Economy slows big plans for Peachtree Street shopping district

Retailers — stricken by a deep recession and cash-strapped consumers — have scattered. A mammoth complex along the route, called 12th & Midtown and announced three years ago, is still courting anchor retail tenants.

And it could be years before some tracts of Peachtree ever see redevelopment. A boarded-up storefront faces the marble facade of the Federal Reserve Bank at Peachtree and 10th Street, just blocks from the city's main green space, Piedmont Park. A new nightclub is supposed to open there soon, but the "legacy project" envisioned by landowner John Dewberry could still be years, if not a decade, away.

This week, many Atlanta developers will head to Las Vegas for the largest retail conference of the year — the International Council of Shopping Centers show. It is just another sign of the economy that fewer Atlanta developers are making the trip.

Even Mayor Shirley Franklin and the staff from the Atlanta Development Authority and Midtown Alliance are staying home this year. (Central Atlanta Progress is sending a representative to pitch downtown Atlanta.)

The question — Will any of the Peachtree Street developers come back with retailers in tow? — has only grown deeper with the passing years.

Steve Baile, senior vice president of Daniel Corp.'s Atlanta operations, is part of the development team at 12th & Midtown, a mega-complex that will cover a four-block area near Peachtree and 11th Street. He won't be going to Las Vegas. The company had hoped to make a big announcement at the show. Instead, it could come this summer.

"We're negotiating with two tenants to take over 20,000 square feet of flagship retail frontage on Peachtree Street," said Baile, who added that Daniel is looking to sign a national grocer, but that could take more than a year.

Along with the condo tower Viewpoint by Novare down the street, the developments are hitting the market at one of the worst times in local economic history.

"We've been in discussions, but there's so much that's up in the air," Baile said. "Because of the capital market situation, it's tough to speculate."

Conor McNally, an executive vice president with Novare, said he has signed two leases at Viewpoint, including a high-end kitchen design shop.

To be fair, much of the Midtown Mile is unrecognizable from what it looked like in the early 1990s. Back then, between the homeless and the criminal element, it could be a dicey walk from the Fox up to 10th.

Now, that stretch of the Midtown Mile is more than walkable, upgraded by restaurants like Bazzaar, Baraonda Cafe Italiano and ENO Restaurant, as well by condo towers like Spire and Metropolis near the Margaret Mitchell House.

"It's unbelievable what has been accomplished," said Ken Bleakly, president of Bleakly Advisory Group.

"It's gone in waves," he said. "When you look at pictures of the area in 1990 [compared to today], it's truly eye opening."

And while the recessionary pressures have made signing retailers more difficult, the Midtown Alliance still calls development of the Midtown Mile a success.

Shannon Powell, executive vice president of the group, said the Midtown Mile was conceived as a way to draw more merchants onto Peachtree Street. The idea, she said, was to build 1 million square feet of retail space.

"Of the million square feet of retail that we were looking at, 500,000 square feet is close to being completed, or there is a serious commitment to retrofit it," she said. "We're halfway there. That's more than we ever would've thought we'd have at this point."

While the Midtown Mile is being actively marketed to prospective retail tenants, it's too soon to market the district to the public, she said.

The biggest selling point to retailers is the location, Baile said.

"With the flagship design of the retail space down Peachtree Street, the presence of the sign is worth more than the space alone because of the exposure," he said.

The Alliance and developers have sparred over whether developers could place restaurants along Peachtree. Powell says the Alliance has wanted to save the main thoroughfare for flagship stores because they create the real lure for shoppers.

"It's a long-term vision, and it will evolve and change in character over time," Powell said. "Ideally, the Midtown Mile was envisioned for merchandising because we knew you needed the critical mass to accomplish something."

Baile agreed, saying, "The evolution will go on for years to come. The critical mass will come in the next wave of development."

That next wave, however, will depend greatly on neighboring condos being bought and office towers filling up, said Bleakly, a real estate consultant.

"It could take a year or two to absorb what's already there, then start the construction cycle over again," he said.

Bleakly explained that retail follows rooftops, so if new condos are slow to sell, retailers may wait for "absorption" of the existing inventory before committing to the district.

That is one reason why developer John Dewberry has been sitting on a prime chunk of the Midtown Mile since 1999. He owns a city block at Peachtree and 10th, and some have wondered when, if ever, he might deem it shovel-ready.

"We have shown restraint on developing the site before it's ready," said Steven P. Cesinger, Dewberry Capital Corp.'s chief operating and chief financial officer.

"John has a vision of that location being a legacy project for our firm and hopefully the city as well," Cesinger said, likening the possible development to New York's Rockefeller Center.

For now, the company is watching how well the 12th & Midtown projects perform.

"We feel good we have not replicated the mistakes of some of the other markets, in terms of too many projects competing for too few tenants," Cesinger said.

A new restaurant, a 24-hour eatery called The Midtown Diner, has opened at 10th and Peachtree, where a Jocks & Jills sports bar used to be. Next door, a nightclub could open soon.

The Midtown Alliance does want Dewberry to develop the site, Powell said.

"We wish that the market were there and they could get the capital they need," she said. "I think it will be a fabulous project."

Bleakly estimated in August 2007 that the Midtown Mile — with strong retail and hotel components — could generate $38.3 million in city revenues, $62.3 million in hotel revenues and 1,500 retail jobs.

"We're in a pause," Bleakly said. "We're seeing it across the board on any kind of retail project. The general tenor is that everybody is being super-cautious and conservative about any new store openings of any kind, whether luxury or regular."

The good news, he said, is that the pattern in Midtown has "already been set. This is going to be Atlanta's urban shopping district. The question now is when?"