Technology Square

Atlanta, Georgia

Project Type: Mixed-Use/Multi-Use

Case No: C035013

Year: 2005

SUMMARY Technology Square is a two-block-long complex of five four- to six-story buildings on eight acres (3.2 hectares) in the Midtown neighborhood of Atlanta developed by the Georgia Institute of Technology (Georgia Tech). Although the structures maintain an outward focus on Midtown’s major streets (West Peachtree and Fifth streets, NW), the project also includes inner plazas and courtyards. The anchor tenant of the $180 million project is Georgia Tech’s College of Management, housed in a LEED-certified building. Also on site are continuing education facilities, a 250-room hotel, a 1,500-space parking garage, and 11 shops, including a campus bookstore managed by Barnes & Noble. Designed to look like a trolley, a shuttle runs along Fifth Street over 12 lanes of freeway, moving students to and from the main 450-acre (182.1-hectare) Georgia Tech campus. Technology Square is an example of university-sponsored development that has helped transform a run-down neighborhood into a vibrant district.

FEATURES

Mixed-Use Complex Trolley Infill Development Green Building Technology Square

Atlanta, Georgia

Project Type: Mixed Use/Multiuse

Volume 35 Number 13

July–September 2005

Case Number: C035013

PROJECT TYPE

Technology Square is a two-block-long complex of five four- to six-story buildings on eight acres (3.2 hectares) in the Midtown neighborhood of Atlanta developed by the Georgia Institute of Technology (Georgia Tech). Although the structures maintain an outward focus on Midtown’s major streets (West Peachtree and Fifth streets, NW), the project also includes inner plazas and courtyards. The anchor tenant of the $180 million project is Georgia Tech’s College of Management, housed in a LEED-certified building. Also on site are continuing education facilities, a 250-room hotel, a 1,500-space parking garage, and 11 shops, including a campus bookstore managed by Barnes & Noble. Designed to look like a trolley, a shuttle runs along Fifth Street over 12 lanes of freeway, moving students to and from the main 450-acre (182.1-hectare) Georgia Tech campus. Technology Square is an example of university-sponsored development that has helped transform a run-down neighborhood into a vibrant district.

LOCATION Central City

SITE SIZE 8 acres/3.2 hectares

LAND USES University, Downtown Hotel, Community Retail Center

KEYWORDS/SPECIAL FEATURES

Mixed-Use Complex Trolley Infill Development Green Building

DEVELOPER

Georgia Institute of Technology Division of Administration and Finance Atlanta, Georgia 30332-0325 404-894-3361 Fax: 404-894-1277 www.admin-fin.gatech.edu

DEVELOPMENT MANAGER

Jones Lang LaSalle 3500 Piedmont Road, NE Atlanta, Georgia 30305 404-995-6300 Fax: 404-995-2184 www.us.am.joneslanglasalle.com/en-US

ARCHITECT

Thompson, Ventulett, Stainback & Associates 1230 Peachtree Street, NE Atlanta, Georgia 30309 404-888-6600 Fax: 404-888-6700 www.tvsa.com GENERAL DESCRIPTION

Technology Square is complex of five buildings on eight acres (3.2 hectares) in Midtown Atlanta developed by the Georgia Institute of Technology (Georgia Tech). The anchor tenant of the $180 million project is the College of Management, housed in a LEED-certified building. Also on site are offices, continuing education facilities, a 250-room hotel, a plaza and quads, a 1,500-space parking garage, and retail businesses, including a campus bookstore managed by Barnes & Noble. These varied uses are spread among four- to six-story buildings that fuse traditional brick with modernist referents such as glass and steel. Wide sidewalks and double rows of trees line the perimeter. Designed to look like a trolley, a shuttle runs along Fifth Street, NW, over 12 lanes of freeway, moving students to and from the main 450-acre (182.1-hectare) Georgia Tech campus.

Prior to the project’s completion in August 2003, most of the retail spaces in the square had been leased. When the fall semester started that year, hundreds of students and faculty plus alumni and businesspeople began to course through the square each day. From the outset, the hotel exceeded occupancy projections.

Two years later, Technology Square has established itself as an example of a quickly completed, successful infill project—undertaken by a public developer. This achievement is largely the result of two converging visions: one for a university, the other for a neighborhood.

THE SITE

Encompassing two blocks, Technology Square is bounded by West Peachtree Street, NW, on the east and Interstate 75/Interstate 85 on the west, with Fifth and Fourth streets, NW, forming its north and south boundaries, respectively. The site lies immediately north of downtown in Midtown Atlanta.

At the time when Georgia Tech began to assemble property for the project, residents of Atlanta often referred to Midtown as the city's armpit. Midtown residents felt the same way about the site, which included land that had sat vacant for five years and contained deserted buildings (previously a restaurant and Cadillac dealership) hosting prostitutes, vagrants, and drug dealers.

The parcel did, however, have redeeming features. It was flat and offered good highway and subway access. The Biltmore Hotel, a city landmark, sat just across from it on West Peachtree Street. Running parallel to West Peachtree Street and just two blocks east of the site is the famous north-south corridor, Peachtree Street, as emblematic of Atlanta as the Braves.

BACKGROUND AND DEVELOPMENT PROCESS

In 1978, with gunshots, sirens, and motorcycle engines setting the ambience of the neighborhood, area residents formed the Midtown Alliance. Initially focusing on grass-roots networking, the organization later expanded its goals to include beautification and cultural programming. In spite of these efforts, 66 percent of the neighborhood was vacant by 1996.

If things were looking bad for Midtown, they were not looking much better across the interstate at Georgia Tech. The deteriorating campus was girded behind fences due to crime in adjacent neighborhoods. Moreover, a state audit had cited the administration for a number of irregularities. Out went the old president in 1995 and in came a new one, Wayne Clough from the University of Washington. From the start of his term, Clough was upfront about his vision for the school—putting Georgia Tech on the map as a major research university. And he realized that it would not happen without an upgrade to the surrounding community. To further these goals, he put Robert Thompson, a former colleague, in charge of a new administration and finance department. Soon thereafter, Thompson launched a master-planning processes, inviting the Midtown Alliance to participate. The nonprofit group in turn appointed him a board director.

When Atlanta hosted the 1996 Summer Olympics, Georgia Tech served as the Olympic Village, housing 15,000 athletes. Afterward, the university had an extra 6,500 beds. These were filled without increasing enrollment so that, overnight, the campus became vastly more residential in nature. Suddenly, the need for safe streets (with entertainment, dining, and shopping options) became more urgent.

The city of Atlanta had already demolished a dilapidated public housing project south of campus to improve conditions around Georgia Tech for the Olympics. Home Park, a residential neighborhood north of campus, was slowly renovating on its own; the administration abetted efforts by funding a daycare center. Pursuant to Georgia Tech’s master plan, Thompson shopped for bargains in an industrial tract west of campus.

That left Midtown to the east, also viewed as an area for potential expansion. By that time, Susan Menheim, president of the Midtown Alliance, was conducting the visioning stage of an economic development initiative called “Blueprint Midtown.” At 50 varied settings ranging from corporate breakfasts to church suppers, the alliance asked area residents and stakeholders to visualize the neighborhood of their dreams. The consensus: people wanted lively streets—a smaller, southern version of midtown Manhattan.

Thompson had his own convergent ideas but was holding his cards close. At a real estate conference, he had learned about a University of Pennsylvania project called “Sansom Common.” (Now named “University Square,” the project is a mixed-use district combining a university bookstore with hotel, conference, retail, and dining amenities.) Imagining an equivalent project, he hired the Philadelphia-based design firm of Wallace, Roberts & Todd to formulate a conceptual plan for the freeway tract. Meanwhile, the Atlanta office of Jones Lang LaSalle (JLL), a real estate consulting firm, executed a feasibility study. Two facts stood out: 1) the campus was severely under retailed, and 2) there was built-in demand for hotel/conference facilities.

Because the regents of the University of Georgia system had made it clear they did not have the resources to finance Georgia Tech’s ambitious master plan, which called for the construction of one large new building each year for ten years, Thompson had already begun to court the Georgia Tech Foundation as an alternative funding source. Sitting on an endowment of roughly $300 million and with a capital campaign underway, the foundation seemed like a perfect solution to the administration’s financial predicament. There was, however, a small problem. Up until then, the foundation had focused on acquiring capital, preserving it, and using the interest generated to fund scholarships and professorships. Real estate entailed a huge conceptual stretch for the conservative institution.

Thompson and Clough eventually persuaded the foundation to adopt their vision of Georgia Tech and assist with financial implementation. (The vision proved so compelling that the capital campaign raised $412 million more than originally targeted, with $180 million allocated for new buildings.) But later, when Thompson presented a specific request—Technology Square—the foundation again balked. Traditional academic buildings were one thing, but leveraging the endowment to finance the construction of a 250-room hotel/conference center off campus—in Midtown of all places—seemed like a very risky proposition.

A committee formed to deliberate the matter and after some time came to the conclusion that Technology Square was a good idea but lacked the scale and critical mass of uses to achieve its various goals in a synergistic way: providing needed classrooms and facilities, crafting a new gateway to campus, upgrading the neighborhood, and raising the profile of Georgia Tech. The administration offered space at Technology Square to the College of Management, which was desperate for new accommodations, and the dean accepted. The Economic Development Institute (EDI), which helps Georgia communities address economic growth issues, received and accepted a similar proposal. The administration decided to move the campus bookstore as well and arranged for Barnes & Noble to manage it. Thompson added the Global Learning and Conference Center (GLCC), a new continuing education facility. In the end, there were five structures: the College of Management, a hotel, the GLCC, a small office building, and a parking garage.

As the project expanded, the estimated price increased, too, again raising the foundation’s anxiety level. Trustees asked the administration to demonstrate financial viability. Mike Sivewright, managing director of JLL’s southeast region and project executive, delivered pro forma after pro forma. Deliberations continued for nearly two years before Technology Square gained foundation approval in 2000. Hoping to make up for lost time, Thompson decided to fast track the project for an August 2003 opening.

Meanwhile, in no small part due to the alliance’s efforts, other developers had been eyeing Midtown more seriously. James Borders, for example, had renovated the Biltmore Hotel into offices. The state of Georgia was helping another developer, Kim King, finance an incubation component (with an emphasis on the broadband industry) in the Centergy office complex across Fifth Street, NW, from Technology Square. As confidence in Midtown’s future grew, investments began to pour into the area.

In 2000, commercial property owners in Midtown created a self-taxing district to fund improvement projects. Administered by the alliance, those proceeds, along with grants, were used to finance a public safety force, streetscaping initiatives, and a litter control crew. A year later, the city of Atlanta rezoned Midtown to incorporate the blueprint’s design specifications. The alliance updated the blueprint in 2003, planning for additional retail, transit, and parks.

Today, more than 10,000 multifamily units are in the works. Millions of square feet encapsulated in office buildings are emerging. At the north end of Midtown, the Woodruff Arts Center is expanding. The Federal Reserve has constructed a new regional vault. And architect Santiago Calatrava has a concert hall for the Atlanta Symphony Orchestra on the drawing board.

FINANCING

As mentioned previously, Technology Square was a $180 million project. The bulk of financing ($170 million) came from bonds and the rest from an equity investment made by the foundation and Georgia Tech. Each component—the small retail spaces, the bookstore, the College of Management, the GLCC, the EDI office building, the hotel/conference center, and the parking garage—had a distinct funding mechanism based on either donations or revenue. Some of the capital components, such as the College of Management, were supported by tax-exempt bonds; others, like the hotel and bookstore, by taxable bonds. The foundation’s endowment secured all bonds, which were issued simultaneously. Upon payment of outstanding obligations, ownership will revert to the University of Georgia system.

The hotel/conference center was, by far, the most complicated component in the financial package. Thompson wanted to optimize the debt/equity ratio to protect the long-term viability of cash flow, and also provide the administration with as much control as possible. Sivewright crafted a deal to allay the foundation’s concern over making a $10 million downpayment on a $47 million facility. Crestline Hotels and Resorts signed a 30-year operating lease that delineated a minimum rent and a two-year rent guarantee and backed the agreement with an irrevocable letter of credit. This gave the foundation protection from risk. And in exchange, Crestline was able to negotiate for a more favorable agreement with the school during the time before a prearranged profit-sharing arrangement with the foundation is set to begin.

DESIGN AND CONSTRUCTION

To help facilitate the accelerated timeline, Johnson hired JLL to manage the design and construction phases. In theory, the three-year design/build timeline meant one year for design and two for construction. In practice, it meant embarking on design while fine-tuning the ownership structure and finalizing the funding mechanisms. In order to achieve the August 2003 opening, Georgia Tech’s board of trustees granted Thompson the authority to make day-to-day decisions, so long as they fell within agreed-upon parameters.

The design contract went to Atlanta-based Thompson, Ventulett, Stainback & Associates. Partner Tom Ventulett, a Georgia Tech alumnus, was a driving force. The challenge was to design a high-tech campus with a "Main Street" feeling, especially along Fifth Street, NW. Solutions involved downsizing Fifth Street from four lanes to two, retaining on-street parking, widening sidewalks, adding trees, and accenting with glass and brick. Further, placing all street-level retail, including the entrance to Barnes & Noble, on the ground floor along the Fifth Street side added to the ambience.

The intersection of Fifth and West Peachtree streets, NW, is the “100 percent corner” (Fifth, because it links Technology Square to the main Georgia Tech campus; West Peachtree because it connects Technology Square to Midtown). The 248,000-square-foot (23,039-square-meter) College of Management is oriented to that corner, which is further emphasized by a plaza and sleek monument sign.

The College of Management building, which contains a 350-seat auditorium, offices, classrooms, the campus bookstore, and street-level retail space, encompasses the easternmost of the two blocks. To enhance natural lighting, it is shaped like a donut around an open-air quad. The structure's environmentally sensitive components—interior finishes that use low volatile organic compounds (VOCs), water-saving features, and a heat-reflecting roof—earned it a Leadership in Energy and Environmental Design (LEED) Silver certification from the U.S. Green Building Council.

The second block is rectangular. A narrow office building, housing the Economic Development Institute and facing Spring Street, NW, lends a friendly facade to the multilevel parking garage. The other two buildings, the hotel and the GLCC, form a complex around a second open-air quad. The GLCC, with its distance learning center, auditorium, lecture halls, classrooms, and TV studio, was placed adjacent to the freeway on the presumption that most users would arrive by car. Connectivity to the hotel allows for shared use of facilities; for example, people arriving from out of town for workshops need accommodations and hotel-initiated events often require additional meeting rooms. Designers placed the hotel between the GLCC and the College of Management to accent its support role (restaurant, accommodations, bar). They also designed expansion possibilities into the hotel, which can add 100 rooms over the porte-cochere (motor lobby) on Spring Street.

Because uses and physical spaces are interwoven and blend together, structures were made as transparent as possible to facilitate wayfinding and orientation. For instance, a sloping floor in the bookstore lets pedestrians see into the building’s interior instead of at a blank wall. A glass facade on the College of Management building seemingly draws the neighborhood into Technology Square. Architects enclosed a corner staircase of the GLCC with a glass curtain wall. When lighted at night, the sculptural element is a wayside beacon to freeway travelers.

EXPERIENCE GAINED

Both Thompson and Sivewright focus their hindsight-perfected vision on design modifications. The plaza in front of the College of Management where the trolley stops is underused. The original idea, in placing the College of Management back from the street, was to make it more visible, to emphasize Technology Square as a portal into the main Georgia Tech campus, to echo a traditional campus component of foreground landscapes, and to better frame the Biltmore for people traveling east on Fifth Street, NW. Although trees were planted in the plaza, they take a long time to mature; in the interim, the plaza is too large and too stark an expanse of pavement. The university plans to redesign the area so that it is more appealing to pedestrians and purchase property across Fifth Street to better emphasize that Technology Square is a portal into Georgia Tech.

After the project was underway, JLL discovered a title irregularity. The Georgia Department of Transportation owned a sliver of the eight-acre (3.2-hectare) parcel. Also, when excavating for foundations, contractors found the remains of former buildings on site, including their concrete foundations and basements. Both incidents slowed the construction process and diverted energy from other pressing needs, highlighting the need to double- and triple-check facts, regardless of the credibility of information sources.

The peculiar combination of private funding with eventual state ownership added two more headaches. The city viewed the project as a private development, and one building code clause required the installation of railings up and down every sloped classroom aisle. Architects balked at this because it compromised their idea of open, transparent design. The university balked at the cost. Eventually the city granted a waiver. A second problem cropped up just weeks before opening, when staff from the state fire marshall’s office informed JLL that the project required their signoff since the state would own Technology Square decades down the road. In public/private projects, developers should seek early involvement from relevant municipal and state offices. PROJECT DATA LAND USE INFORMATION Site area (acres/hectares): 8/3.2

GROSS BUILDING AREA Global Learning and Conference Center Use Area (Gross Square Feet/Square Meters) Retail 5,800/539 Academic 113,094/10,506 Total GBA 118,894/11,045

Hotel and Conference Center Use Area (Gross Square Feet/Square Meters) Retail 6,984/649 Hospitality and 207,141/19,243 conference Total GBA 214,125/19,892

College of Management Building Use Area (Gross Square Feet/Square Meters) Retail 52,242/4,853 Academic 188,872/17,546 Total GBA 241,114/22,400

Economic Development Building Use Area (Gross Square Feet/Square Meters) Academic 60,715/5,640 Total GBA 60,715/5,640

Parking Deck Use Area (Gross Square Feet/Square Meters) Parking 498,098/46,273 Total GBA 498,098/46,273

LAND USE PLAN Use Area (Acres/Hectares) Percentage of Site Buildings 5.06/2.04 62.4 Landscaping/open space 3.05/1.23 37.6 Total 8.11/3.28 100.0

RETAIL INFORMATION Tenant Classification Number of Stores Total GLA (Square Feet/Square Meters) Food service 6 12,667/1,177 Hobby/special interest 1 1,497/139 Gift/specialty 1 1,543/143 Personal services 2 2,766/257 Campus bookstore 1 40,239/3,738 Total 11 58,712/5,454

Percentage of GLA occupied: 96

Annual rents: approximately $25–$32 per square foot/$269.10–$344.45 per square meter Average annual sales: approximately $283.18 per square foot/$3,048.41 per square meter Average length of lease: 1 year (annually renewable by state law)

DEVELOPMENT COST INFORMATION Site Acquisition Cost: $14,150,000

Site Improvement and Construction Costs: $121,175,000 Retail: $10,228,000 Hotel: $31,175,000 Parking deck: $14,514,000 Academic: $65,231,000

Soft Costs: $58,112,000

Total Development Cost: $193,437,000

DEVELOPMENT SCHEDULE Site purchased: 1998 Planning started: 1998 Construction started: 2001 Sales/leasing started: 2003 Project completed: 2003

DIRECTIONS

From Hartsfield-Jackson Atlanta International Airport: Take Interstate 75 north to Exit 250 (10th/14th streets). Head right on 10th Street, NW, and then take the subsequent right onto Spring Street, NW. Technology Square is at the corner of Spring and Fifth streets, NW. Parking is off of Spring Street just south of Fifth Street.

Driving time: 20 minutes in nonpeak traffic.

Rebecca Bryant, report author Jason Scully, editor, Development Case Studies David James Rose, copy editor Joanne Nanez, online production manager

This Development Case Study is intended as a resource for subscribers in improving the quality of future projects. Data contained herein were made available by the project's development team and constitute a report on, not an endorsement of, the project by ULI–the Urban Land Institute.

Copyright © 2005 by ULI–the Urban Land Institute 1025 Thomas Jefferson Street, N.W., Suite 500 West, Washington D.C. 20007-5201 Technology Square is an example of university-sponsored development that has helped transform a run-down neighborhood into a vibrant district. Containing a mix of shops, conference facilities, and classrooms, the Georgia Institute of Technology?s two-block-long development is a complex of five four- to six-story buildings on eight acres (3.2 hectares) in the Midtown neighborhood of Atlanta. A shuttle designed to look like a trolley connects Technology Square to the Georgia Tech campus, which is separated from the project by the 12-lane Interstate 75/Interstate 85. The anchor tenant for the project is the 248,000-square-foot (23,039-square-meter) LEED Silver-certified College of Management building (on the left). Also included in Technology Square are a 250-room hotel; the Global Learning and Conference Center, a continuing education facility (on the right); and a 1,500-space parking garage. Underneath the College of Management space is a Barnes & Noble that serves as the university?s bookstore. Although the buildings in Technology Square maintain an outward focus on Midtown?s major streets, inner courtyards provide meeting and socializing spaces for students. Technology Square site plan.