Hines and Cousins Properties have formed another joint venture to develop an office property in metropolitan Atlanta. The real estate companies will build 10000 Avalon, a 251,000-square-foot tower in Alpharetta, Ga., at an anticipated cost of approximately $97 million. 10000 Avalon is scheduled to welcome its first tenants in 2020.
Hines and Cousins’ ownership interest in the joint venture breaks down to 10 percent and 90 percent, respectively. The partners kicked off construction of 10000 Avalon earlier in July, with AXIS Reinsurance Co. having signed on as the anchor tenant in a 76,000-square-foot, 15-year lease agreement. 10000 Avalon will take its place as one of two office towers within the mixed-use Avalon development.
In addition to Class A office space, the 86-acre Avalon will encompass approximately 570,000 square feet of retail space, 800 multifamily and single-family units and the 330-key Hotel Avalon. Hines and Cousins completed Avalon’s first office tower, the 224,000-square-foot, $73 million 8000 Avalon, in 2017 and exercised their option to acquire the site’s remaining office pad for the development of 10000 Avalon last year as well.
Atlanta’s upward trajectory
A year after delivery, Hines and Cousins’ 8000 Avalon office building is 98 percent leased, which belies the current state of the Greater Atlanta office market in terms of occupancies. The average vacancy rate in the metro area was just over 16 percent in the first quarter of 2018, according to a report by CBRE. The commercial real estate services firm oversees Avalon’s office leasing, and Sam Holmes, a vice chairman with CBRE, represented AXIS in its lease transaction as well. Atlanta’s relatively lackluster vacancy rate, however, does not tell the full story; the area is very much on the upswing.
“During the Great Recession that occurred almost a decade ago, the Atlanta real estate market was hit hard,” per the CBRE report. “Since that time, the Atlanta office market has fully rebounded. Vacancy rates have fallen and overall rents have risen above $25.00 per square-foot on a full-service basis for the first time in history.”
Rendering courtesy of Hines