by Douglas Sams
Commercial Real Estate Editor- Atlanta Business Chronicle

Florida-based real estate company Crocker Partners LLC is proposing one of the largest apartment projects in Atlanta — 26-story and 19-story towers in Buckhead.

Crocker Partners filed a rezoning request with the city of Atlanta Feb. 12 for a 6.5-acre site next to the 18-story Buckhead office tower known as Prominence. The site at Piedmont and Lenox roads lies at the western end of what’s commonly called the Buckhead Loop that crosses over Georgia 400.

The Loop has been a magnet for office towers that included Prominence in the 1990s, and the development of Tishman Speyer’s Two Alliance Center and Manulife’s Phipps Tower between 2007 and 2010.

In a sign of the times, Crocker Partners will take what would typically be a prime location for another office tower and instead seek to develop apartment units.

Developer Crescent Resources LLC is doing the same thing at another Buckhead site: Cousins Properties Inc.’s Terminus project at Piedmont and Peachtree roads. Crescent has broken ground on a 355-unit apartment development called Circle Terminus.

Post Properties Inc. also has longer-range plans for a second phase at its Post Alexander project on the Buckhead Loop. It too would most likely be an apartment tower. CEO Dave Stockert told Atlanta Business Chronicle recently that it’s not close to making an announcement on the development.

Crocker Partners is planning its project in two phases.

The first would contain the larger 26-story tower and 380 units. The second phase would house a 19-story tower with about 322 units.

Crocker Partners declined to comment about the project.

At more than 760,000-square-feet combined, it’s one of the largest projects planned in Buckhead since the office boom several years ago. It could take much of this year to get its zoning, real estate executives familiar with the project said.

Crocker Partners will have to get a special zoning district known as SPI-12 extended across the Loop. The district is designed to encourage such things as greater walkability and open space. The 26-story apartment tower would be the tallest in Buckhead since Coro Realty Advisors LLC built 05 Buckhead, at Peachtree and Piedmont roads, a 20-story, 155-unit apartment project. Crocker Partners is also the first in recent memory to propose two towers on the same site.

So far, Midtown has seen the most new towers.

Jim Borders’ Novare Group, in a partnership with Batson-Cook Development Co., has completed the 23-story SkyHouse Midtown. The same team has also broken ground on their 23-story 100 6th Street.

Daniel Corp., backed by Northwestern Mutual, is will complete its 23-story 77 12th Street tower later this year.

Crocker Partners may not be able to break ground on its project until 2014, multifamily real estate executives said. It could also alter its proposal several times from its original concept.

Even so, it underscores how much the apartment sector is fueling construction.

“We’re very excited to see the market activity pick up,” said Nelson Sexton, a senior vice president with JE Dunn Construction Co. “We still have to be very selective because we know that a lot of what’s talked about may not come around. Still, there’s demand in Midtown and Buckhead for high-rise apartment living. When we cross that threshold and there’s too much, I don’t know. But there’s obviously select locations, like what Borders and Daniel have in Midtown, and other sites in Buckhead, where it will work.”

Some developers have concerns about an apartment bubble in cities such as Washington, D.C., where the recovery started earlier than Atlanta’s.

For now, few are raising the red flags in Atlanta that too many high-end rental units will hit the market in coming years.

Ultimately, lenders probably control the development pipeline more than any other player. And lenders say they remain very cautious about financing new commercial real estate projects.

“We are seeing a lot of multifamily,” said Melissa Frawley, a senior executive with Wells Fargo & Co.

But, Frawley added, lenders are scrutinizing the proposals of even the best-located projects.

Buckhead will be a center of the new development activity.

Last year, the Buckhead and Brookhaven market started 1,473 apartment units, according to The Reid Report, a publication that tracks apartment development. Already in 2013 that same market has 1,675 proposed apartment starts.

It’s not out of the question that Buckhead and Brookhaven could start morethan 2,100 units this year — the most since 2006.

MARTA has also likely paved the way for more development in Buckhead, narrowing its list of transit stations that are best positioned for new mixed-use projects to five.

That initial list includes MARTA-owned land around the Brookhaven station on Peachtree Road, just north of Buckhead’s office towers, and around its Lindbergh station on Piedmont Road near the Ga. 400/I-85 interchange.