Atlanta malls shop for a Plan B as times get tougher

For some, not a Merry Christmas; climbing walls, anyone?

Elysa Jones and her son Jayden Jones, of Lithonia, walk along the top floor at Northlake Mall in Tucker. Elysa said she came to Northlake mall to browse for Christmas gifts. She said she hasn’t been to Northlake Mall in more than a year. She frequently visits Stonecrest Mall because of the proximity it has to her residence. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM)

Editor’s note: This article was updated with Cumberland Mall development plans.

On a recent Friday evening, during the high days of holiday shopping, only two people walked down a forlorn wing of North DeKalb Mall past mostly vacant store fronts.

One was a cleaning lady wheeling her cart. The other was a reporter trying not to spook her.

Less than four miles away that same evening, at Northlake Mall in Tucker, shoppers were also scarce.

“I don’t have to worry about lines, and I’m not big on crowds,” said Stone Mountain resident Tyrel Harper, whose shopping haul included jeans, a hoodie and Stacy Adams shoes.

While some metro Atlanta malls appear to be doing well, others are slipping further into scary territory. The evidence this holiday season is as clear as proliferating vacant store spaces, quiet corridors and virtually empty parking lots.

Consumers are bumping up their spending. The National Retail Federation forecasts total holiday sales this year will grow faster than the five-year average. But where they want to spend is the rub. Online purchases represent only about 11% of retail sales but are growing quickly, according to the U.S. Census Bureau. Traditional malls also are being bruised by mixed-use projects like Ponce City Market that are springing up around metro Atlanta.

Some of metro Atlanta’s malls have become eerily quiet places, even during the 2019 holiday shopping season. North DeKalb Mall in the Decatur area had few shoppers and lots of closed storefronts on a recent Friday evening. Plans to redevelop some of the mall property fell apart last year. MATT KEMPNER / AJC

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That is forcing a reckoning. Dramatic reformulations are in the the works or being contemplated for malls from Buckhead to Alpharetta and DeKalb. Planned are everything from outside rock climbing walls to offices in former department stores to new storefronts that face out from the mall instead of in.

The aim for metro Atlanta malls? Become less like a mall.

“That’s not how we live anymore,” said Rainey Shane, an “adaptive reuse” director for real estate services giant JLL, which also manages malls.

The average vacancy rate at U.S. malls is 9.4%, the highest it has been in eight years, according to Moody’s Analytics REIS. The rate is nearly double what it was in 2000.

By the next real estate downturn, half of metro Atlanta malls will no longer exist as they are, predicts Eric Weatherholtz, senior managing director of JLL Atlanta Retail Services. They will either be closed or morph into something else, keeping some retail but adding varying combinations of apartments, entertainment, public spaces, more restaurants, offices, hotels and medical or educational uses, he said. What he doesn’t expect to expand is their traditional fare of apparel retailers.

Emory Healthcare will become an anchor tenant at Northlake Mall in Tucker, developers of the project announced Thursday. (Credit: Wakefield Beasley & Associates Architects, Inc.)

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Some are even dropping the word mall — like Northlake Mall, slated to become just “Northlake.”

It announced a deal in October for Emory Healthcare to move more than 1,600 employees into the mall, occupying a former Sear’s building and nearby space. Emory workers will start arriving in about two years and the operation could expand into additional space, said Tony Ruggeri of ATR Corinth Partners, Northlake’s owner.

Other plans call for adding more restaurants and “turning the mall inside out,” Ruggeri said, so that retailers in areas closest to Briarcliff Road open primarily into the parking lot rather than into the mall’s interior.

Once the changes take hold, he added, “I think you won’t think of it as a mall.”

This is a proposed rendering for the redeveloped North Point Mall entrance. 

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Lots of future plans — and others already nixed 

Here’s what else is on tap for local malls:

— In Alpharetta, North Point Mall plans to add hundreds of apartments, park space and trails, an outdoor rock climbing wall, an amphitheater and water features with an overlook. The changes will take the place of a former Sears store. The mall, according to a real estate consultant, had seen its vacancy rate jump above 20% and average sales per square foot decline significantly in the last few years.

— At Phipps Plaza in Buckhead, crews demolished the former Belk department store, making more room for a planned Nobu Hotel and restaurant, a fitness center and a 13-story office building that are expected to begin phased-in openings in 2021. An Alon’s Bakery & Market is slated to launch this coming summer at the upscale property, which the owners call a center, not a mall.

Phipps Plaza has broken ground on a redevelopment that will include a Nobu restaurant and hotel, a 13-story office building with a Class A status and a 90,000-square-foot Life Time fitness complex.

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— Cumberland Mall expects next year to open a Round1 bowling and entertainment venue. Owner Brookfield Properties also has floated plans for a $250 million retail, residential and office project and a longer-term $160 million project for a hotel and office space. (Last weekend, at the height of the Christmas shopping season, the mall was the scene of a shooting after an altercation in the food court.)

— The Mall West End would get a major remake in southwest Atlanta under a proposal by Beltline visionary Ryan Gravel and investor Donray Von. They've pitched a plan to demolish the mall and replace it with offices, restaurants and other uses. Groundbreaking might begin late next year or in early 2021 for a first phase of multi-family housing, a hotel and replacement retail space, said Gravel, who hopes to buy the property in the next three months.

Other mall visions haven’t panned out.

At DeKalb's Mall at Stonecrest, a sprawling sports complex with a 15,000-seat stadium and space for dozens of playing fields was never built.

And last year the owner of North DeKalb Mall dropped a proposal for a mixed-use project that was to include a new Costco and 500 multi-family homes and townhouses. The owner, Sterling Organization, didn't respond to requests for comment about what's ahead for a mall so depleted that it has been the setting for numerous recent movie and TV productions.

Kathy Zickert, a local zoning attorney who represented Sterling on its earlier proposal, said last she heard from the company it was contemplating trying to sell the mall.

Brinley Rawson, a 17-year-old Stranger Things fan from Gwinnett County, snaps a photo of Gwinnett Place Mall. The Duluth mall has been losing shoppers and stores. That made room for Stranger Things to film much of season three at the mall, called Starcourt Mall in the show. (AP Photo/Andrea Smith)

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In the Duluth area, officials have lamented for years about the decline of Gwinnett Place mall. Two years ago a young woman's body was found after lingering for days near the vacant food court in the midst of the holiday shopping season. 

The mall's owner, Moonbeam Capital Investments, had talked about reducing retail space and adding apartments, offices and entertainment options. But years have passed without it making a formal proposal. The mall got attention recently as the setting for the fictional Starcourt Mall in the Netflix series Stranger Things. The buzz wasn't enough. Moonbeam now intends to put the property up for sale. Meanwhile, an apartment developer that bought the former Sears building there hasn't announced its plans.

Some malls still thrive, but change tough for many

With some exceptions, malls have been accused of offering bland concepts and little variety. Plenty never retired their ferns and fountains.

“Malls entered the era of lameness,” JLL’s Weatherholtz said.

The former entrances to Kohl’s department store (right) and Sears department store (left) are a reminder of the challenges facing Northlake Mall in Tucker and the troubles faced by some other mall owners. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM)

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Some of the retail chains that malls most relied on were loaded with debt and faced their own stagnation. Then online sellers with generous delivery and return policies cracked the apparel market that malls had long relied on. Lots of chains have shuttered some mall stores. A partial list: Macy’s, Sears, Kohl’s, Belk, JCPenney, Gap, Sports Authority, Forever 21, Gymboree, and The Limited.

While many shopping center Goliaths struggled, rival strip shopping centers mushroomed. More recently, mixed-use projects like Halcyon in Forsyth County and Avalon in North Fulton also curbed mall traffic.

Yet even among traditional malls, there are bright spots.

Those held by some of the biggest operators such as Simon Property Group, owner of Lenox Square, Phipps, Mall of Georgia and others, tend to have vacancy rates averaging about half that of the industry overall.

Compared with last year, sales at Perimeter Mall in Dunwoody are up a bit and vacancies are down, said Bill Baker, the mall’s senior general manager. A 16-story office tower and a 10-story hotel are under construction in a former parking area. And two new restaurants are in the works, which fits into broader plans for the mall’s parent, Brookfield Properties, which locally also owns Cumberland and North Point Malls.

“One of our models is called densification,” Baker said, “where we make better use of surface parking lots.”

How bold mall owners can be in their plans depends largely on whether they are in high-income areas that will attract development interest, according to JLL’s Weatherholtz. “You can be as woke as you want, but if you ain’t got the demand, you’ve got a difficult road.”

Even successful malls, he added, can face stagnant tenant rents and exposure to weakened department stores.

A man walks past an empty storefront inside Northlake Mall in Tucker during the 2019 holiday shopping season. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM)

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Remakes can be maddeningly complex.

Anchor department store space and much of their surrounding parking often are owned by the retailers themselves or locked into decades-long leases. Anchors can have veto rights over many changes.

Zickert, the attorney who represented North DeKalb Mall, said the owner bailed on redevelopment plans over concern government leaders would set expensive, burdensome conditions and that it would be difficult to work around three anchor tenants.

Theresa Same, a neighborhood activist involved in talks over the changes, said the project was pulled before negotiations solidified. Neighbors hoped the mall would create ways for nearby residents to walk or bike over for everyday shopping.

“We would love to see something that is innovative and is thinking about the future,” she said.

Northlake Mall in Tucker has seen stores close, but the mall’s owner has plans for redevelopment. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM)

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Michael Gilmore, a minister, recently walked Northlake Mall not to window shop, but to get exercise. He lives an eight-minute drive from the mall but months go by without him stopping in to actually buy anything there. “I’m not sure the mall venue is really the effective way to sell things today.”

He’s not altogether happy with that conclusion, though. Malls in the past helped people spend time with one another. “I think the trend is to isolate people, and I don’t think that is good for human beings.”

Why it matters

Traditionally, malls have been not only popular places to shop but also big job centers and concentrated tax generators for local governments. Swift changes in how and where Americans shop has bitten into the health of many metro Atlanta malls and surrounding areas. That has added pressure to try dramatic transformations that could change the character of the shopping giants.

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