From this month’s Decatur Focus…

The Alexan 1133 luxury apartments on Commerce Dr. are officially open and giving tours according to their Facebook page.

Their website shows studio, 1 bedroom, and 2 bedroom rental options.  Studios range from 532 to 714 sq. ft. with 6 floor plans available.  There are twelve, yes 12, one bedroom floor plans ranging from 723 to almost 900 sq. ft.  Two Bedroom units come in 9 different configurations, range from 964 to 1554 sq. ft., and are almost entirely 2 bed/2 bath with the exception of one model.

Amenities include the expected clubhouse, fitness center, and a pool – this one is saltwater.  Additionally, there is a rooftop deck with fooseball, outdoor kitchen and casual seating, a “social hub” with Wi-Fi, iMacs, powered individual and communal work spaces, TV’s, billiards, ping pong, shuffleboard, darts, and arcade games, electric car charging stations and a dog spa.

Alexan 1133 is the second large apartment development to open in Decatur after The Place on Ponce last year, with the third development, Arlo, still under construction.

Image courtesy of Alexan 1133 blog.

The Place on Ponce at 315 West Ponce is always an interesting development to keep an eye on.

Most of us are well-aware that until very recently, there were few rental options in the city and now – starting with The Place on Ponce – three large apartment projects are about to come online (totalling around 600 apartments) with even more potentially working their way through the pipeline.

The Place on Ponce was the first of the three projects to be completed and it opened its much larger, second phase to the public at the start of September.  At the time, they reported that Phase II was already 42% leased.

But how’s demand looking now, a couple months in with the two “A” apartment projects, Arlo and Alexan, coming online in a few months?

We followed up with Carter’s Chief Development Officer, the always responsive Conor McNally, who let us know that the entire project is now 62% leased and that they are “happy with that progress”, adding “the market is receiving the product very well.”

We shall keep an eye on the occupancy rates as more and more apartments open up around Decatur in the coming months, but for now the folks at The Place on Ponce sound satisfied with their progress.

Photo courtesy of The Place on Ponce Facebook page

We had high hopes that we might get another grocery store in Downtown Decatur with the mixed-use development at the Callaway property, across from City Hall along Trinity Place.

But the recent disagreement between the city – who acquired the site a couple of years ago from DeKalb County – and the developer, Cousins, about what the market can support and what’s physically possible on the slanted site seems to have resulted in begrudging agreement that a grocery store isn’t possible at that location, according to a new blurb on AJC.com…

Decatur wants more ground-floor retail, though a grocery—or at least a full-sized grocery—seems unlikely given the topography and layout makes it difficult for large delivery trucks.

Le sigh.  The blurb also notes that the city would like some upper-floor office space in the development, since the last time an office building was constructed in Decatur was back before the Olympics in 1991.

Seems the development appetite is still mostly in luxury rentals, which is the case all over Atlanta. A recent GA Tech study found that a large majority of the 11,000 apartments being built and the 9,000 planned are these “luxury rentals”.  At the same time, low-cost rentals are disappearing.

Rendering for old plan courtesy of Smith Dalia

In the October issue of the Decatur Focus, the city responds to two key concerns that have popped up around here for many, many, many years.  Namely, “Apartment developments will be flooded with school-aged children.” and  “Apartment developments will cost the school system money.”

So let’s get right to it…

Using existing enrollment numbers and the local tax revenue generated by downtown multi-family buildings, it was shown that these developments created a healthy, positive net income for the school system. For example, property taxes paid on a $700,000 single-family home generally provide enough school tax revenue to cover the local cost of educating one student. The local cost of educating more than one child from a $700,000 home or from homes valued below $700,000 must be covered by other taxpayers. Commercial and multi-family developments, as well as empty nesters and senior citizen homeowners, provide the needed school tax revenue to make up this loss. Here are a few other issues that are frequently topics of conversation:

“Apartment developments will be flooded with school-aged children.”

The primary market for these dwellings is singles and young professionals. These projects fill a gap in Decatur’s housing market by providing a new, urban rental housing option for those looking for the flexibility and freedom from maintenance that rental housing provides. The city has worked closely with the school system’s enrollment consultant to provide information on these anticipated developments so that enrollment effects could be incorporated into estimates of the school system’s growth and expansion plans.

Many assume that these new developments will exceed the school system’s projections but it is important to consider the size of the units in the projects. Of the 624 units currently being built, approximately 69 percent (430) are efficiencies or one-bedroom units. The likelihood of any of these units being inhabited by more than one person is extremely unlikely. The remaining 194 units consist of approximately 30 percent two-bedroom units and only 2 percent three-bedroom units. Using the enrollment consultant’s estimate for potential students from residential apartments, these units would represent an enrollment growth of approximately 27 students. Even if all of the efficiency and one-bedroom units were included, the estimated number of students would be 87.

“Apartment developments will cost the school system money.”

Unlike owner-occupied condominium developments, apartment developments do not qualify for homestead exemptions and are taxed at their full assessed value. The projected local property tax revenue for City Schools of Decatur from the three downtown apartment buildings under construction (Place on Ponce, the Alexan and the Arlo), will be about $715,000 per year. With an estimate of $7,000 in local tax revenue needed to educate one student per year, these three developments will provide local property taxes that cover the costs for 102 students.

• Using a high-end estimate of potential enrollment of 87 students, the school system will receive at least $105,000 annually to cover costs for other students.
• Using a mid-range estimate of potential enrollment of 57 students, the school system will receive at least $315,000 annually to cover costs for other students.
• Using a low-end estimate of potential enrollment of 27 students, the school system will receive at least $525,000 annually to cover costs for other students.

Rendering courtesy of ColeJenest & Stone

The PR folks for The Place on Ponce at 315 West Ponce de Leon Ave sent around this announcement this morning…

The Place on Ponce, downtown Decatur’s first new apartment complex in more than a decade, began welcoming new residents yesterday following completion of Phase II of the development.

Located on the corner of West Ponce de Leon Avenue and Ponce de Leon Place, the 234-unit, two-building, five-story development features contemporary one-, two- and three-bedroom apartments and 10,000 square feet of street-level retail space. Amenities include a 4,000-square-foot resident clubroom, 1,700-square-foot fitness center, resort-style pool, dog spa, bike repair station and two outdoor courtyards.

The first phase, completed in late 2014, consisted of 28 units and is currently at full capacity. The second phase, consisting of 206 units, is currently at 42 percent capacity but is expected to fill up quickly.

Having just leased out three, brand-new retail spaces at The Place on Ponce in Downtown Decatur, Redstone Properties President, Lyle Fogarty, may currently have one of the best vantage points to report on the state of the city’s retail real estate market.

In a recent press release, Mr. Fogarty noted that “The demand for retail space in Decatur was greater than we projected,” He continued, “It is clear that restaurant owners and retailers recognize the uniqueness of the area and its value.”

I was curious for find out a bit more detail as to what this demand looked like, so I followed up.  His response should be quite interesting to many of you who like to follow and offer predictions on Decatur commercial real estate trends.

We simply had demand from many more tenants than the 10,000 sf of space could accommodate.  By far, the most demand came from restaurants.  We could have filled up 30,000 sf with restaurants if we had the space (and parking).

There was some demand for soft goods and apparel, but many of those retailers like to congregate together and need more critical mass to help them be successful.  If a location could be identified in Downtown where a developer could build 50,000 or more square feet of modern retail space, there’s sufficient demand from shop tenants to make a vibrant retail district in Downtown in addition to the renowned restaurant scene.

So basically, even though the restaurant market may already seem pretty saturated in Decatur, it sounds like we shouldn’t expect it to ease up anytime soon.  Also, for those expecting a greater variety of clothing stores in the city, you may need to wait for a very large project to come in and provide the necessary space to allow a “critical mass”.

I guess we’ll have to wait and see if any of the current projects in development (Arlo, Alexan Decatur residential only!) or planned (Calloway, Avondale MARTA Station) will make a move in this direction.