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.

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

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.

 

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

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.

 

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.”

 

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

 

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.

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

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 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.”

Written by Urvaksh Karkaria for Atlanta Business Chronicle

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.

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.”