Imagine a vibrant public square with a massive outdoor TV screen, a large-scale work-play environment that mixes office space, self-storage, 300 hotel rooms, retail, a posh 60,000-square foot fitness center, and upscale family and student housing with bustling Midtown Atlanta.
The hypothetical three-phase project is dubbed Piazza Midtown which if constructed would be an ambitious $481.8 million, 3.1 million square-foot, 8.4-acre mixed-use development at the corner of Atlanta’s 17th and Spring Streets near Woodruff Park, Georgia Tech and Atlantic Station.
Complete with 3-D blueprints, thorough financial models and zoning regulations, four Master of Real Estate Development (MRED) students, handed their proposal to investors from the Daniel Corp., who could one day develop the property – and were given the theoretical job for what one day could become the “Metropolitan Center Midtown Atlanta project.”
The team of McClain Towery, Kurt O’Brien, Robert Ferrara, and Reggie Love was awarded Best Capstone Project by a team of industry professionals. The panel of judges included three Daniel Corp. executives — Senior Vice President John Gunderson, Vice President John Zintak, Senior Vice President Steve Baile – along with JHP Architecture Vice President J. Mark Wolfe, Auburn University School of Architecture Head David Hinson, and Onion Flats partner Tim McDonald.
The Capstone is the pinnacle of the two-year MRED program and gives students the opportunity to design potential real-life real estate projects. This spring, 15 MRED students were divided into four project teams who made presentations before actual investor-judges before graduating from the program in May.
“This is a simulated professional request for proposal,” said Michael Robinson, Director of the Master of Real Estate Development Program jointly offered by the Harbert College of Business and the College of Architecture, Design and Construction’s School of Architecture, Planning and Landscape Architecture. “It has everything from what are your qualifications to capital stacks, complete with building design and site sections. It’s a comprehensive project in which students have to use all of the knowledge and skills gained in the program to be able to execute the request for proposal. These proposals to a developer are intended to assess the development potential and the value of the property.”
In this instance, the “Piazza” team stood out due to its attention to detail and its diverse professional talents.
“The reason why our proposal works is we were really cued in on our financial numbers and making sure that they were correct and doing our research on those and building the accurate model,” said Ferrara, Senior Vice President of Underwriting for OB Management in Orlando, Fla., whose team also proposed storage space, a hotel and conference center at the location.
Towery, who founded Towery Development in Nashville, said, “We were lucky to have a team with complementary strengths from various backgrounds and experience.”
“Robert Ferrara is a real estate finance expert,” Towery said. “Kurt O’Brien is a self-storage veteran with expertise in market analysis, deal structure, joint ventures, and virtually every other component of real estate development related to self-storage. Reggie Love has an architecture background, which helped with the renderings of our concept. My background is in civil engineering with a focus on land design, development, permitting and construction.”
Demographics for the location also played a role in the proposal.
“It (Midtown) is a young, happening spot – that’s what we cued in on,” Ferrara added. “That’s why we did a high-end fitness center. We even proposed tenants for it – a company out of Miami called Equinox. We also wanted to create an atmosphere of a piazza — a large TV … the idea that people could go hang out there. Imagine watching the World Cup with 2,000 other people in the middle of a piazza in Midtown.”
Though the estimated cost was $481.8 million for all three phases, the group used comprehensive financial spreadsheets to show judges how the mixed-use development would pay for itself over time, via tenants. The group estimated that Piazza Midtown would generate between $35 million and $37 million in annual revenue during its first seven years of existence.
“The greatest challenge on this project was by far the sheer size of the mixed-use development, particularly in the very large Atlanta market, which was uncharted territory for us,” Towery said. “A project of this magnitude is in an entirely different league; most components are different in some way as a result.”
What do students get out of the project?
“You’re going through the whole phase essentially of getting a project ready,” Ferrara said. “Even though this was a large project and is something that I personally am not going to be able to go do tomorrow, being able to go through these processes – you can use the same processes on a small development by finding out your permitting, your zoning, building your models, putting together a full presentation because you’re essentially going to have to make a presentation to investors on any project that you do. It refines your skills.”
Towery added: “Seeing the site, knowing its realities, understanding the site and building constraints created a comprehensive real world experience for all of us. This final project completed our exposure to virtually every project type throughout the program.”
This year’s Capstone Project was the program’s third-such assignment in three years. Previous projects included theoretical construction plans for downtown Boston’s Big Dig in 2012 and plans for a progressive-care retirement facility at the Reynolds Plantation in central Georgia.
“All of our Capstone courses have been on real projects made to real developers and/or property owners,” Robinson added. “These are actual projects that are ready to go in the design and implementation phases. Developers are looking for some additional ideas. They (developers) will use some of the ideas, either from each team or the best project proposal. There are different proposals for financing and for public-private partnerships. They (developers) got to see a lot of different ideas.”
For more information about the Executive Master of Real Estate Development program, visit http://mred.auburn.edu/ or contact Jana Smith, Assistant Director for Executive MBA Programs, at (334) 844-5078 or firstname.lastname@example.org; or Michael Robinson, Director of the MRED program, at (334) 844-5486 or email@example.com.