Ponce City Market secures largest Atlanta construction loan since recession

Apr 28, 2014, 11:28am EDT Updated: Apr 28, 2014, 3:22pm EDT
Douglas Sams

Real estate company Jamestown has secured $180 million in construction financing for Ponce City Market, the redevelopment of the Sears Roebuck & Co. building in Atlanta’s historic Old Fourth Ward.

It’s the largest construction loan for a project in Atlanta since the recession ended in 2009.

The loan was spearheaded by PNC Bank, N.A. SunTrust Banks Inc. and JP Morgan also provided the financing.

It marks the second time in the past year that PNC Bank has led the origination of a construction loan for a high-profile Atlanta real estate project. Last July, Buckhead Atlanta, the eight-acre redevelopment of a former bar district at Peachtree and East Paces Ferry roads, secured a $167 million construction loan led by PNC. Four other lenders, including SunTrust Banks, also provided financing.

CBRE Inc. advised Jamestown in its effort to secure the financing for Ponce City Market.

The 1.1 million square-foot restoration of the former Sears building is the largest adaptive reuse project in Atlanta’s history. It will feature about 330,000 square feet of retail and restaurants, including a central food hall; 517,000 square feet of office space; and 259 residential flats.

Ponce City Market is an example of a much broader urban renaissance taking place across the United States that’s turning parking lots into office towers, warehouses into apartment buildings, abandoned railways into parks.

Jamestown, the German private equity fund and developer, bought the building almost three years ago. At the time, it was housing offices for Atlanta City Hall. Other developers saw the potential of the project, but it always proved too big and risky. At more than 2 million square feet, it was the largest brick building in the South.

PNC’s commitment to supporting mixed-used projects in Atlanta is reflected in its collaboration on Ponce City Market, Chad McMasters, PNC real estate banking Georgia market manager, said in a statement. “Jamestown’s investment in the heart of the city will be a catalyst for continued growth and a driver for employment for hundreds of residents,” he said.

Jamestown has funded all of the project cost from its own equity, the company said. That number hovers around $200 million. Ponce City Market’s intersection with Atlanta’s past and future struck the right chord with growing technology companies athenahealth, MailChimp, and Cardlytics, all of which signed big leasing deals in the building.

Ponce City Market will also become the city’s largest food hall, and Atlanta chefs, such as Anne Quatrano of Bacchanalia fame, plan to put new restaurants there. New apartment lofts also just went on the market for rent.

Ponce City Market draws natural comparisons to Chelsea Market, a former Nabisco factory in New York that has been redeveloped into a 1.1 million-square-foot magnet for high-tech and media companies including the Food Network, Time Warner and Google, along with a mix of local restaurants and shops.

Across the United States, several other former Sears buildings from the same era have also been successfully redeveloped. In Seattle, one of those buildings now houses the Starbucks headquarters. In Boston, another stands two blocks from Fenway Park and contains the headquarters for Blue Cross Blue Shield of Massachusetts.