New owners, new direction

Toro’s group will manage the retail portion, with CB Richard Ellis Investors of Los Angeles bankrolling changes as the financial partner and majority owner.

They are frank about the problems they bought into. Toro’s group is seeking input from shoppers, workers, residents and visitors; hiring twenty-somethings to help run the retail part of the complex; and generally trying like mad to make their investment pays off.

Since rising in the early 2000s, Atlantic Station has added a glittering gateway to Midtown where once there was a decrepit former steel mill. But the nationally watched project also has had its troubles, ranging from real estate woes to residents’ unease about crime.

Two apartment buildings were sold in foreclosure; some retailers have struggled and closed; and the FDIC took ownership of The Atlantic condo tower, with 47 floors of nearly unsold condo units. About 2,200 of Atlantic Station’s 2,700 residential units are occupied, though the project has been plagued by foreclosures.

Atlantic Station says about 4,000 people live there, and 1,500 work in the restaurants and shops.

AIG Global Real Estate Investment Corp., which backed Jacoby Development’s creation, hit hard times in the financial crises and had to sell its holdings in the project. CB Richard Ellis late last year bought AIG’s interests — the retail portion, an office tower and the remaining vacant land — for about $173 million, according to DataBank Atlanta, as well as the two distressed apartment buildings.

As the fixer, Toro has arrived at a crucial time. The retail portion of the project opened to much hoopla in 2005, but only had a couple of years of economic fair weather before the recession set in.

Toro plans to fine-tune the tenants by adding locally owned shops and restaurants, as well as fix major issues faced by residents and workers. With CBRE involved, Toro says he can spend the millions of dollars it could take to reinvent Atlantic Station.

Built on a ‘brownfield’

For nearly a century, the Atlantic Station site was occupied by Atlantic Steel mill. Developer Jim Jacoby bought the land in the late 1990s as the mill was closing, ushering in a new era for the 138-acre tract next to the junction of I-75/85 north of downtown.

Discarded earlier ideas for the site included the Olympic Stadium that became Turner Field, the Georgia Aquarium, a skate board park, an entertainment venue, and a Sam’s Club or Walmart.

Those plans faded in favor of what Atlantic Station is today. The project has three office towers, a large outdoor retail center and multiple condo and apartment complexes, plus a hotel. It snagged the first IKEA and West Elm stores in the region, and the only intown H&M store.

Some residents and potential customers, however, complain it resembles any lifestyle center with its commercial movie theater, chain stores like Old Navy and Target, and few locally owned businesses. While Jacoby entertained different ideas for the site, once development began, he didn’t claim it would be otherwise.

Ray Uttenhove, an Atlanta retail broker with SRS Real Estate Partners, said the center lacks identity.

“There are good tenants,” she said. “It just needs a reason for being.”

She and other experts say the center never defined a target market. Intowners also have shown a preference for shopping districts in Little Five Points, Virginia-Highland and on the Westside, they noted.

Alexander Garvin always thought Atlantic Station was flawed. “Fundamentally, it’s a fake set of streets,” he said. “It’s a matter of the way it was designed. It doesn’t fit into the rest of the city.”

President and CEO of AGA Public Realm Strategists in New York, Garvin said Atlantic Station does not invite pedestrians or tie in to the heart of Atlanta. Visitors who go to IKEA, a main draw that is blocks from the rest of the retail development, often leave without stopping at other shops or restaurants.

Developers proud of result

The original developers defend the project.

Brian Leary developed ideas for Atlantic Station for his master’s thesis at Georgia Tech, then worked for the developers for more than a decade. He is now president and CEO of the Atlanta BeltLine Inc.

A report early in the development process showed that Midtown was one of most “under-retailed” areas in the country, he said. And national retailers had the credit-worthiness to secure bank loans for the project.

“As someone who was involved, we accept all the criticism and wish it was SoHo boutiques and trendy brands,” Leary said. “That being said, there is a place for some of these national fashion plates that serve the local community.”

Jacoby, head of Jacoby Development, said he’s “absolutely” proud of Atlantic Station, which he called the “No. 1 brownfield development in the country.”

Jacoby noted that 9/11 happened while he was selling bonds for the project, followed by a mini-recession before the economy spurted again. Then the Great Recession hit.

“If we didn’t have these national tenants, there would probably be a larger vacancy factor,” he said. “I’ll have to respectfully say it was the right choice.”

Security an issue

The architecture and mix of stores aside, some residents and visitors feel the area is unsafe. One resident wrote on a blog of finding three cars on cinder blocks in her parking deck one morning.

At a recent Atlantic Station Civic Association meeting, residents told Toro they want him to improve the image and sense of safety. While he says crime happens in any city environment, Toro agrees something must be done.

Residents interviewed by the AJC, as well as those who have Tweeted, Facebooked and blogged about the project, see the good and the bad.

Brad Knight has lived in an Atlantic Station condo for two years.

“There certainly are changes that can be made to increase the overall appeal of the area to both potential homeowners and retail customers,” he wrote in an e-mail to the AJC, noting, “the volume of loiterers, the lack of variety in shops, the lack of mid-priced restaurants (plenty of fast food and high-end), no tie-ins to unique local flavors, etc.”

Anne Fuller, a resident and Realtor who moved to Atlantic Station from Alpharetta, loves the convenience. Still, declining property values are a concern.

“We, like all homeowners, have definitely watched our values decline. I’ve just listed a 3-bedroom, 3.5-bath townhome for $300,000 that originally sold for more than $500,000 in 2007,” she wrote in an e-mail. But she also added, “I’m hopeful new ownership will bring positive life to our community.”

‘Tough love’ planned

Toro talks about tough love, such as a “no tolerance” policy for loiterers and those who make the environment uncomfortable.

“It’s not a secret Atlantic Station is perceived by some to be an uncomfortable, unfriendly, unsafe space,” he said. “We can’t have that.”

Among his plans:

● Crack down on the club-like atmosphere at five restaurants that stay open until early morning by either asking them to close earlier or shut down.

● Consult with former Atlanta Police officer Wayne Mock, of Midtown Blue, on methods to improve security and add more staff. Because it is a private development, Atlantic Station has its own security force, although Atlanta police patrol the area.

● Improve the maze-like underground parking deck.

● Expand shuttle service that now only goes from Arts Center MARTA station to the project.

Toro, who developed Camp Creek MarketPlace on Atlanta’s Southside, has hired Tom Miles to help him energize the shopping experience. Miles managed The Grove, a successful West Los Angeles outdoor retail center with a nearby farmer’s market.

While The Grove largely features national chains, it is praised for its atmosphere.

Without elaborating, Toro said to expect several retailers to close in Atlantic Station.

“They clearly do not meet the market,” he said. “The market has spoken and said, ‘We don’t shop here.’”

He thinks about a quarter of tenants will turn over as the project seeks to better appeal to the Midtown market. He hopes to double sales in five years to $600 per square foot.

White House Black Market is out, and American Eagle could soon follow. Toro wants locally owned shops to replace them and said he has the capital to cut lease deals to make that happen.

Toro also plans to add aged architectural elements to some shop facades to emulate more artsy venues. He wants street performers around every corner. In short, he wants to create an “anti-mall” that will resonate with the people who live in nearby trendy neighborhoods.

“There are 25,000 students at Georgia Tech. They are the smartest people in the world,” he said. “Why are they not shopping here? We’re going to fix that.” He’s also clear about who his shopper is not: “The Dunwoody soccer mom is not our target. They have plenty of stuff where they are.”

But, in the end, Toro adds, “They will want to come here.”