AirRealty is set to break ground on a 109-unit apartment development in College Park, Ga. The suburban Atlanta project taps into an emerging area of the market that aims to marry new developments with important transit and infrastructure, said Rod Mullice, an investor in AirRealty and national director for the transit-oriented development practice at Colliers International.
ThePad on Harvard Residential has secured $16.5m of financing from Atlantic Capital Bank and is set to see construction start shortly. “[This is a] trend that will go on for a while. We’ve changed our transportation policies in the country and we will start to see more density around transit systems,” Mullice said.
Mullice’s involvement with the deal dates back to 2011, when he was asked to study the potential of the site by Atlanta’s transit authority. “We completed a study that determined that the highest correlation of station to station traffic inside of Atlanta’s 38-station system was between College Park and the airport,” he said. In 2012, the site – 400 feet from a transit stop and close to a boutique hotel – was identified as a multifamily site.
At that point, the city of College Park hired Mullice to renew a lease for the Federal Aviation Administration’s regional headquarters, which is adjacent to the site. “After the lease renewal, we re-stacked the building and added another 400 employees to the property. At that point, we began raising investor capital, formed AirRealty and brought in our local partner, HJ Russell & Co to put the deal together,” he explained.
The company is in talks right now for two more projects that will add 500 units to its pipeline and was recently invited out to another city to look at a couple of deals next to a transit stop near an airport. It will follow a similar strategy to the Atlanta development, Mullice noted. “We were able to keep a single focus on transportation-oriented development and are able to understand and explain, from an equity investor perspective, how this fits in with the economic development of the city and what the value proposition is,” he noted.
Rents at ThePad will be about $1,500 per unit. Employers such as Hartfield Jackson Atlanta International Airport, Chick-Fil-A, Porsche North America and Delta Air Lines are among the employers in the region.
The link between transportation and real estate led Colliers to formalize its focus on this part of the market in early 2014. The firm just created a sister practice group out in Honolulu. “Our goal is to have Eastern and Western region leaders with dual focus on understanding the planning process as well as raising capital to execute a project,” Mullice said. “We’re managing the process for developers who are not as adept at working in an urban environment.”
AirRealty was formed in April 2014. “It’s driven by technology, including smart phones and the way we receive goods and services. It’s also being driven by technology and transportation, including the rise of electrical cars and more fuel-efficient cars. We’re building fewer roads and allocating less money to build roads,” Mullice said. “We will see more real estate transactions and developments closer to transit stops.”
[Article originally published in Real Estate Fund Manager, August 2015]