VOLUME 26 NUMBER 18OCTOBER-DECEMBER 1996

OFFICE

THE CARRIAGE WORKSATLANTA, GEORGIA

PROJECT TYPE

Adaptive use of a historic manufacturing andwarehouse facility as a 62,556-square-footcommercial office building. The renovationhas acted as a catalyst to further redevelopment of a declining area neardowntown Atlanta into a burgeoning artsdistrict. By taking advantage of tax credits for historic preservation and facadeeasements, along with a negotiated propertytax freeze, the building can achieve a profitat 60 percent occupancy. The building'sproximity to downtown and the Georgia Institute of Technology offers tenants aconvenient location, and the historiccharacteristics of the building provide an alternative to conventional office buildings.

SPECIAL FEATURES

Adaptive useHistoric preservationOversized lobby used as art galleryConcrete fence around perimeter of site

OWNER/DEVELOPER

Winter Properties, Inc. 330 Means Street Suite 110 Atlanta, Georgia 30318 404-223-5015

ARCHITECT

MSTSD, Inc., Architects 1401 Peachtree Street, N.E. Suite 460 Atlanta, Georgia 30340 404-876-6040

GENERAL DESCRIPTION

Originally a turn-of-the century manufacturing facility and most recently warehouse space, theCarriage Works building today is a 62,556-square-foot commercial office building. Completedin 1992, the project represents the first in Winter Properties' vision for the redevelopment of aneglected area near downtown Atlanta into a new arts district. The project is within minutes ofthe central business district, midtown, and Georgia Tech.

Winter Properties, Inc., purchased the property in June 1988 and originally planned to convertthe building into loft housing. Unable to secure debt financing, Winter began renovating thebuilding with its own money, hoping to secure financing once the project was under way.Eventually, the company obtained bank financing to convert the property to commercial officespace rather than loft housing as originally planned. Today, the building is the cornerstone ofan award-winning office and arts complex created from historic three- and four-story brickwarehouses. It also is home to the Winter Group of Companies, Inc., and the Georgia ArtsCouncil and several other arts-related and high-tech tenants.

SITE HISTORY

Built in 1907 and located on Means Street near downtown Atlanta, the Carriage Works wasoriginally the home of the Atlanta Buggy Company. The building served as a full assemblyplant, manufacturing wheels and bodies for painting, upholstering, and assembly. In 1913,Atlanta Buggy Company filed for bankruptcy, and the building reverted to the original owners.

Between 1928 and 1940, Block Candy Company occupied the building. In 1951, MouchetCorporation, a textile salvage dealer that had been a tenant in the building since 1944,purchased the building. The building was used most recently as a warehouse; it wasabandoned in 1981.

DEVELOPMENT AND FINANCING

The building was purchased in 1988 by Carriage House Associates, a joint venture of CarriageWorks Partners and Marietta Atelier, Inc. (owned by Bob and Arnie Silverman of the WinterGroup of Companies). In May 1989, an agreement was reached for Carriage House Associatesto own 100 percent interest in the building now known as the Carriage Works.

A predevelopment market analysis indicated a strong demand for housing in the downtownarea generated by the increasing number of Atlanta residents seeking a more urban lifestyle.But the apparent decayed condition of the building and the fact that the market for lofthousing in Atlanta was untested prevented Winter Properties from securing financing for thatuse.

Winter continued to believe in the project's potential and proceeded to renovate the buildingfor housing, investing $1.5 million of equity resources and hoping it could subsequently obtainfinancing.

Winter Properties finally was able to finance $2.5 million from Barnett Bank of Florida tocomplete construction of the Carriage Works. However, the bank believed that loft housingposed too much risk and made financing contingent on the building's conversion to acommercial office building. Winter proceeded with the renovation and conversion, knowing theproject would offer an alternative to the cookie-cutter office buildings typical of mostdowntowns. The company felt it could attract Atlanta's growing creative and high-techcommunities with appealing and distinctive office space in a historic building.

Because of the building's historic significance, the developer was able to secure federalrehabilitation tax credits, and the city agreed to freeze property taxes for nine and one-halfyears at the initial annual rate of approximately $12,000. In addition, a facade easement tothe Georgia Trust for Historic Preservation qualified as a charitable contribution for taxpurposes. Because of these financial incentives, the low acquisition cost, and judicious controlover the cost of renovation, the Carriage Works achieved a profitable cash flow at only 60

percent occupancy. The building is currently fully occupied.

DESIGN

The L-shaped brick building sits on a 154,000-square-foot site. One leg of the L measures 160feet long by 86 feet wide and consists of four levels with a partial basement. Separated fromthe larger wing by a two-foot-thick brick wall, the building's smaller wing is 126 feet long by80 feet wide and contains three levels with a full basement. The interior of the building is allwood, consisting of one- and two-foot beams and four-by-six-inch tongue-and-groove flooringspanning ten-foot bays. One industrial elevator inside an oversized shaft served the building inits former uses.

The original brick facade required extensive cleaning, pointing, and replacement. Because thedesigners were able to illustrate the brick exterior in fine detail, the contractor was able toprovide accurate price estimates for the work necessary to stabilize the exterior wall.

Most of the windows in the building were deteriorated and needed replacement. More than 80percent of the existing windows were replaced with similar-style white aluminum windowswith mullions that matched the existing mullions. The steel windows located on one facadealso were replaced with this type of window.

A considerable amount of sitework had to be done to make the area suitable for a commercialoffice development. Much of the soil was inadequate for the construction of surface parkingand landscaping and had to be removed from the site. Railroad tracks surrounding theproperty were removed to make much-needed room for parking, and the site was landscapedto soften its industrial appearance.

To enhance security for the building and its tenants, a ten- to twelve-foot concrete wall waserected around the entire site, which is monitored 24 hours a day by security personnel viaclosed circuit television. The city granted Winter Properties permission to close off MeansStreet at its western end to further enhance the area's security. The city also agreed tochange the name of a connecting two-block strip to Means Street, facilitating access to thesite, as the property is not on a main street.

CONSTRUCTION

Analysis by Winter's architect and structural engineer, MSTSD Architects, revealed thestructure to be only moderately deteriorated. Structural failure during reconstruction was,nevertheless, a major concern of both the developer and the lender. Approximately 30percent of the building's beams and timbers needed to be replaced. Weak sections of thebuilding were supported using screwjacks, while replacement timbers were installed from thebasement to the roof.

Previous warehouse operations had caused the building's floors to sag as much as four to sixinches within a ten-foot span. Several sections of flooring required complete replacement.Lightweight concrete was poured onto all the floors to make them level; the concrete providedthe added benefit of enhanced soundproofing between the floors.

The building's roof also was in poor condition and had to be replaced. The project teamdiscovered that several times during the building's history, the existing roof had been left inplace while another roof was installed on top of it, resulting in roofing material eight to teninches thick. Structural enhancements to the roof also were necessary. The wood and steeltrusses supporting the roof of the short leg of the building lacked any lateral bracing andneeded supports. Because the trusses would remain open to view, the new lateral bracing wasdesigned to be compatible with the existing trusses.

Whenever possible, the designers left the existing wood structure and metal beams intact. Inaddition to being cost-effective, this approach created a striking contrast between the old andnew components of the building. Brick walls and even old fire mains in the building were leftexposed, emphasizing the building's historic nature. Lettering reading "Atlanta Buggy

Company" painted on a third floor wall was left in place, making new office tenants even moreaware of the Carriage House's history.

The existing elevator shaft on the west side of the building was removed and converted intoan exit stairwell. A new elevator shaft was created in a more convenient area near the newlobby entrance. The new oversized lobby, measuring nearly 2,400 square feet, is used by oneof the building's tenants, the Georgia Council for the Arts, as exhibition space for works bylocal artists.

The building's outdated mechanical systems were completely replaced, and new electricalwiring, plumbing, and sewer lines were installed. The majority of the fire-sprinkler lines couldbe reused, however. As predicted in a predevelopment study, no environmental problemsmaterialized during the renovation, with the exception of some asbestos in the roofing.

Lacking windows, the basement of the building could not be leased as office space, but Winterconverted it into a private health club for tenants' use. The club includes exercise equipmentand separate showers for men and women.

MARKETING/TENANTS

A big boost to the project's ultimate success came in 1991 when the Nexus ContemporaryArts Center relocated across the street from the Carriage Works building in four contiguouswarehouses bought from Winter Properties. Using community development block grants,Nexus was able to complete its renovation in 1992 and open what is now the Nexus Galleryand Nexus Press. The arts center acted as an anchor for the Carriage Works project, helpingto attract tenants to the Carriage Works building and to generate interest in the area amongartists.

EXPERIENCE GAINED

Bring experienced construction professionals on board as soon as possible to reviewdesign plans for cost and engineering feasibility.

Make accurate drawings of existing conditions to aid the contractor in the initial stagesand to facilitate more reliable cost estimates.

Adaptive use projects often produce a greater number of unanticipated expenses. Builda higher contingency fund into the development budget for an adaptive use project thanfor new construction.

PROJECT DATA

LAND USE INFORMATION

Site Area: 3.5 acres Gross Building Area: 62,556 square feet Net Rentable Area (NRA): 60,098 square feet Typical Floor Size: 18,000 square feet Floor/Area Ratio: 0.41 Building Height: 4 stories, plus basement Total Parking Spaces: 223 spaces

LAND USE PLAN

Acres

Buildings .75

Paved areas (surface parking/roads) 2.00

Landscaped areas .75

Total 3.50

OFFICE TENANT INFORMATION

Percent of NRA Occupied: 100 percent Annual Rents: Approximately $11-$14 per square foot Average Length of Lease: 5 to 7 years Typical Terms of Lease: Full service Average Tenant Size: 3,000 square feet Largest Tenant Size: 28,000 square feet

Office Tenant Size(square feet)

Number of Tenants

<5,000 12

5,001 to 10,000 3

>10,000 1

Total 16

DEVELOPMENT COST INFORMATION

Site Acquisition Cost $945,000 Site Improvement Costs

Excavation $50,000

Grading 60,000

Sewer/water/drainage 30,000

Paving 100,000

Curbs/sidewalks 30,000

Landscaping/irrigation 60,000

Fees/general conditions 70,000

Fencing, etc. 100,000

Total $500,000

Construction Costs

Superstructure $250,000

HVAC 300,000

Electrical 260,000

Plumbing/sprinklers 225,000

Elevators 70,000

Fees/general conditions 300,000

Finishes 60,000

Graphics/specialties 10,000

Other 25,000

Total $1,500,000

Soft Costs

Architecture/engineering $95,000

Project management 50,000

Leasing/marketing 15,000

Legal/accounting 10,000

Taxes/insurance 25,000

Title fees 7,000

Construction interest and fees 70,000

Other 40,000

Total $312,000

Total Development Cost $3,257,000 Site Improvement and Construction Cost (per net square foot) $33

Annual Operating Expenses (Year One)

Taxes $12,000

Insurance 9,000

Services/security 78,000

Maintenance 15,000

Janitorial 30,000

Utilities 68,000

Legal 2,000

Management 31,000

Miscellaneous 18,000

Total $263,000

DEVELOPMENT SCHEDULE

Site Purchased: June 1988 Planning Started: January 1991 Construction Started: April 1991 Leasing Started: November 1991 Project Completed: January 1992

DIRECTIONS

From the Airport: Take I-85 North to W. Peachtree/Spring Street (Exit 100). Turn left at thesecond traffic light onto West Peachtree Street. Go to the first traffic light and turn left ontoNorth Avenue. Take North Avenue to Tech Parkway. Turn right onto Tech Parkway. Turn leftat first traffic light onto Means Street. At the stop sign turn right. Go up a small hill and turnleft at the Guard House. Main entrance (white awning) is at the back of the building (530Means Street).

Driving Time: Twenty minutes in non-peak-hour traffic.

The Project Reference File is intended as a resource tool for use by the subscribers in improving the quality offuture projects. Data contained herein were made available by the Development team and constitute a reporton, not an endorsement of, the project by ULI - The Urban Land Institute.

Copyright 1996, 1997, by ULI - the Urban Land Institute1025 Thomas Jefferson Street, N. W. Ste. 500w, Washington, D. C. 20007-5201

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