An Atlanta developer is revising its ambitious plans for a multiblock redevelopment project along Ponce de Leon Avenue, a popular area near the Beltline.
Portman Holdings’ project, known as Ponce & Ponce, was set to replace a row of well-loved bars and nightlife establishments with a mix of new office, retail, and apartment buildings, the Atlanta Journal Constitution reported.
But due to financial challenges, Portman is scaling back the project’s scope. The company has decided against purchasing three properties on the project’s perimeter, allowing existing businesses to continue operating for a longer duration than initially anticipated. The decision was prompted by tight investment and lending conditions due to high interest rates and construction costs, according to the outlet.
Mike Greene, Portman’s vice president of development, noted the constraints of the investment and lending market, noting the adverse effects of prolonged high interest rates and construction expenses on projects in the planning stages.
“The general feeling — I’m sorry to say — is that we’re kind of at the beginning,” Greene told the outlet. “The financing market is crunched right now.”
The development, originally intended to transform dive bars and nightclubs into upscale buildings with apartments, retail space, and offices, is being reshaped.
Proposed office projects are facing significant financing challenges in the current high-interest-rate environment. A substantial amount of available office space in the Atlanta metro area, driven by low occupancy and remote work trends, further complicates the situation.
Portman’s altered plans exclude several properties on Ponce de Leon Avenue, sparing venues like the Local bar and VESTA Fitboxing gym. Additionally, the revised timeline for the project allows existing businesses more time, as the developer doesn’t anticipate breaking ground for at least two years.
Greene said Portman will redesign Ponce & Ponce as a two-building project with a focus on residential spaces, possibly reducing or eliminating office spaces.
Development has been a big topic in Atlanta recently.
German real estate behemoth Newport RE has announced a deal to sell its South Downtown portfolio, with over 50 buildings and several acres of parking lots across approximately 10 blocks of downtown Atlanta.
The buyer, Braden Fellman Group, is a well-known Atlanta developer with a reputation for revitalizing industrial properties, the Atlanta Journal Constitution reported.
The sale is a significant development for one of the city’s largest adaptive reuse projects, which Newport had undertaken before the disruptions caused by the Covid-19 pandemic in the commercial real estate market.
— Ted Glanzer