(12.8.16) “Resuburbanization?” Alpharetta mid-rise sells for $27.5 million

(Atlanta Business Chronicle, December 8, 2016)

preston-ridgePreston Ridge IV, part of that initial wave of suburban office parks that popped up along Georgia 400 during the 1990s, has sold to an Atlanta real estate company for $27.5 million.

Atlanta real estate company OA Development paid about $183 a foot for the six-story Preston Ridge IV in Alpharetta. It’s 94 percent leased to tenants including Select Management Resources and U.S. HealthWorks Holding Co.

Preston Ridge Office Park is just east of Avalon, which has brought more walkable mixed-use development — a feature of intown projects — to a large area along Old Milton Parkway.

RGA ReCap LLC provided debt to finance the purchase of Preston Ridge IV. Cushman & Wakefield brokered the sale.

Atlanta’ skyline includes a handful of iconic towers, and when they sell they can get big numbers.

But, the people who market suburban office buildings say there’s plenty to like about properties north of the Atlanta Perimeter. One reason is cap rates, which are generally higher in suburban areas than intown neighborhoods.

A recent report from Cushman and Wakefield said: “Suburban office has lagged the property recovery cycle. Most of the lag is the result of urbanization trends driven by the millennial demographic.”

The report, “Suburban Office: Is This The Next play?” went on to say, “As millennials age, many couples with young children will gravitate toward areas that are more affordable, have better schools, and offer more space. … We expect a ‘re-suburbanization trend’ (already beginning) to gradually occur over the next several years.”

That sentiment has been around a long among those that buy and develop Atlanta real estate. It will interesting to see if that opinion remains entrenched over the next decade, or if it becomes more nuanced, especially if more companies move back toward the urban core, MARTA continues to expand inside the Perimeter, and the city takes on growing concerns over housing affordability.

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