated. One problem is the lack of talent. I need to check everyone’s answer twice. Otherwise, this is a GE type of environment. Sigma Six black belts running around.”

Initially, Spagnoletti commuted from New Jersey. He and Marisa never stayed apart for more than three days. They lived in a Marriott hotel for a while, and then a condo on Condado Beach. In the spring of 2011, Spagnoletti hired Balmas as a consultant; they had dinners at an Italian restaurant by the beach and spent some nights gambling at casinos on the Condado strip. Spagnoletti loved to swim and take his daughter to look for seashells.

But that same spring, Spagnoletti clashed with Figueroa, the facilities vice president who handled the Santeria priest’s maintenance contract. They fought about purchases as small as a table, according to a lawsuit she filed against the bank in 2012 alleging gender discrimination. On March 8, Spagnoletti e-mailed Figueroa asking whether she understood that she was supposed to follow his orders. “Do you understand that as a Vice President of this company, you are also expected to always exercise good judgment in the performance of your duties?” he wrote. “YES, ALWAYS HAVE AND ALWAYS WILL,” she replied, according to her lawsuit, which was settled confidentially.

Marisa alleged in her lawsuit that her husband uncovered fraud at Doral, in the form of Figueroa paying vendors for services they didn’t perform and making unauthorized transfers of $30,000 a week to someone. If Spagnoletti knew about Doral’s Santeria circle or the idea that the payments might have been not fraud but a reward for supernaturally assisting the bank, he kept it from his wife. Figueroa, who was fired on May 25, 2011, says she did nothing wrong and doesn’t know anything about the murder. “I’m more anxious than anyone to find out who did it to clean up my name,” she says.

Three weeks after Figueroa’s termination, on the day he was killed, Spagnoletti left work on the early side. Balmas departed later and got stuck in traffic by the bridge. He didn’t think anything of the shattered Lexus on the side of the road.

Around 2 a.m., a colleague called to tell him what had happened. Balmas went to the Spagnolettis’ apartment and found Marisa hysterical, talking about how her husband had been kidnapped. Wakeman had been there, along with other colleagues, and the bank sent armed guards to walk them home. Doral assigned security guards to other top executives, and Wakeman brought guards with him to Spagnoletti’s New Jersey funeral.

As investigations into Spagnoletti’s murder began, Doral struggled. The Puerto Rican economy only got worse, and more of the bank’s loans became worthless. The FDIC wouldn’t give Doral’s balance sheet its seal of approval, and without it, Doral couldn’t get the money it needed to operate. Wakeman tried expanding in the U.S. He moved Doral’s headquarters to Miami in 2013. U.S. operations showed a profit that year, but it wasn’t enough to make up for the deteriorating Puerto Rican portfolio.

In 2014, Puerto Rico created a major crimes unit, headed by Captain Ferdinand Acosta, and he took up the Spagnoletti murder. There weren’t many leads. None of the 911 callers got a good look at the shooter or his vehicle, Acosta says. The murder was definitely not random, but the shooter exhibited poor aim, so he may not have been a professional gunman. Acosta says he started interviewing Doral employees but got word from the FBI to back off. “They prefer to do it alone,” he says.

The FBI’s murder investigation, begun shortly after the 2011 shooting, had expanded to include fraud — just as the widow Spagnoletti had charged. In December 2014 the FBI raided Doral, seizing computers from Wakeman, his secretary, and other executives. In February 2015, Rivera and Figueroa were arrested and charged with fraud. The federal indictment said that Figueroa changed the cleaning company’s contract so that it was getting $24,288.27 every week instead of every month. In all, according to prosecutors, the pair wrongfully took about $2.4 million.

Two days later, on Feb. 25, the FDIC closed Doral’s doors for good. The agency spent $698.4 million making Doral’s depositors whole. Many of the branches, along with the headquarters, were sold to Popular, another Puerto Rican bank. The headquarters building is empty now. A rusty outline remains where the Doral sign used to hang.

Motombo grabbed a woman as a shield. “Don’t do this,” she cried. He started shooting.
Days after the bank failed, Santeria stories surfaced in local newspapers. El Nuevo Día wrote that there had been a ritual with a caiman at the bank. Levis, the founder, went on the radio to joke about it. The failure of Doral is like a “detective novel,” he said. “Not even the caiman could save them at the end.”

When Rivera came to court to plead not guilty to fraud, the proceedings revealed that police had found 10 guns in his home. All were legally registered to him or his wife. Prosecutors said Rivera had been charged with murder once before, in 1983, and was acquitted. He was put under house arrest, with an electronic monitoring bracelet. Figueroa also pleaded not guilty.

Eight months later, in October 2015, the agents looking into Spagnoletti’s murder caught a break: A man on Puerto Rico’s most-wanted list was arrested at San Juan’s airport. He’d worked for Rivera at his janitorial company, according to two people with knowledge of the investigation.

His name is Yadiel Serrano-Canales, aka Motombo, and, according to prosecutors, he was a member of a gang that dealt cocaine and heroin in San Juan’s Villa Esperanza housing projects. In a court filing, an FBI agent described a June 2012 incident that got Motombo on the most-wanted list. Just after 1 a.m., he and a friend approached three off-duty police officers who were hanging out at a bar across from the projects. After words were exchanged, Motombo left and returned with a gun. “Put down the phone, d—sucker,” Motombo said to one of the officers. The cops pulled out their own guns; Motombo grabbed a nearby woman by her hair, using her as a human shield. “Motombo, don’t do this!” she cried. He fled, firing four times at the police officers, and escaped the island. In 2015 he arranged to return to Puerto Rico and turn himself in.

FBI agents interrogated Motombo for about an hour in a windowless room on the second floor of San Juan’s police headquarters. A person with knowledge of the FBI’s investigation and one of the Puerto Rican police officers say Motombo is suspected of driving Spagnoletti’s shooter. Motombo has not been charged in connection with that. He is in federal custody, facing attempted murder charges for the police shootout. He pleaded not guilty, and his lawyer declined to comment.

In November, Wakeman’s secretary, Vélez, was arrested and charged with perjury for telling the grand jury she didn’t know about the payments to the Santeria priest. Prosecutors say she instructed two Doral employees to pay Rivera weekly rather than monthly. Vélez pleaded not guilty. Her lawyer, Mariela Maestre Cordero, declined to comment.

In April the Doral case took yet another turn. U.S. prosecutors moved to drop the charges against Rivera and Figueroa. They withdrew the indictment “without prejudice,” meaning that they can file new charges with more information if they choose to.

A day after the about-face, I drive to a gated community in a suburb of San Juan to meet Rivera, the person I’d heard so much about. I find a chubby man with a neatly trimmed gray chinstrap beard standing on the porch of a two-story gray stucco house. The Santeria priest is wearing gold bracelets on his wrists and an electronic bracelet on his ankle. Rivera shakes my hand and offers my translator a light. He cuts off my halting attempt to introduce myself in Spanish. “I speak English,” he says, without an accent. Then he tells me to call his lawyer.

His attorney, Carrillo-Jiménez, says her client had nothing to do with Spagnoletti’s murder and that the payments he received were for janitorial services he performed. “People are speculating,” she says. “There is no evidence whatsoever.”

Douglas Leff, the FBI special agent in charge of the San Juan division, held a news conference on June 15, the fifth anniversary of the shooting. He announced a $20,000 reward for information leading to an arrest, and Marisa offered $10,000 of her own. The authorities are in the final stages of their investigation, he said, and have a great deal of information about the culprits. In an interview, Leff declines to comment on potential suspects. The fraud and murder investigations, he emphasizes, are proceeding on independent tracks. “We’ve been working it very diligently, and we have a lot of momentum,” he says about the murder. “The more digging we do, the more potential avenues we find to work. There may be different people with different levels of culpability.”

When I visit Marisa, she says she has complete faith that the FBI will solve the case. “You need to understand,” she says, “that justice is coming.”

Written by Zeke Faux for Bloomberg Businessweek

How old buildings are attracting young talent

Atlanta loft office developer Parkside Partners is planning an $8 million modernization of an aging low-rise building along West Peachtree Street — the latest in a series of “adaptive reuse” projects sweeping across Midtown. The building is overshadowed by Midtown’s gleaming office towers and newly repositioned mixed-use projects such as Atlantic Station.

1438 W Peachtree

But, the property’s obscurity compared with higher-profile undeveloped sites such as the Symphony Center tract near the Four Seasons Hotel Atlanta is also part of what makes 1438 West Peachtree attractive, developers say.

A few blocks south, Parkside Partners is already planning a similar adaptive reuse project of a building at 16th Street next to the former Trump Towers site. That $12 million overhaul will be called 16th Station.

The goal of both projects: provide creative office space in high demand from firms that want to be in Midtown, near MARTA, Georgia Tech and amenities such as Piedmont Park and the Atlanta Beltline, said Parkside’s Eli Green.

Parkside isn’t alone in scouring Midtown for diamonds in the rough. Atlanta real estate company Carter is remaking Midtown’s former J.C. Penney Co. regional headquarters building into a hub for co-working space and fledgling technology companies. Carter, in a joint venture with private equity firm Pacific Coast Capital Partners, already has at least one undisclosed tenant signed to a lease in the 10-story building just north of the Fox Theatre, the Georgian Terrace hotel and Hotel Indigo at 715 Peachtree St.

Matt Delicata, a vice president with Carter, said loft-office projects such as 715 Peachtree increase competition for landlords of traditional Midtown high-rise towers. “There is more out there for tenants to choose from,” he said.

More adaptive reuse projects are being launched as the construction of new office towers without an anchor tenant remains difficult for some developers, said Josh Hirsh, a senior managing director with real estate services giant Jones Lang LaSalle Inc. Premium Midtown land prices caused by multifamily projects is one hurdle, he said. Prices have climbed to at least $8 million an acre across parts of Midtown. Soaring construction costs is another challenge for developers, he added. For example, the cost to build a new trophy intown office building has risen to slightly more than $400 a foot. By contrast, Carter is redeveloping 715 Peachtree for about half as much.

More tenants are also demanding a different type of working environment from the garden-variety office. Consider Ponce City Market, the redevelopment of the former 2-million-square foot Sears building on Ponce de Leon Avenue in the Old Fourth Ward neighborhood next to the Atlanta Beltline. The former brick warehouse now features loft offices, apartments and a food hall. It’s already landed several creative-class companies.

“It’s all about attracting young talent,” said Ben Hautt, co-managing partner with Stream Realty’s Atlanta office. Stream has adaptive reuse projects in West Midtown on Ellsworth Industrial Drive and in Brookhaven. “The young talent companies want is drawn to adaptive reuse projects because they provide a unique experience,” he said. “They don’t want to ride up an elevator to an office where they work in a cubicle. They have a huge desire for uniqueness.”

Parkside is striving for that at 1438 West Peachtree. Architect MSTSD Inc. is designing the project, which will include up to 14-foot ceilings and skylights on the second floor. The building, which will be 80 percent leased when Payscape takes occupancy this fall, will feature the remaining loft office space as an alternative to the glass towers on Peachtree Street, Parkside Partners said.

Demand for creative loft office space doesn’t appear to be waning, either. “Given the growth in Midtown multifamily development that caters toward young professionals, you are going to see this trend continue for a while,” Hirsh said.

Written by Douglass Sams for Atlanta Business Chronicle

GE puts North American IT HQ in Midtown ATL, will add more than 400 jobs

General Electric Co. (NYSE: GE) has picked Atlanta as the North American headquarters of its Information Technology unit. The conglomerate will, over time, add more than 400 jobs in midtown Atlanta as it shutters the Fairfield, Conn.-based IT HQ and consolidates work from around the country.

GE Article

GE Digital Chief Technology Officer Chris Drumgoole will manage the Atlanta operation. GE Chief Information Officer Jim Fowler lives in Atlanta.

On June 9, Atlanta Business Chronicle first reported on San Ramon, Calf.-based GE Digital’s plans to put a $3 million, 250-job IT center in Midtown. That facility will be GE’s IT headquarters in North America. GE will, over time, relocate to Atlanta most of the 250 jobs at Fairfield. “There’ll be jobs from all over GE moving (to Atlanta) over time,” Fowler said. “As GE grows, you would expect the (Atlanta) operations to grow with it.”

The majority of the initial 250 jobs being added in Atlanta are related to off-shored work outsourced to third-parties that will be brought in-house. The IT business is part of GE Digital, which applies Big Data technologies to help industrial companies manage assets and operations more efficiently. Big data refers to the crunching of massive and complex data sets that can’t be processed by database management tools.

“At GE Digital, we connect streams of data and information coming from machines to analytics, artificial intelligence and machine learning and we are create new outcomes for industrial companies,” Fowler said.

GE is in midst of its largest transformation in 100 years, Fowler said. “By putting software and analytics together with hardware and machines, we are able to create new levels of industrial productivity never possible before,” he said.

Atlanta was picked for the North American HQ because of the quality and cost of talent in the area. “More than 130 Tier 1 CIOs are located in Atlanta (and) they come here for a reason,” Fowler said. “Atlanta is a place where talent wants to live. The quality and the cost of talent can’t be beaten anywhere else.”

GE is considering 10 buildings around Georgia Tech for the IT hub, Fowler said. The company is likely to take temporary space in the city in the interim. One site could be Coda, a 750,000-square-foot office tower planned for Tech Square. That building, which will be anchored by Georgia Tech, is targeting companies who work on Big Data technologies, and would benefit from the in-house 40,000-square-foot data center. Coda, however, would not be ready until early 2019.

For GE, anchoring a big data hub in Atlanta makes sense. The Internet of Things hinges on a host of technologies including wireless connectivity, sensors, cybersecurity and data processing. As a telecom hub dating back to the days of BellSouth, Scientific Atlanta and Internet Security Systems, Metro Atlanta has capabilities and talent in those technologies. Startups such as Bastille and NexDefense — which protect Internet-connected devices and industrial equipment from cyberattack — have emerged in the city.

GE considered Atlanta for its global headquarters before settling on Boston.

Written by Urvaksh Karkaria for Atlanta Business Chronicle

Atlanta Sees No. 9 Biggest April to May Rent Drop in U.S.

Atlanta had one of the largest decreases in rent for a 1-bedroom apartment from April to May, according to a new report. Madison, Wisc.-based ABODO’s National Apartment Report: May 2016, found Atlanta saw average rents for a 1-bedroom apartment fall from $1,305 to $1,266 — a 3 percent decrease.

Atlanta

Rent for a 1-bedroom apartment fell from $1,331 in March to $1,305 in April — a 2 percent decrease. ABODO reported the sustained buyer demand will continue to keep pressure on sale prices, especially for best-in-class assets in major metros. “The competitive marketplace is pushing investors further out into smaller secondary and tertiary markets in search of higher yields,” it said. “However, the rise in new construction in many cities may make buyers more cautious going forward.”

David Haddow, president and founder of the Atlanta-based real estate consulting company Haddow and Co., told Atlanta Business Chronicle during a January interview he thought Atlanta will begin to see more for-sale activity in 2016. “I think we’ll hopefully see a little tapering off on apartment construction, but I think rents are going to start to flatten out because of completion,” he said. “There are a lot of deliveries this year.”

Click here for the full report from ABODO.

Written by Phil W. Hudson for Atlanta Business Chronicle

14th Street tower could soar to 70 stories

Two years after first pitching the project, developers are tweaking a plan for Midtown’s former Symphony Center site to include a 70-story skyscraper, potentially making it one of the tallest buildings in the city.

Symphony Center Design

Symphony

In 2014, New York developers including Ashkenazy Acquisition Corp. and Olympia Heights Management pitched one of the city’s largest mixed-use projects for the four-acre site at 98 14th Street — a $650 million plan to build a trio of twisting towers. The project would include up to 1,300 residential units, 90,000 square feet of retail and a 340-room hotel.

“Tower C” was to rise 60 stories, with 340 hotel rooms and 200 residential units. That tower is now being considered for an additional 10 stories, allowing it to reach at least 800 feet, or about as tall as Midtown’s One Atlantic Center, the city’s fifth-tallest office building, Atlanta Business Chronicle has learned. The original plans also called for a 57-story residential tower with ground-floor retail and a 38-story residential building with retail. Now, one of those buildings would be scaled back, sources said. An attorney for the development group — identified as an affiliate of New York-based Ashkenazy Acquisition Corp., Olympia Heights Management and architect Arquitectonica — was not immediately available for comment. The Atlanta office of Perkins + Will is also designing the initial phase of the project. An announcement could come toward the end of May.

The new proposal is being discussed with planners in Midtown and the city of Atlanta, sources familiar with the plans say. An initial site plan is already approved. “The original concepts for this site were bold but achievable, and we appreciate that the development team is taking their time,” said Midtown Alliance President and CEO Kevin Green. “Given the amount of investment and momentum in Midtown and our city, the value proposition is becoming more compelling.” Green added, “This is a premier site in the heart of Midtown that offers a lot of opportunity. If you are going to build something remarkable, this is a great place to do it.”

The plan would face growing headwinds. Financing high-rise apartment towers is becoming more difficult, as banks are growing wary of overdevelopment, with several thousand units already under construction in Midtown alone and rents starting to peak. While Atlanta’s economy bounced back after the national recovery began, and the Atlanta Regional Commission projects the region will add about 320,000 jobs between 2015 and 2020, it’s uncertain how much longer the expansion will last. The average U.S. economic cycle in the postwar period is seven years. The average of the last three cycles is nine years.

When the project was presented in 2014, the goal was to build in phases over several years with the thinking that Midtown would continue becoming an even greater magnet for investment and jobs. Since then, the expansion of NCR Corp. to Midtown and the launching of the next phase of Technology Square have done little to diminish that hope. Pursuing an option to build an even taller skyscraper could make sense, especially if the project intends to attract an upscale hotel brand, such as Mandarin Oriental or Park Hyatt, said Atlanta developer Jarel Portman.

“No question that developers love height because they can see their building from any point in the city,” said Portman, whose current projects include a luxury condo project in Buckhead called Emerson. He added that Ashkenazy is known for interesting architecture. “That is just their DNA.”