Phase 2 Of $750M Interlock Project Breaks Ground As Lender Anticipates A Sale
SJC Ventures is moving forward on the second phase of its West Midtown mixed-use project, The Interlock.
The developer received Atlanta city approval this month for a permit to start construction on 2000 Interlock II, and has since broken ground on the five-story, 670-bed student housing building atop a Publix Super Markets store in a joint venture with student housing specialist PeakMade Real Estate, SJC partner Jeff Garrison told Bisnow.
The mixed-use building kicks off the second phase of the $750M Interlock project on Howell Mill Road a block from Georgia Tech's campus. SJC also plans to develop a new, 180K SF office building and public green space surrounded by six fast-casual restaurants in the project's second and final phase, Garrison said.
The Interlock's first phase consists of a 200K SF office building anchored by WeWork and Georgia Tech Ventures, 100K SF of retail, the Solis Apartments by Terwilliger Pappas and the Bellyard Hotel at Interlock, a boutique hotel in the Marriott International Tribute Portfolio. Earlier this year, Airbnb announced that it planned to open a tech hub at the Interlock, but it hasn't said how much space it would occupy.
Phase 2's large student housing component is indicative of SJC's desire to lean into its neighbor, Georgia Tech, the higher education institution that has been a major economic development engine for Atlanta over the past decade. Garrison hopes to attract Ph.D. students at Tech, with hopes that the office building will ultimately lure some of those same students to establish new companies there.
“We see [Georgia Tech as] the biggest growth vehicle for West Midtown,” he said. “We sort of want to capture all of those elements."
The start of the second phase comes as SJC is in the process of paying off the roughly $100M mezzanine loan on the project it secured in 2018 with real estate investment trust Armada Hoffler Properties.
As of Dec. 31, SJC had a $95.4M outstanding balance on the loan, according to Armada Hoffler's annual financial statement filed with the Securities and Exchange Commission. The REIT said S.J. Collins paid down the balance of the loan by $13.5M last month, which Garrison said was through a refinancing deal with Fifth Third Bank.
Armada Hoffler CEO Lou Haddad said during the company's most recent earnings call that The Interlock could be sold as soon as next year.
“Our 2022 guidance includes additional purchases of $100M in the second half of 2022 as we prepare to receive the proceeds from our partner's sale of the Interlock project in West Midtown Atlanta early next year,” Haddad said Feb. 10, according to a Seeking Alpha transcript.
Garrison told Bisnow The Interlock wasn't being marketed for sale as of yet, despite the record investor demand for Atlanta commercial real estate.
"It is not being marketed but we have been approached by a number of institutional buyers," Garrison wrote in an email. "It is always a consideration, but our current focus is creating a great brand experience.”
