Part of Hedgewood Properties' "new urbanist" development in Norcross briefly faced foreclosure this month.

Hedgewood's lender, Colonial Bank, listed more than $2 million in undeveloped land at the Seven Norcross development as in default and subject to foreclosure this month in Gwinnett County's legal advertisements. Hedgewood CEO Pam Sessions said her company negotiated terms with the lender to prevent the foreclosure.

The award-winning Atlanta-based builder has presented the new subdivision near Norcross' historic downtown square as an example of "new urbanist" planning, with large, densely built homes and condominiums of brick and stone a five-minute walk from the city's shops and restaurants.

But Hedgewood, along with other builders hoping to capitalize on Norcross' extensive downtown revitalization plans, has sustained slow sales typical of the broad downturn in the real estate market.

Many of Seven Norcross' condominium units have been sold, but single-family homes in and around downtown Norcross remain in abundant supply, Sessions said.

"It's obviously a bit chaotic. Its different at every location, every lender," she said. "It's not business as usual."

Hedgewood has won plaudits for its development of downtown Woodstock in Cherokee County, using a similar work-live-play philosophy to that of Norcross.

But some of that property also has come under the eye of wary lenders.

Republic Bank of Georgia called its $5.7 million note on about 26,000 square feet of retail in Hedgewood's main mixed-use building. Hedgewood settled with the bank in May, permitting it to continue to develop, lease and manage the commercial aspects of the project under terms of the deal. Hedgewood Properties, the master developer, will continue its work with the residential side of the development.

Mixed-use development has been in relatively high demand but isn't immune to the broader market turmoil, Sessions said.

"We don't have any unique resilience in any of our neighborhoods. What Norcross has in its favor is its downtown. But I think that all real estate has the strain. It's not a silver bullet."

Meanwhile, the city of Norcross remains full steam ahead with plans for a mixed-use shopping and living district to emerge from its historic downtown core. The city signed a $4 million contract to transform its historic Lillian Webb baseball field into a deluxe Town Green. Private developers plan to ring the new park with urban condominiums, featuring shops and restaurants on ground floors and residences above.

For years, city leaders have pointed toward Seven Norcross as a first step to a grander vision of new urban cool.

Skip Nau, the city's Downtown Development Authority head, seemed to step back a bit from that assessment.

"As far as it being a catalyst for downtown, I wouldn't go that far. It's up the street and over the tracks from downtown," he said. "[The new park is in] construction now. We're hoping that's going to be the catalyst that will allow us to push to Buford Highway and begin to reclaim that."