Underground Atlanta Sold

New era for iconic mall S.C. developer under contract to purchase troubled property,by Katie Leslie kleslie@ajc.com  

 

Atlanta Mayor Kasim Reed is expected to announce today that a South Carolina developer is under contract to purchase Underground Atlanta, one of the city’s most iconic yet troubled properties.

Development firm WRS Inc. will pay $25.75 million for the downtown shopping mall and convert it into a mixed-use development with a grocery store and above-ground apartments, firm president and CEO T. Scott Smith has confirmed.

It’s the city’s latest attempt to overhaul a 12-acre property that has long vexed Atlanta’s leaders.

A late-1980s makeover that attempted to turn the land into a destination shopping mall for suburbanites and tourists sparked but quickly fizzled out. In recent years, the property has become a financial albatross for city leaders and a punchline for locals, who at different times in history have revered and reviled the downtown center.

Smith said that he expects to close on the deal in mid-2015 and hopes to begin construction by 2016. Reed is expected to give additional details about the deal in a press conference.

Smith, whose work in the Southeast has largely consisted of suburban commercial development, said he was attracted to Underground because of its proximity to MARTA’s Five Points station, Georgia State University, new development and government offices filled with potential customers and tenants.

He believes the scale of his project will give Atlantans reason to give the notorious property a second look.

“We think that we can change a part of downtown Atlanta that badly needs to be changed, and we’re putting a lot of pressure on ourselves to be successful,” he said.

Smith said he’s still in talks with a residential development partner and estimates a total investment of $150 million to $200 million in the project. Smith said he hasn’t yet determined the number of residential units he plans to bring to the site.

The pending sale comes nine months after Reed announced plans to sell Underground. The mayor has pushed the sale of several city parcels this year, including The Boisfeuillet Jones Civic Center.

Shedding Underground, with its $8 million annual financial burden on the city, is critical to Reed’s plans to free up millions to help fund the debt service on an anticipated infrastructure bond worth up to $250 million.

The mayor has also said revamping the struggling downtown mall is a key part of revitalizing downtown Atlanta.

Smith’s project comes amid a flurry of development in the corridor. Just last month, Invest Atlanta approved giving $4.4 million in public money to help Post Properties build a 407-unit mixed-use housing complex worth $85 million near Centennial Olympic Park. City leaders are also betting on the new $1.4 billion Atlanta Falcons stadium, the Atlanta Streetcar project and new museums to draw residents back into the heart of the city.

But remaking Underground Atlanta could pose the biggest downtown development challenge yet, and not just for its complicated multi-tiered structure.

The property has undergone large-scale changes during the past five decades, each attempting to bring back the popularity it enjoyed in the 1970s as a hub for Atlanta nightlife.

“It has been a troubled project from Day One,” said Michael Dobbins, a Georgia Tech architecture professor and former Atlanta planning commissioner.

Underground was born as a bar and entertainment district in 1969, but after a brief heyday, it went dormant. Under Mayor Andrew Young, the city worked with noted developer Rouse Company to turn Underground into a destination shopping mall in the late 1980s.

The new Underground opened to rave reviews, but its success quickly evaporated.

Rioters smashed windows in the wake of 1992 verdict in the Rodney King beating, damaging shoppers’ perceptions of the mall. The Olympics helped pump up foot traffic, but that momentum couldn’t be sustained. New development has since largely traveled north to Centennial Park and CNN Center — a move epitomized by the departure of World of Coca-Cola in 2007 — taking tourists with it.

While some tourists can still be found wandering the site, locals rarely go to Underground outside of the annual Peach Drop on New Year’s Eve.

Smith said he’s well aware of the stigma.

“A lot of the people we’ve talked to around Atlanta have said to us: ‘Guys, you need to be careful.’ ... But I can remember when Midtown was thought of in the same context,” he said.

He believes the property’s size will enable a large enough redevelopment project to have dramatic impact.

Where the 1980s vision called for Underground to be a tourist draw, WRS’ vision for the site is more of a self-sustained community.

Smith said his group plans to keep the historical facade — and name — of the Underground below street level.

The retail, including a grocer, will be designed to fit the needs of the residents and thousands of nearby state and local government employees.

Smith said the firm hasn’t yet branded the future apartment development.

WRS hopes to retain existing vendors but expand on the shopping center’s offerings with new retailers, Smith said.

“We don’t know exactly everyone that will come there yet,” he said. “What we do know is that people have no problem coming somewhere that is redeveloped very nicely.”

Post 2 At-Large Councilwoman Mary Norwood said on Tuesday that Reed and the council made the right decision in March to buy out the rights of CV Underground, which manages the site, and sell the property.

“I think the evolution of downtown makes this the perfect time for mixed-use development that is broader than the Underground of the 1970s that many of us knew,” she said.

 

Source: AJC 12/17/14,

By Katie Leslie  kleslie@ajc.com  Staff writer J. Scott Trubey contributed to this article.

 

Comments

 

Not reported was the fact that the re-do of Underground Atlanta cost was an $80 million bond. If it was a 30 year bond at 5% interest, the total cost would have been $160 million. Now, it’s selling for $25.75 million. Tax subsidized urban redevelopment typically loses money better spent fixing the pot holes and sewer and water system.

 

Norb Leahy, Dunwoody GA Tea Party Leader