Category Archives: Real Estate

Would you trade $123,000,000 worth of jobs for 546 condos?

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Well that’s what the Alpharetta City Council is poised to do on Monday, February 28. That is when the city will vote on the high density mixed use Peridot project that MetLife has requested.

I’d prefer the city show they can make one of the already approved mixed use projects work before approving any more but I have listened to the justifications for this project. I listened to City Council Members say the project would reduce traffic, bring jobs and pay for road improvements. It just seemed too good to be true. And as my Dad used to say,”if something sounds too good to be true,son, it probably is.”

So I decided to check the numbers for myself. Sure enough it was too good to be true. While City Council Members tout the benefits of the MetLife project they have failed to mention that the benefits would come at an enormous price. Based on the numbers provided by the developer the Alpharetta City Council will essentially vote whether or not we will exchange 1894 jobs worth $123,000,000 a year for 546 condos in a completely saturated market.

Are you skeptical? You should be. I couldn’t believe it myself. But facts are facts and you can check it out for yourself.

First you just need to look at the Alpharetta Community Development Department’s comparison of the current zoning for the MetLife parcel to the new zoning proposed for the Peridot project. You can find that analysis on page 10 here: http://bit.ly/fBri9t Notice that the major change proposed is a reduction of office space by 568,320 square feet and the addition of 546 condominiums covering 655,200 square feet.

Then take a look at the job projections that MetLife submitted for analysis by the Atlanta Regional Commission on page 17 and 18 here:http://bit.ly/ibZrVX  The developer’s analysis shows that office space is expected to add “1 employee per 300 SF”. That means a reduction of 568,320 square feet of office space would eliminate 1894 potential jobs from the parcel. So if you plug the salary numbers MetLife used on page 18 for the various occupations you will see that the lost salaries from that zoning change would be more than $123,000,000 a year!

Maybe Alpharetta’s Community Development Department doesn’t mind trading 1894 badly needed jobs for 546 condos in an already saturated market but I know a few Alpharetta residents that beg to disagree. I’m just not so sure any of them are on City Council.

You might have a saturated market if you have 15 years worth of inventory

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Since the City of Alpharetta is in the process of approving another 500 or so condominiums for our fair city I thought I would check and see how badly they are needed.

To determine the demand for more condos I pulled the December’s multiple listing statistics for Fulton county condominiums within zip codes 30004 and 30005. There are currently 132 condos for sale in this area and the whopping sum of nine actually sold in December. That means that there are currently enough condos on the market to meet demand for 15 months.

So if you add the condos planned for the MetLife project, the Windward Mill project, the Prospect Park project and every other project not yet built we would have enough inventory to last about 15 years as long as nobody else in Alpharetta wants to sell their condo!

Brilliant. I sure am glad I don’t own a condo in Alpharetta.

Discussion of Mixed Use Developments

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One of the local blogs I frequently read is Bob Strader’s liveinalpharetta.com. Bob is also a real estate agent in this area and his blog is primarily a real estate blog. In a recent post Bob extolled the virtues of mixed use developments in North Fulton County.

The current mixed use fad happens to be one of the topics that really gets my attention so I posted a rather long comment on his blog. But I didn’t want to wear out my welcome and still have more to say so I brought the conversation back here to GA Jim.

You can read Bob’s post at the link above and below is the comment I left on his website:

“Couldn’t disagree with you more on this one Bob. Smart growth is a charade being pushed by developers because it quadruples the density of their speculative parcels thereby quadrupling their profits.

Mixed use with townhomes? That was the good old days. A few years ago Penn Hodge got a 13 story condo tower zoned on Windward Parkway. What’s an extra 12,000 car trips on one of the most congested intersections in town?

And keep in mind that if 24% of people want to live in mixed use developments that means 76% don’t. Vickery Creek and Prospect Park were supposed to be the wave of the future but they were both in trouble long before the economic collapse.

Alpharetta has been the jewel of North Fulton because it is perfect for young families raising children. You say that the demand for our schools will always be there but you overlook the impact of high density development on those schools. If you don’t believe me check the test scores for any elementary school with high density mixed use in the district.

You are right that in the future there will be mixed use developments for the 24% of people that want them. Young, single people and empty nesters will support mixed use in areas like Atlanta, Sandy Springs or Vinings that have already run off the young families.

But high density mixed use won’t succeed in North Fulton until the developers have driven out the families that live here now.”

To give you a little background, my neighborhood was faced with a mixed use zoning in our children’s school district a few years ago. In the course of that zoning battle I learned a lot.  

When I talked to politicians, developers and their circle of defenders I would ask a direct question like,”How can adding 12,000 car trips to a horribly congested intersection improve traffic?” The response was usually some silly talking point like “Mixed use developments reduce traffic” to which I would ask, “How?” and repeat the original question. At that point the other party would usually hem and haw and act as though I were an idiot for not understanding the conventional wisdom of the development community. But I’m no fan of “conventional wisdom” because I find it is rarely conventional or wise. In the end it was clear that nobody could satisfactorily answer the most basic questions.

Another thing I learned is that developers and land speculators spend a fortune promoting the concept of “livable” and “sustainable communities” in Atlanta. There are entire groups like the Livable Communities Coalition devoted to promoting the livable concept and governmental entities like the Atlanta Regional Commission accept their  sustainability as gospel. The thing that struck me as most odd was that sustainable always meant increasing the density of undeveloped land. Not once has the conventional wisdom been that a developer should build four acre parcels with a density so low that traffic would be nonexistent. Wonder why that is?

Some people may think my position is anti-mixed use development but that is not the case. I was glad to see the Vickery development in Forsyth County because it is mixed use with a very low density much like my neighborhood of Windward. And I had no problem with the Milton Park development on Northpoint Parkway. Milton Park is higher density but it is in an area that is  primarily retail.

What I oppose is the simplistic conventional wisdom that “sustainable” mixed use is some kind of panacea. If people wanted these “sustainable” communities so bad the market would demand them organically and developers wouldn’t have to create front groups to advocate for them.  I also don’t believe that high density mixed use is appropriate for suburban areas like Windward and I have yet to find a single piece of evidence that they can succeed in that environment.

“Second-Mortgage Standoffs Stand in Way of Short Sales”

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An article in today’s Wall street journal explains one of the big reasons that real estate short sale programs haven’t been very successful. Nearly a third of homes facing foreclosure have second mortgages and the institutions holding the second mortgages have little or no incentive to play nice.

It is clear why commercial banks like J. P. Morgan Chase choose to let homes slip into foreclosure when it suits them. Banks make decisions based on dollars and cents without any hint of moral obligation and Chase is just one example.  Of course those same banks expect the public to continue paying for homes that are hundreds of thousands of dollars underwater when it makes no economic sense for the homeowner. Hypocrisy much?

I also find it amusing that Chase Bank is screwing their mortgage customers while spending a fortune to open new branches all over Georgia. Guess they gotta have more screwees to keep making money.

Read the whole article here: http://on.wsj.com/fgiLru