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How an economic downturn might affect development boom
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Development of the planned apartments and retail site along Phil Neikro Boulevard in Flowery Branch is still underway despite the pandemic and rain. - photo by Scott Rogers

Heavy machinery is still in motion at a large tract off Phil Niekro Boulevard, even as businesses are shutting down due to the coronavirus pandemic and economic forecasts are grim.

“We are under construction and by the time we begin to lease, we hope things have started to improve,” said Kurt Alexander, principal with The Residential Group, which is grading for a 324-unit apartment complex near Interstate 985 in Flowery Branch.

Others aren’t quite as upbeat, staring at an economic slowdown and what that could mean for the area’s growth and development, which has percolated strongly for several years.

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A bulldozer pushes wet dirt around a development of planned apartments and retail sites along Phil Neikro Boulevard in Flowery Branch. Wet weather over the past months has slowed the project. - photo by Scott Rogers

“I’ve talked to a lot of local developers and we’re all asking the same questions, with very few answers right now,” said Jonathan Collins, president of Capstone Property Group in Gainesville.

“The fluidity of information almost changes day by day, at this point.

“From our perspective … there are certain projects we are moving ahead on and certain projects we’re hitting a pause button on,” Collins said.

For example, plans for a 50-room upscale boutique hotel in the old Regions Bank building at 111 Green St. in Gainesville have been put on hold, he said.

“The retail environment is certainly strained, as well, and there are some retail projects we’re (holding off on),” Collins said. “We’re just waiting to see how things play out over the next 30-60 days.”

“Unprecedented is the only description for these challenging times,” said Brian Daniel, president of Carroll Daniel Construction, which is involved in numerous building projects in the area.

“It’s scary for our people. We’re dealing with a very real pandemic at the same time we’re dealing with the fear, uncertainty and economic fallout from the pandemic. It’s just something else.”

So how might a downturn, possibly a recession or worse, affect development?

“The only truthful answer is we just don’t know,” Daniel said.

Because of contractual obligations that go into the future, “we’re one of the last (industries) to be affected and one of the last to recover,” he said. “I know that all too well from 2007-09 (Great Recession). Surely we will see impact from this. What that means, I just don’t know.”

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Development of the planned apartments and retail site along Phil Neikro Boulevard in Flowery Branch is still underway despite the pandemic and rain. - photo by Scott Rogers

Gov. Brian Kemp’s shelter-in-place order last week excludes essential workers and defers to a federal list. Federal guidelines identify workers “who conduct a range of operations and services that are typically essential to continued critical infrastructure viability,” including construction workers.

Workers supporting the construction of housing are specifically listed. Kemp’s order requires workers must be at least 6 feet apart on worksites.

Alexander said “social distancing and eliminating group meetings” are taking place on construction sites.

“If someone is showing any signs of illness, we are requesting they leave the site and quarantine for 14 days before returning,”

And so, while the Flowery Branch project is forging ahead, an apartment project planned in Oakwood is iffy, Alexander said.

“Financing is very difficult,” he said. “It will probably be another year before breaking ground on that site.”

Asked to elaborate, Alexander said, “Banks, as well as equity investors, are taking a wait-and-see approach.”

Elsewhere, the vibe is more positive, as Atlanta developer Terwilliger Pappas is still planning to build 400 apartments and retail on two city-owned midtown Gainesville plots.

“We continue to press forward on our Gainesville project and remain steadfast in our commitment,” said Greg Power, company executive vice president, in an email. “We look forward to a successful project.”

Still, he said, “the development industry — and moreover, the world — is facing unprecedented uncertainty. Like everyone in the country, we are figuring out how to adjust to the new normal.”

The city has agreed to sell the properties to Terwilliger Pappas. The Jesse Jewell property will be sold for $5 million, half of what the city paid for it in 2018. Closing could take place in late May, City Manager Bryan Lackey said.

The developer will then have the option to buy the Main Street site for $3.6 million within 60 days of when the last certificate of occupancy for the first phase of the project is issued.

Another major downtown project, Gainesville Renaissance, is still in the works, although a planned groundbreaking in April has been delayed, said Fred Roddy, who is associated with the project.

The $22.4 million development will feature a three-story building on Spring Street, between Main and Bradford streets, or the “fourth side of the square.”

It will have 15,000 square feet of restaurant and retail space on the first floor, 15,000 square feet of office space on the second floor and eight condominiums on the third floor.

“Our intent is to break ground as soon as the restrictions on work are lifted and the supply chain is flowing, but we continue to monitor the national scene for circumstances which impact local development,” Roddy said.