Young downtown investors and developers take the driver’s seat.
Strolling down Broad Street, Rafik “Rafy” Bassali could easily be mistaken for a college student on his way to class at the nearby Georgia Cyber Center.
With his casual attire and five o’ clock shadow, he easily blends in with the growing crowd of young people who frequent downtown bars, restaurants and boutiques.
What separates Bassali from the rest from the millennial milieu is that many of the buildings he enters have his name on the deed.
He’s bought so many properties in the central business district during the past few years that he’s unsure exactly how many buildings are in his real estate portfolio.
“Twenty?” he says during an interview at 879 Broad St., a building he’s helping a tenant develop into a wine bar. “Probably about 20.”
Bassali is 32 – the median age that the typical American buys his or her first home. Bassali bought his first home, a rental property in Olde Town, at age 19 while studying real estate investment finance at the University of South Carolina.
“Real estate was a passion of mine even before college,” said Bassali, who earned his MBA at Augusta University. “When I graduated college in ‘09 it was primarily residential. In 2011-2012 I started getting into commercial and since 2015, I’ve shifted primarily to commercial.”
These days his residential portfolio is down to five homes, not including the home he occupies in North Augusta with his wife Hannah and their infant daughter.
Bassali is one of the more prolific young real estate investors in downtown Augusta, but he’s certainly not the only under-50 businessperson staking a claim in a central business district rapidly shaking off a slump caused by suburban flight more than four decades ago.
It doesn’t take 20/20 vision to see the redevelopment torch being passed from baby boomers to generation X and millennials.
Consider the 20 and 30-something leaders of TaxSlayer, who are investing undisclosed millions to turn the nearly 40,000-square-foot former YMCA building at 945 Broad St. into a corporate headquarters and “innovation and technology campus” for 160 mostly young full-time employees.
“We decided as a group that we wanted to make the move,” TaxSlayer CEO Brian Rhodes, 39, said in a recent interview. “When the (Georgia Cyber Center) was announced, it turned out we were right.”
Directly across the street, in the century-old building at 972 Broad St., will be the future offices of Loop Recruiting, a tech-focused employment firm co-owned by Charlie Wall, 32, and Jason Kennedy, 36. Half of the 8,000-square-foot building will be occupied by Milestone Construction, headed by Miles Dunstan and Sam McElreath, both 37.
Wall can’t deny downtown’s “cool” factor was the primary impetus for the investment.
“Everybody, at least at our company, has lived in bigger cities so we’ve had a taste of that urban lifestyle,” said Wall, whose company currently leases space at a west Augusta corporate park. “We won’t have to get in our car every day to go to lunch. We can just walk down the street.”
It was Kennedy, a native of Birmingham, Ala., who pushed to buy the long-vacant building, which was the tallest on Broad Street in the 19th century. The property’s proximity to major clients such as TaxSlayer and Unisys made the purchase a no-brainer.
“We’re in the technology business and there’s more tech firms coming downtown,” Kennedy said. “This is a great spot to be in the middle of it all.”
At 982 Broad St. – practically next door to Loop’s future offices – is the expansion-in-progress of Weir/Stewart, a gen X-headed marketing firm that typifies the burgeoning “creative class” city leaders envision being a key component of downtown commerce.
Young entrepreneurs are filling up spaces up and down Broad, from The Southern Salad (co-owned by Havird Ussery, 32) at 1008 Broad to the recently opened Groucho’s Deli franchise (managed by co-owner/operator Cameron Spears, 26) at 758 Broad. Other young investors are building entirely new spaces, including 39-year-old John Engler, whose family-owned venture DTJR LLC is developing the seven-story, 125-room Hyatt House hotel at at 1268 Broad St.
Engler’s cousin, Matt McKnight, 32, of ACC Construction is overseeing the $20 million-plus development.
YOUNG EYES FOR OLD PROPERTY
According to industry figures, the average age of a commercial real estate broker is 54. Davis Beman, arguably one of downtown’s busiest commercial agents, is 38.
During the past few years he’s made the transition from selling properties to developing them, including the historic Red Star Building at 531 James Brown Boulevard, which is now home to four residential units as well as the offices of attorney M. Austin Jackson, 35, and the contract-labor firm Austin Industrial.
Beman and two partners last year bought the 1920s era building – once a movie house known as The Palace Theater – after managing it for four years for a Columbia, S.C.-based investor.
“Buying property helps me become a better broker,” said Beman, director of commercial real estate for Blanchard & Calhoun. “When you start buying property, you have to start thinking about those risks.”
And the risks are plenty. Despite downtown’s resurgence, many of its vacant buildings require major work to become habitable. Assuming a property can be purchased at a fair price, the cost of “upfitting” it to be occupant-ready often exceeds what most investors could recoup on rent. Downtown lease rates are still relatively low despite the infusion of new business from Fort Gordon’s expanding cyberdefense and national security missions.
“I’ve probably talked more people out of buying downtown buildings than buying into them,” Beman says.
Although large vacant properties, such as the Lamar and Marion buildings on Broad’s 700 block, could be purchased for hundreds of thousands of dollars in their present conditions, they would require multimillion-dollar renovations that most young investors can’t fund or finance.
Bassali, for example, says his run of real-estate acquisitions has come to an end because most properties left in downtown are either overpriced or too capital-intensive for a mid-level investor such as himself.
“You can still buy some of these old buildings at below construction cost, but they still take a lot of work,” he explains. “Once you start peeling back these old buildings, you tear out one thing and then you have to tear out another and it just spirals into a bigger project.”
The largest project on Bassali’s plate is 1051 Broad St., a three-story, 30,000-square-foot former furniture store that he plans to renovate into co-working suites on the upper floors and retail space at ground level for The Swank Co., a high-end boutique chain he and his wife have owned since 2014.
The dwindling inventory of financially viable real estate on Broad Street’s west end has caused young investors such as restaurateur Jay Klugo to head east. The 46-year-old owner of the Solé restaurant at 1033 Broad St. has acquired several buildings on the north side of Broad’s 500 block for future restaurant expansion.
Klugo, who owns three other Solé locations in and around Clemson University in South Carolina, said he is working on a restaurant concept that should open next year. He sees lower Broad’s less-congested streets – along with the planned Riverfront at the Depot mixed-use development at 6th and Reynolds streets – as being conducive to his plans.
“We enjoy the fact that there is plenty of parking at that end, and we’re excited about the riverfront property coming along,” he said. “When we first came to Augusta, everyone thought we were crazy for going into the location we did, thinking we should be on 11th or 12th street. Now the other side of Broad is underdeveloped, but the parking there is amazing so people can get in and out.”
At Beman’s off-Broad Red Star Building, renovation work that occurred under the previous owner has helped create unique space for Jackson’s law firm, which is in walking distance of both the U.S. District Court and the Augusta Judicial Center.
“My generation wants, say, a nicer look – the modern mixed with the old,” Jackson said of his offices, which boast exposed brick walls and high ceilings. “It all looks very chic. Clients judge you on that so this is what I was looking for in a space.”
ROOM WITH A VIEW
Millennials, according to the Pew Research Center, have eclipsed baby boomers as America’s largest workforce.
And unlike previous generations, they eschew cubicle culture for workplaces with wide-open spaces. Which is why Ryan Downs, 35, has been spearheading a floor-by-floor renovation of the SunTrust Building for WDM Family Enterprises, a McKnight family-affiliated company that purchased the 135,000-square-foot midrise two years ago.
What Downs is doing to the 50-year-old building is a small-scale version of what he saw done to the Empire State Building when he worked as an investment banker in New York before moving to Augusta in 2016. Much like the iconic New York skyscraper, the SunTrust Building’s floorplans were largely compartmentalized suites that shielded workers from window views and created a cramped atmosphere.
“When you stepped off the elevator, it felt like you were stepping into a rat maze,” he said. “You can look at floorplans and test fits, but you really have to see the space. If you step off the elevator and see 1970s-dated office space, many people have a hard time visualizing what it could be.”
The building’s transition to an open-floorplan style is a five-year plan, which helps manage costs as well as avoid disruptions to the building’s existing tenant list, which includes the Hull Barrett and Brennan, Wasden & Painter law firms, Equity Residential Properties, the Department of Homeland Security and the building’s namesake bank operation.
Renovations started with the building’s exterior, parking deck, lobby and common areas such as restrooms. But vacant space is being opened up and marketed heavily by partners such as Jordan Trotter Real Estate.
The commercial real estate firm, headed by Troy Jordan, 45, and Dennis Trotter, 41, was instrumental in bringing Unisys’ Augusta Security Operations Center to vacant space in downtown’s Port Royal building more than four years ago.
Downs said the goal is to create space that appeals to IT-based companies attracted to Augusta’s growing cybersecurity industry as well as traditional office tenants.
“One of the things you have to appreciate about downtown is the influx of new businesses,” he said. “You have the new, exciting kind of tech companies, but you also have a pretty good base of established companies that, like Hull Barrett, are important pillars in downtown. They’ve been in this building since it was built.”
CHANGING OF THE GUARD
Although the younger generation is clearly injecting new energy into downtown Augusta, they are not doing so without a little help from their friends – including older, more experienced business leaders and advisors.
Loop Recruiting’s Wall, for example, bristles at the idea of being called a “pioneer” for his investment in downtown.
“I sort of turn the clock back and look at what people like Clay (Boardman) did up at Enterprise Mill – that was pioneering,” Wall said.
“We’re more like settlers,” adds Kennedy.
Although Beman has built a successful downtown commercial real estate practice, it wasn’t without some guidance from his father, Hal D. Beman III, a former banker with more than 42 years of real estate experience.
“I hate terms like ‘self-made man.’ We are all products of our mentors. You can’t buy 30 to 40 years of experience,” Beman said. “We’re probably a little more aggressive than the older generation, but they’re the ones teaching us.”
Downs agrees. Though he runs the SunTrust Building’s day-to-day affairs, he ultimately answers to WDM’s principals, Will and Mason McKnight.
“I’m the developer and asset manager and they are the board and investment committee, so I’m the one making recommendations to them, but I don’t do anything without their approval,” he said. “Everything comes down to teamwork and group effort.”
The impact of new blood in downtown Augusta is palpable. The young investors and entrepreneurs already have shifted revitalization efforts into a higher gear. Their feet are now inching toward the gas pedal.
And when the time is right, they, too, will get the chance to steer.
“I think that’s the story for Augusta,” Downs says. “The old guard and the new guard running parallel, making each other better.”
Article appears in the January 2019 issue of Augusta Magazine.