Tony Ressler, the billionaire co-founder of Ares Management and Atlanta Hawks owner, said he’s undeterred by the recent property downturn and is moving forward with his partners to transform downtown Atlanta by turning a vacant railyard into a $5 billion mix of hotels, restaurants and offices.
(Bloomberg) — Tony Ressler, the billionaire co-founder of Ares Management and Atlanta Hawks owner, said he’s undeterred by the recent property downturn and is moving forward with his partners to transform downtown Atlanta by turning a vacant railyard into a $5 billion mix of hotels, restaurants and offices.
Fears about the stability of commercial real estate aren’t affecting development of Centennial Yards, a 50-acre, gritty subterranean swath of land now under development by CIM Group, in which Ressler is an investor, he said in an interview.
“We’re not worried about any of that,” Ressler said. “Higher or lower interest rates may change your rate of return but will not determine the success or failure of a project. For us, the project is funded and we’re full steam ahead.”
Work has begun on the first hotel and residential building of Centennial Yards, known locally as “The Gulch” because of the way it sits below streets that were elevated decades ago to allow traffic to pass over the railyards below. Ressler said plans have evolved with shifting demand, with more focus on multifamily housing and hospitality and less office construction.
“The obstacle is more about what do you want to build, because you’re going into a different type of economy,” Ressler said from Atlanta. “There will still be office,” he said. “Downtown is a really attractive office location.”
Vexing Challenges
The project, backed by Ressler and CIM, the Los Angeles-based real estate developer co-founded by his brother, Richard Ressler, aims to tackle one of Atlanta’s most vexing challenges.
New residents and corporations have flocked to the southern city, drawn by its lower cost of living and temperate weather, but the downtown district has struggled for decades to become a destination where people want to live and work.
Ressler said that his group, which includes several Black investors such as basketball stars Shaquille O’Neal and Grant Hill and civil rights icon Andrew Young, holds about 35% of the equity in the project, while CIM has the rest.
Centennial Yards’s vast tract, now mostly foreboding parking lots, is adjacent to the Mercedes Benz Stadium, home to Atlanta’s professional football and soccer teams, and the State Farm Arena, where Ressler’s Hawks play.
The area is just a few miles south of midtown Atlanta, where tech companies, law firms and banks are gravitating, and new office towers and huge cranes dot the skyline. The first two buildings at Centennial Yards are already under construction, but Ressler wants to move at pace.
‘Moving Rapidly’
Atlanta will co-host the 2026 World Cup soccer championship, which Ressler said creates “a greater sense of urgency” to get Centennial Yards developed. It’s an opportunity, he said, “to show the world that Centennial Yards is moving rapidly.”
Ressler said that Atlanta’s appeal to business interests is clear with a highly educated and diverse workforce, relative affordability and pro-business policies at the city and state levels.
While downtown Atlanta struggles, with CNN moving from its signature downtown tower into space in midtown, there are signs of untapped promise around Ressler’s project.
Churches and historically Black colleges own land in the area and just to the south of The Gulch is Castleberry Hill, which in recent years has attracted loft-building urban pioneers and Black business owners who’ve opened bars and restaurants.
Ressler and CIM’s project is receiving an estimated $2 billion of incentives with all city and state taxes collected at Centennial Yards over a 30-year period going to the developers. They will also get a 20-year property tax break.
Ressler said the project includes a 20% affordable housing commitment and 38% minority contractor participation, as well as specific goals for hiring workers from the predominantly-Black areas surrounding the development.
NBA Owner
“Supporting small businesses, and of minorities in particular, is good for the economy and good business,” he said. “Most of our fan base, most of our employees, all support it.”
The 62-year-old investor, who has an estimated $7.2 billion fortune, according to the Bloomberg Billionaires Index, splits his time between his home in Los Angeles and Atlanta, where he moved after purchasing the Hawks franchise in 2015 for $730 million.
Calling himself “a committed centrist,” Ressler said that he was still adjusting to the attention that comes with being an NBA owner. “I never thought I was a public figure,” he said. “You buy a basketball team, you become a public figure.”
The team is currently in the first round of this year’s NBA playoffs, trailing the Boston Celtics, 3-1, in a 7-game series. While a basketball championship may be difficult to achieve, Ressler said that when he purchased the team some eight years ago, he immediately saw the potential at the massive undeveloped site across the street from the stadium.
“I did not think of it as a 50-acre hole in the ground,” he said.
–With assistance from Michael Sasso.
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