Atlanta - There's something to he said for being first. In the race to build big new speculative office space in Atlanta, The Yarmouth Group, New York, has fired the first salvo across the market bow with its groundbreaking earlier this month of Lakeside Commons Two, a 14-story, 285,000 sq. ft. office building coming to market f right now at least) without a single lease commitment (otherwise known as 100% spec.).

While a spate of new suburban office construction (about a dozen projects) has come to market in the last two years primarily in Atlanta's North Central submarket, most new starts have only averaged from 100,000 sq. ft. to 150,000 sq. ft. in five- or six-story configurations, and many have had substantial prelease commitments. Yarmouth's new project sits in the heart of the Perimeter Center area, which is in the Southern part of the North Central office market.

The Perimeter Center area was rocked recently by Beacon Property Corp.'s (Boston) $336 million purchase of a 3.3 million sq. ft., 32-building portfolio of properties in Perimeter Center owned by MetLife (New York) and Taylor & Mathis (Atlanta).

"The size is really market driven," says Cynthia Alexander, vice president with Lend Lease Development (U.S.) and asset manager with Yarmouth (Lend Lease is affiliated with Yarmouth through their joint parent company, Lend Lease Corp. of Sydney, Australia. Lend Lease U.S. will oversee all construction, marketing, leasing and operational efforts for the Atlanta project.)

"Other new buildings announced are smaller primarily because they are located in a different section of the North Central submarket. The Northern portion of the submarket is where the new announced projects have occurred in the last year or two. That market is where the Perimeter, or the Southern portion, of this market was eight years ago."

Alexander also thinks the market can support such a building. "The vacancy is at less than 5% and our leaseup projections are indicating that it will take us less than two years to lease that amount of space. We've been extremely conservative in our projections. There aren't any other viable options today on the market," says Alexander.

Financing for the new project is through Yarmouth Capital Partners L.P. I, a $650 million opportunistic fund.

Lakeside Commons Two joins Lakeside Commons One, an existing 222,000 sq. ft. office building on a wooded 10.5-acre site overlooking a two-acre natural lake. Project buildout of phase two is estimated at about 13 months.

So, is this the start of a big new spec-building cycle and a return to a 1980s-style optimism?

"On one side we're optimistic that it is, and the other side is saying we hope it's not too big of a cycle," says Alexander. "We feel that we're the first out of the block. We'd like to think that we're going to be the only one out of the block, but we think if the market continues to perform as it has in the last 18 months that there will be someone else coming behind us. We just hope that the number coming behind us is not substantial. Our thought process was that the first group out of the block, die first two or three projects, depending on size, will do fine in the submarket. Once you start getting beyond that, then there becomes an issue of timing - can they be phased in as the space in leased up."

Only time will tell, but Yarmouth is in the market for more. "We're looking at various options, and a couple of very interesting opportunities, but nothing concrete at this time," says Alexander