Development Magazine Winter 2016/2017

Development - Ownership

Atlanta Metro Studios And Union Station Business Center

Rooker built Union Station Business Center on the site of a failed regional mall in Union City, Georgia. The three buildings on the left comprise Atlanta Metro Studios. The larger building at the right is a spec 988,000-square-foot distribution center now occupied by DHL.

A fully leased business center with movie production studios and a distribution center has risen on the site of a former Atlanta-area mall.

WHEN JOHN ROOKER first looked at the shuttered Shannon Mall site south of Atlanta in Union City, Georgia, he didn’t see a failed retail project. “We weren’t really looking at a dead mall,” he says. “We were looking at land. The location is what drove everything for us. Sitting right on I-85, two exits [seven minutes] south of the Hartsfield-Jackson Atlanta International Airport, in the strongest industrial corridor in all of Atlanta, it made sense immediately.”

Shannon Mall had been in decline for years before it was given up to foreclosure in 2009. Sim Doughtie, SIOR, president of King Industrial Realty, who originally brought the project to Rooker in 2013, had already established a relationship with the Union City Council and Mayor Vince Williams. “I explained to them that they would need to rezone the property, for me to have any interest,” recalls John Rooker, the CEO of Rooker, an Atlanta-based full-service real estate development firm that specializes in industrial projects. Eager to have the property revitalized, Union City fast-tracked the project and rezoned the property in 30 days, to “Town Center/Mixed Use,” a very flexible zoning designation that would allow Rooker to take the project in a number of potential directions, including industrial.

Shannon mall site

The Shannon Mall site is shown in May 2015, after demolition was complete and grading had begun.

Following a favorable due diligence process, Rooker set about assembling the multiple tracts and cross easements once occupied by the mall’s end cap tenants. He purchased the main part of the mall from Colony Capital; the Sears property from Sears Holdings Corp.; and the old Federated Department Stores space, once occupied by Macy’s, from a private investor. The purchase price was $6 million. The redevelopment of the site as Union Station Business Center includes 1.2 million square feet of commercial development.

Because the site had housed an 830,000-square-foot regional mall, much of the required infrastructure and utilities already existed. The site had significant power and water service. Although the sanitary sewer system had adequate capacity and was in good condition, the aging storm sewers had to be completely removed and replaced. Existing perimeter roads from the original mall site remain in service; Rooker added driveways for the new facilities and new paving on all the roads.

Identifying the First New Use

As an industrial developer and owner of more than 3.5 million square feet of industrial space, Rooker had noticed that movie producers were coming to Atlanta and using existing warehouse space for their productions. “In the downturn, when nobody else was really leasing warehouse space, the film industry was,” explains Rooker.

Atlanta Metro Studios

In November 2015, panels were erected to construct the 80,000-square-foot building that now houses Atlanta Metro Studios’ four 20,000-square-foot sound stages; two 27,500- square-foot sound stages are located in another building.

Atlanta Metro Studios

All six of the sound stages at Atlanta Metro Studios feature 40-foot clear-to-grid ceiling heights, no columns and 3,200 amps of power.

Movie and television production has become big business in Georgia, largely because of state and local tax credits. An estimated 245 film and TV projects were completed in the state in fiscal year 2016; they contributed more than $7 billion to Georgia’s economy. Other than Pinewood Atlanta Studios in Fayetteville, which came online in 2014, the Atlanta area had no other purpose-built studio space. Rooker sought to fill that need quickly, by building a 245,000-square-foot film and television studio facility on 25 acres of the Shannon Mall site. The project includes the following facilities:

  • An 80,000-square-foot building consisting of four 20,000-square-foot sound stages with three operable sound doors between them; 40-foot clear-to-grid ceiling heights; no columns; and 3,200 amps of power for each sound stage.
  • A 55,000-square-foot building consisting of two 27,500-square-foot sound stages with an operable sound door between them and the same features as in the larger building.
  • A 60,000-square-foot, two-story office building for production company activities such as script work, casting, rehearsals, costumes, laundry, etc., which is attached to a 50,000-square-foot “mill space” building with 28-foot clear height ceilings. Mill space is a term used by the movie industry for the workshops where sets, props, components, etc. are built before being brought to the sound stage, where the final assembly process is completed.
  • A four-acre “back lot,” a gravel area where production companies can create alleys and street facades for filming purposes or erect a large green screen made of shipping containers for outdoor shooting.

Rooker contracted with Comcast to pull a gigabit fiber line onto the site. Production companies use a significant amount of bandwidth to send high-density (HD) video of a day’s work (“dailies”) back to their offices in California for review.

two story office building

A two-story, 60,000-square-foot office building houses film and television production company activities such as script work, casting, rehearsals and more.

Rather than simply develop the studio complex and then sell or lease it to a third party, Rooker decided to become the managing partner of Atlanta Metro Studios, which leases space to production companies. Making the jump from being an industrial developer to owning and leasing movie studio space required learning a lot about the movie production industry.

distribution center

The 988,000-square-foot distribution center now occupied by DHL was designed to accommodate large-scale consumer product and e-commerce business operations, with 36-foot clear height ceilings and 60-foot-wide bay spacing.

“As an industrial real estate, construction and development company, we already understand how to build warehouses,” explains Rooker. “Partnering with Ed Richardson and Brian Livesay [both co-founders and partners of Atlanta Metro Studios and 404 Studio Partners] enabled us to understand how to build production facilities to meet the unique requirements of the television and film industries.” Richardson, a former Turner Entertainment Group producer, and Livesay handle sales and marketing for the studio facilities.

Rooker declines to divulge leasing rates, but does say that “It’s not like a lease rate on an industrial warehouse; [there are] lots more moving parts than [those typically found in] an industrial lease. They pay for different things at different times, when they’re using the spaces. It’s a pretty intricate operation, as to how we are compensated for them using the space.”

Rooker believes that Atlanta Metro Studios and the South Fulton area are well positioned to meet the needs of very demanding movie companies for services and amenities such as competent security, reliable internet access, skilled labor, carpentry, experienced and capable lighting services, varied and high-quality catering and a range of housing options, from hotels to private homes. Atlanta Metro Studios moved into its facilities in mid-June 2016.

Financing and Tax Credits

Atlanta Metro Studios was financed by Bank of North Georgia with Rooker equity. The state of Georgia offers a 20 percent tax credit per production to film and television production companies that spend at least $500,000 in Georgia. If a production displays the Georgia Film Office logo in the credits, it earns an additional 10 percent. Although out-of-state companies — those based in California, for example — cannot typically use the tax credits directly, the credits are transferrable and can be sold to Georgia businesses or individuals seeking a state tax break. Demand is high. “They seem to be selling them as fast as they can get them,” Rooker reports. This has helped attract many production companies to Atlanta Metro Studios.

Union City business center project summary

As creators of new jobs, the businesses in the Union City Business Center are also able to take advantage of Opportunity Zone Tax Credit Incentives. Under this program, local governments that undertake redevelopment and revitalization efforts in certain older commercial and industrial areas can qualify for a Georgia state job tax credit of $3,500 per net new job created. Companies can apply the credit against their state income tax liability and payroll withholding tax. Atlanta Metro Studios will receive Opportunity Zone Tax Credits for its nine permanent, full-time employees.

The Second New Use

Union Station Business Center also includes a 988,000-square-foot distribution facility, sited on 65 acres adjacent to the Atlanta Metro Studios facilities. The location of the site, with access to the busy I-85 interstate highway and minutes from both the Hartsfield-Jackson airport and downtown Atlanta, made it ideal for a spec industrial building. The building was designed to accommodate large-scale consumer product and e-commerce business operations, with 36-foot clear height ceilings, 60-foot-wide bay spacing, an early suppression fast response (ESFR) fire system and ample parking. The final construction cost was roughly $26.4 million.

DHL moved into the project on April 1, 2016. The company leases the building as a logistics hub, where it performs kitting operations for Keurig, packaging various coffees and coffee makers together and distributing them from the facility. It has received Opportunity Zone Tax Credits for the jobs created there.

The industrial building was financed by BBVA/Compass Bank with Rooker and Lasalle Investment Management in a joint-venture equity partnership. Rooker sold the property in April 2016 to CBRE Global Investors.

With the recent signing of Fox Television and SONY Pictures as tenants at Atlanta Metro Studios, the property is now fully occupied. The redevelopment earned Union Station Business Center and Rooker NAIOP Georgia’s 2015 “Industrial Deal of the Year.”

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