Underground Atlanta sales price suggests its value only took small hit

Despite the pandemic and its nearly deserted retail space, Underground Atlanta’s previous owners sold the downtown landmark late last year for almost as much as they paid for it in 2017.

It’s a sign the long-struggling venue isn’t a hot property, but also that it may still have potential to once again lure shoppers, tourists and those looking for dining and live entertainment.

WRS Inc. of Mount Pleasant, South Carolina, sold Underground to Gwinnett County investor Shaneel Lalani for $31.6 million on Nov. 25, according to court records. WRS bought the property for $34.6 million roughly four years earlier.

The Atlanta Journal-Constitution reported the sale last year, but the price wasn’t disclosed at the time.

Development activity downtown may have helped Underground retain most of its value.

CIM Group of Los Angeles plans a $5 billion project at the Gulch railroad site that will include offices, residences and hotel rooms. German developer Newport plans a $100 million renovation of the vacant 222 Mitchell Street building and additional investments in other nearby properties.

Georgia State University has acquired and upgraded properties throughout downtown in recent years and continues to plan new developments, including a 32-story building for student housing.

Underground’s new owner, Lalani, recently consulted with six local design firms, including HGOR and Smith Dalia Architects, to develop a master plan for Underground, according to a Tuesday news release. Lalani’s company, Billionaires Funding Group, may add apartments and condos, improve street-level retail and install new outdoor green space.

“We continue to engage in conversations with city officials and neighborhood organizations to better understand the need in the downtown market and how Underground Atlanta can fill that void,” Lalani said in an emailed statement Wednesday.

Lalani declined to provide additional details on the master plan, or a timetable for construction.

Credit: Ben Gray

Credit: Ben Gray

Others have tried and failed to revive the 8-acre Underground site. Underground was popular when it first opened in the 1970s. A late 1980s redevelopment led to a temporary surge of new interest, but its popularity soon faded.

WRS had planned a $300 million mixed-use development at Underground, including retail and residences.

But WRS’ plans never got off the ground and the pandemic was the final straw. According to a lawsuit filed last week in Georgia State-wide Business Court, WRS was forced to sell Underground because most tenants had not paid rent during the pandemic. WRS had been “operating with negative monthly cash flow for months” and would have defaulted on an $18.8 million loan if it didn’t sell Underground by Nov. 30, according to the lawsuit.

The lawsuit involves a dispute between WRS and Atlanta developer Dion Meltzer over the value of Meltzer’s investment in Underground. WRS, which filed the lawsuit, did not immediately respond to a request for comment. Meltzer’s company had not filed a response as of Wednesday.

Lalani is not a party to the lawsuit and he said the case does not affect his development plans.