Atlanta – A local high-end condominium developer has been tapped by Starwood Hotels & Resorts Worldwide, Inc., to build its latest project here in the heart of the Buckhead area.
Paul Freeman, the managing development partner of SR Hotel Development, LLLP, said that his 26-story, 150-room St. Regis Hotel Atlanta will be the area’s most luxurious. Scheduled to open in the first half of 2008, the hotel will also feature 50 St. Regis Residences condos on top.
“We were immediately attracted to Buckhead,” said Kerry Hatch, president of St. Regis Hotels & Resorts. “We will build an exquisite property that will be embraced not only by the world’s most sophisticated travelers, but also by the local community.”
Buckhead was recently named by Robb Report as one of the country’s top 10 affluent communities. The St. Regis development is located in the upscale Buckhead Plaza, where hotel guests and residents can walk to fine restaurants, shopping, galleries and offices.
“We’re bringing in five-star interior designers [Hirsch Bedner] and architect Rabun Hogan Ota Rasche,” said Freeman. “This will be one of the most expensive projects we’ve ever built.”
Construction will begin in April 2006, and the residential condos will be sold for more than $2.5 million each. This arrangement is different from what is known as the condo-hotel, said Freeman, which consists of hotel units bought and rented out as typical hotel rooms by individual investors.
The large two- and three-bedroom units at the St. Regis will range in size from 3,200 square feet to 9,300 square feet, said Freeman. Guests can be put in the hotel rooms so the condos don’t need a lot of bedrooms, he added.
Each unit will have its own media room with an entertainment bar and wine cellar.
Amenities at the hotel include a signature St. Regis restaurant, butler service, valet parking, a 9,200-square-foot ballroom, a spa, a courtyard, an outdoor fireplace and a swimming pool.
Freeman believes that “the opportunity for homeowners to live above and share the luxurious facilities and services St. Regis offers” will be a big draw.
More than 40 of the 50 condos had already been sold, said Freeman. “We’re moving people from their 8,000-square-foot homes. These units are for empty nesters looking for convenience and a large pool and grounds.”
He added that many of the buyers were looking for a second home.
Although much of the financing couldn’t be disclosed at press time, Freeman said that Corus Bank is a possible construction lender.
However, Freeman did say that most of the financing will come through pre-sales of the condos. The construction lender will consider this as equity and lend against those contracts, he said.
Mixed-use is key
Like the new St. Regis development, many of the new projects in the city’s pipeline are mixed-use deals. Major players in this niche include the Lane Cos. and Contravest.
“It’s the best way to get them through planning,” said Jeff Eynon, director of multifamily sales for Sperry Van Ness’ Atlanta office.
The multifamily market continued to hold steady in 2005 after some shakiness in previous years due to overbuilding and barriers to entry, Eynon added. At press time, the occupancy rate was between 91% and 92% and is expected to increase by 2% to 2.5% this year.
According to M/PF Yieldstar, some of the increased demand also comes from the large number of renters who have been evacuated here because of Hurricane Katrina.
Condo conversions and ground-up apartment developments continue to be strong inside the Interstate 285 perimeter, said Eynon. But conversion activity is also spreading out of that area.
The cap rate in the region is averaging 6.4%, he added. “The market is playing into sellers’ hands.”
While rents generally decreased in 2005, there was growth in the higher-end products, said M/PF. Rents increased 1.3% for projects built since 2000, for example.