Office and industrial parks are coming on line across the Southeast, and developers remain optimistic that they will be able to fill them. But they also voice concern about the hype surrounding the economy. "The reality is that [the economy] is probably not that bad but if you start believing it is bad and you put off doing things then, all of a sudden, the economy is bad," says Tom Platford of Platford Properties.

Many developers say the markets in which they develop are stable. Some say they will wait to see what the economy does before making decisions to pursue new developments. Others are capitalizing on downsizing companies by catering to small entrepreneurial enterprises and start up companies.

The Adler Group, based in South Florida, has buildings and a network concept that target small companies. In addition to buildings that can be leased in small increments, the company has created FlexxSpace, a branded strategy of affinity groups and networked business communities that allow smaller companies access to amenities generally afforded only by large corporations. These amenities include a network of conference centers with the latest technology and the most up-to-date teleconferencing facilities.

President Michael Adler has found that FlexxSpace gives the company "a certain amount of flexibility in allowing our space not to be stagnant. Our buildings are built and constructed in such a manner that we have smaller bay sizes that we rent in increments. When a tenant needs to either increase their space or decrease their space, they can do it in smaller increments." The Adler Group has been able to grow as smaller tenants fill space vacated by larger tenants that downsize, he says.

The buildings are also flexible in terms of uses, allowing for office, showroom, distribution, storage and light manufacturing. The Adler Group opened two flex parks in Florida this past summer. Miramar Commerce Park in Broward County is currently 80 percent leased and Sunport Commerce Park in Orlando is 50 percent leased. Both parks are single-story 160,000-square-foot properties. In the present economy, the company has decided to increase its portfolio by acquisition rather than new construction through at least the first half of 2002.

Atlanta-based Platford Properties has also developed a park aimed at smaller tenants. The company recently completed three speculative buildings in the first phase of The Lakes at Bluegrass Office Park. "What we are doing is unique in that we have small-floorplated, single-story buildings. Our market is entrepreneurial-type folks who want to own their space. There are almost no single-story, 100 percent office, small-floorplated buildings that you can buy," says Platford, explaining that buildings at The Lakes at Bluegrass are for sale or lease. Platford describes the product as an alternative to two-story Williamsburg-style buildings. These small, single-story buildings offer more windowed offices to smaller companies than leasing the same amount of space in a larger building, he says.

R. J. Griffin & Company served as general contractor for the first phase, which includes three single-story, 12,897-square-foot buildings. When complete, this 80,000-square-foot office park located in the Bluegrass Business Center in Atlanta's North Fulton office market will have a fourth single-story building and a two-story building of 25,800 to 30,000 square feet. Pro Marketing Inc. has purchased and occupied one building in the park.

Platford sees a demand for these smaller buildings in other Atlanta submarkets, such as the Sugarloaf area, but in the current economy, the company has put such future development decisions on hold.

Also in North Fulton County, Hines plans to start Deerfield Commons II in the next few months. This five-story office building will be 150,000 square feet. Deerfield Commons I, a 120,000-square-office building, opened in early 2001 and is fully leased.

Also in the Atlanta area, Triad Properties will develop the first building at Gwinnett Progress Center, a 130-acre industrial park. Eight buildings totaling 1.5 million square feet are planned for the park, which is located at Highway 316/University Parkway across from the Gwinnett County Airport. The first phase consists of a speculative rear-load, 225,000-square-foot building to be completed in the fall of 2002. Also in Gwinnett County, just south of the new Discover Mills Mall, Triad has completed the first phase of Newpoint Commons, an industrial park. The first two buildings are 104,000 square feet and 109,000 square feet. The second and final phase will consist of a 162,000-square-foot building. Triad Properties completed two 128,000-square-foot buildings in December at The Woodlands at Riverside, a 26-acre park inside Riverside Business Park.

Judd Daniel, director of leasing and marketing at Triad Properties, predicts the economy "is going to bounce back in the second half of 2002. Triad will be prepared with quality product," he adds.

The company also has two joint venture projects underway. The 123,840-square-foot industrial building at 5192 Southridge Parkway, inside Southridge park, is slated for delivery in February. M.D. Hodges, joint developer along with Triad, owns the project and will handle leasing and management. "We really designed it in hopes of attracting companies that are related to the airport, particularly the freight forwarding/air cargo businesses because we are so close to the airportSÁ. The new runway is going to displace many tenants that are already in buildings like this in the immediate area. We certainly hope to attract some of those," says Chet Koenig, vice president of leasing with M.D. Hodges.

In a joint venture with Triad, Trammell Crow Company is developing the second phase of McGinnis Park in Alpharetta. Trammell Crow is handling the development, leasing and property management. The project includes three buildings: a 100,000-square-foot building was completed in 1999, an identical facility was completed in May 2001, and the third phase will be completed as an 80,000 to 140,000-square-foot build-to-suit or speculative project when the second building is leased up.

In Louisville, Kentucky, Faulkner Hinton & Associates has completed Ormsby Two, a 172,000-square-foot Class A office building in Forest Green Office Park. Ormsby One was built 2 years ago. A third speculative building, also 172,000 square feet, is slated to come on line when Ormsby Two is 30 to 40 percent leased. The company also plans a 100,000-square-foot build-to-suit in the park.

Faulkner Hinton & Associates is also readapting a former industrial site at 215 Central Avenue in Louisville. The company has leveled 22 acres, except for a three-story, 73,000-square-foot office building, which is under renovation. An additional building of up to 100,000-square feet is planned for distribution or office purposes.

The market is "sluggish, but SÁ we don't see the peaks and valleys of the national economy. Louisville's economy has always been pretty steady -- even in a recession," according to Mark Hinton, who handles commercial leasing and sales with Faulkner Hinton & Associates. "I think we are on the backside of a downtrend. Depending on what our government does, I think we could go either way -- we could continue in a moderate recession or come out like an explosion in an economic uptrend." He added that activity in early December was "phenomenal."

Also in Louisville, Rick Ashton, marketing director with Fenley Real Estate Group, says, "I think the Louisville market, similar to the national market, has seen some slowdown in the last 6 to 9 months. That said, we've been very pleased with our activity and interest at Olympia Park Plaza. At Triton, we are seeing a very good option for those companies that are looking to plan for efficient space and perhaps downsize or maximize their office usage."

Fenley Real Estate Group is developing Olympia Park Plaza in Louisville. This four-building, two-hotel mixed-use park is adjacent to a 350,000-square-foot lifestyle center under development by Bayer Properties. The first speculative building, a four-story, 120,000-square-foot office building, was completed November 1. Tenants include UBS PaineWebber, 22,000 square feet, Hilliard Lyons, 11,000 square feet, and Elm Croft Assisted Living, 2,500 square feet. Fenley has a total of 30 acres at Olympia Park Plaza and plans a total of 480,000 square feet of office space. Fenley also has 28 acres at Triton Office Park at Eastpoint Business Center. The company has completed the first of three planned buildings. Progressive Casualty Insurance has leased 18,000 square feet of the 103,000-square-foot building.

In Birmingham, Alabama, Daniel Corporation has several projects underway. The Birmingham-based company has teamed with USX Realty Development to develop the 120-acre Oxmoor Corporate Park along Lakeshore Parkway. Regions Bank developed a 300,000-square-foot operations center in the park. Daniel Corporation is in the process of putting in infrastructure and digging two small lakes within the park. Three buildings are planned, two 100,000-square-foot facilities with 25,000-square-foot floorplates and a two-story, 100,000-square-foot high-density, high-tech building. Norman Tynes, vice president of development and marketing with Daniel Corporation, says, "Lakeshore Parkway has been extended to Highway 150, which is a connecting corridor that has really opened up this area for development. Lakeshore Parkway is really Birmingham's next growth corridor."

Birmingham is another stable market, according to Tynes, who says, "Birmingham doesn't experience the real peaks and valleys of office occupancy like some of the other primary markets in the southeast or across the country. Birmingham continuously shows a positive absorption and it just kind of rocks along with steady growth. SÁ Birmingham has transformed from a steel town to a services town, becoming more and more heavily concentrated on the medical field and the biotechnology field."

He notes that USX Realty owns the majority of the land along the Lakeshore Parkway. "Now that USX is getting more aggressive in selling their land and developing it with a controlled growth development plan, we'll see it develop fairly rapidly, I think," says Tynes.

Daniel Corporation is also planning two new buildings in University Park: a six-story, 150,000-square-foot building and a five-story, 125,000-square foot building. The park will total 400,000 square feet, including the building completed in 1999 which now houses companies such as Southern Progress, SouthernLINC and Legg Mason.

Along the Highway 280 corridor, Daniel Corporation developed Meadow Brook South Office Park. The company has completed the third and final high-tech, high-density building in the park. Allstate has leased 73,000 square feet in the 100,000-square-foot building.

In Raleigh, North Carolina, Parker Lincoln Commercial Realty, the largest developer of flex/warehouse space in that area, is developing several parks. Lincoln Park West is a 100-acre park located in Durham, next to Research Triangle Park. Within the last 2 years, the company has built nine buildings totaling 400,000 square feet in the park. Parker Lincoln anticipates building a total of 1 million square feet in the park, which leases to many service companies that service Fortune 500 companies located in Research Triangle Park, according to David Urben, vice president of commercial realty with Parker Lincoln. Recently completed projects include a 60,000-square-foot building and a 40,000-square-foot building. Both are one-third leased.

The company has also built four buildings totaling 200,000 square feet in Lincoln Park South, located in south Raleigh. Parker Lincoln intends to build 600,000 square feet in the park. The latest building, a 50,000-square-foot speculative building, was completed in November.

At Parker Business Center in north Raleigh, Parker Lincoln has completed 13 buildings totaling 600,000 square feet. The most recently completed are a 65,000-square-foot building for Square-D and an 85,000-square-foot build-to-suit for Systech Retail Systems. An 87,000-square-foot build-to-suit for Lipomed will be completed in January.

"We're busy," says Urben. "People are taking a little longer to make decisions, but overall we are busy. Our leasing slowed down for about a month in September, but it has picked right back up again."

Soon, the company will start another 50,000-square-foot speculative building in Parker Business Center and a 65,000-square-foot speculative building in Lincoln Park West. "Because of the Research Triangle Park, we are seeing a lot of start up operations here," says Urben. "When these big companies lay off a couple of divisions, they still need those services performed so they outsource them to small start-up companies. We are seeing a lot of that."

Dowell Springs Business Park is underway in Knoxville, Tennessee. White Realty is developing the 120-acre park, which is located on Middlebrook Pike near the Interstate 40/Papermill Road interchange. Jerry Bodie, executive vice president of White Realty, expects buildout of the park to be between 750,000 and 1 million square feet. "This is one of the last big tracts of space within the city limits of Knoxville," he says.

The first speculative office building at Dowell Springs, a 40,000-square-foot building, will be complete in the first quarter of 2002. A total of 16,000 square feet has been pre-leased in this building. The new regional headquarters for the Boy Scouts of America, a 15,000-square-foot building in the park, will be completed in the second quarter.

Several old archaeological sites are located on the property, including an 18th century home that the developers have deeded to a historical society, spring house and slave cemetery. The developers are preserving the sites and enhancing them with walking trails and a waterfall that goes through the property.

Short-term plans for the park are for build-to-suit projects. "Right now, Knoxville has an abundance of office space," says Bodie. "I think it is going to take a while, with the recent events, for a lot of this office space to be absorbed."

Gaithersburg, Maryland-based Buchanan Partners has a 105,000-square-foot office building under construction in Dulles Trade Center, a flex/industrial park in Dulles, Virginia. This first building will be complete in the second quarter of 2002. The second phase, two buildings totaling 85,000 square feet, will begin when there is sufficient leasing in the first, according to Brian Benninghoff, partner with Buchanan Partners. Ultimately, there will be 550,000 square feet of flex/industrial space on 57 acres.

Benninghoff says the D.C. market "has remained pretty stable because it is impacted heavily by the government." In general, he says, "The economy has slowed. It is primarily due to the decline in telecommunications companies."


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