ATLANTA -- Developer OliverMcMillan has restarted work on Buckhead Atlanta, the 1.5-million-square-foot mixed-use project where construction halted more than three years ago.
The San Diego-based developer began clearing construction debris today on a parcel between Buckhead Avenue and East Paces Ferry Road that will become 85,000 square feet of stores and restaurants, including the new home of French luxury retailer Hermes.
Hermes already has a temporary store on Buckhead Avenue. The parcel will also include two 12-story apartment towers, 15,000 square feet of loft office space, and parking deck with about 1,400 spaces. That will form the core of the 8-acre project near the intersection of Peachtree and Pharr roads. Construction could be complete toward the end of 2013.
OliverMcMillan has a number of additional retailers already signed to leases, but it's not releasing their names, said Hunter Richardson, project manager of Buckhead Atlanta. Those announcements will come later this year, he said. OliverMcMillan has relationships with luxury goods giants, including LVMH Moët Hennessy Louis Vuitton, which controls more than 50 of the world's most prestigious brands.
It's financing the initial construction with its own equity, a decision it made "months and months ago," Richardson said. Lenders have remained cautious about originating new construction loans for mixed-use projects, especially those with large amounts of retail, one of the hardest hit segments in the slow economy. "We are dealing with the realities of 2012," Richardson said.
The developer aims to have construction financing in place later this fall. SunTrust Banks Inc. (NYSE: STI) has been in discussions with OliverMcMillan about a construction loan, people familiar with the process said. Atlanta's largest bank took a retrained approach to commercial real estate lending during the boom, but has been eying financing projects in prime markets and backed by strong sponsors.
Almost a year ago, OliverMcMillan, with up to $300 million from the Boston hedge fund The Baupost Group LLC, reached a deal to acquire the project. Before that, developer Ben Carter launched the project, an attempt to redevelop a former bar district, near the height of the boom.
Hermes, known best for its leather handbags, was one of the few tenants that relocated from Lenox Square. Known as Streets of Buckhead, the more than $1 billion project stalled among the deepest recession in decades.
Carter later gave up control of the project, opening the door for OliverMcMillan. In December 2010, the developer was brought in by lenders to restart the project, once touted "Slice of Rodeo Drive." OliverMcMillan had a history of jump-starting stalled real estate projects. It had paid $28 million to reinvigorate a 95-unit condo outside of San Francisco, and planned to invest another $150 million to complete a 46-story condo in Honolulu.