Alpharetta is the place to be these days—especially if you’re starting a business. In July, personal finance website NerdWallet published a study naming Alpharetta as America’s top small city for starting a business. NerdWallet and its partner, Entrepreneur Media, compared 463 small U.S. cities (defined as cities with populations of 50,000 to 100,000) to determine where the best opportunities are for anyone who is considering starting a business. The North Atlanta suburb competed against cities like Bethesda, MD, Newport Beach, CA, and Greenville, SC.
A number of statistics make Alpharetta stand out. It boasts a 4.4% unemployment rate—well below the average rate of 5.2% among U.S. small cities. Its average revenue per business is $6,908,899. Approximately 36.5% of its businesses have paid employees, which is in line with the status quo of its rival cities. With 8,975 businesses and a population of 59,553, Alpharetta has 15.07 businesses per 100 people. By contrast, New York City has a population of more than 8 million and boasts 11 businesses per 100 people, notes Entrepreneur.com. The average revenue per business among the top ten largest cities by population is $1.4 million compared to the impressive $4 million average revenue per business among Alpharetta and its competition.
Alpharetta is particularly attractive to the technology sector. The city is home to over 600 technology companies and more than 15 enterprise and co-location data centers. Several factors have lured these businesses to the suburb: Alpharetta’s proximity to a major metro area, the expansion of GA 400 in the 1990s, the subsequent development of a powerful grid infrastructure and fast fiber-optic network (with download speeds 60% faster than the U.S. average), and group initiatives like the Alpharetta Technology Commission, a consortium of the city’s leading technology companies. Members of the ATC, which was established by the Alpharetta City Council in 2012, work to identify and pursue “key investment opportunities and policy decisions for Alpharetta’s technology companies and its burgeoning technology industry,” according to the ATC web site.
The Avalon Allure
One of Alpharetta’s biggest draws is, of course, Avalon, the $600 million, 86-acre mixed-use development that opened in October 2014. Avalon is making its mark by bringing walk-able, urban development to the suburbs—creating the live-work-play environment that young, technology-savvy entrepreneurs crave.
In its current first phase, Avalon includes 500,000 square feet of retail space, a 12-screen Regal Cinemas theater, 105,000 square feet of Class-A office space built over retail space, 101 single-family residences, and 250 luxury rental homes. Avalon’s second phase, which will open in Fall 2016, will bring a 276-unit apartment building built over 40,000 square feet of retail space, 550,000 square feet of Class-A office space, a 325-room hotel, 50,000 square feet of additional retail and restaurant space, and a conference center. The apartment building, hotel, and conference center are expected to break ground next year and reach completion in 2017.
Avalon has become a huge success story for Alpharetta. The development has lured in Whole Foods and trendy chefs like Ford Fry and Giovanni di Palma of Antico Pizza. About 90 percent of Avalon’s first-phase office space has been leased. Rental rates have exceeded expectations, with office rents in the mid-$30s per square foot—some $6 to $8 above the rest of the north Fulton market, notes the Atlanta Business Chronicle.
Avalon’s second phase seems equally promising. Office tenants representing as much as one million square feet of potential leasing activity have expressed interest in moving to Avalon in its second phase, claims a representative from developer Hines, which plans to build a $70 million office tower at Avalon.
Notably, Hines and its joint venture partner, Cousins Properties, Inc. are building the ten-story tower on “spec” “because of the strong interest companies have already shown in moving to Avalon,” the Atlanta Business Chronicle says. Slated to break ground early next year, the 220,000-square-foot building will be situated on a three-acre site overlooking Georgia 400. The Chronicle speculates that Microsoft—which already has an office in Alpharetta and is looking at relocating—is a likely tenant for the tower.
Undermining the walk-able appeal of Avalon is the fact that visitors must drive to get there. But that could someday change. The Atlanta Business Chronicle has reported that MARTA may soon test whether Alpharetta and the rest of the north Fulton office district are ready for rail transit. MARTA hopes to extend farther into the county with as many as six new stations, although such an undertaking would likely take years to fund.
Even without MARTA, Avalon is projected to generate approximately $21 million annually in sales tax revenue, $4.5 million annually in new property taxes, $1.1 million annually in hotel taxes, and more than 4,000 new permanent retail sector, white-collar and hotel service jobs, says its developer, North American Properties. Whether these lofty predictions come true remains to be seen. Nevertheless, Avalon has set a new standard for suburban walk-able development, while helping to propel Alpharetta to the top in the competition for new business.
Blog contributed by RT Bowden, Associate with Cresa Atlanta. RT has more than six years experience in the Commercial Real Estate Industry. Providing creative solutions to tenants over the last four years; his transaction experience includes managing and negotiating office and industrial leases as well as sublease and disposition assignments. For more information, contact RT at 404.446.1580 or rbowden@cresa.com.