ATLANTA — Rocked by seismic shifts — major store openings, closings and new in-town developments the size of mini-cities — Atlanta is moving beyond mere renovation, to a total reinvention of its retail scene.
One of the biggest boomtowns of the Nineties, this city doubled its population to nearly 4.4 million today from around 2 million in the mid-Eighties, with more than 100,000 people moving in every year for the past decade, according to U.S. Census figures.
The huge influx ignited a retail explosion, as dozens of new centers and malls sprung up and spread out to the far suburbs. But too many stores contributed to urban sprawl and crippling traffic that began to dull Atlanta’s luster, just as the economy started going south a few years ago.
Now, things are picking up, despite job losses in 2001 and 2002, mostly from tourist and high tech sectors that mirrored national trends. Atlanta’s economy is improving, with 2004 job growth predicted at 2 percent, double the national projection of 1 percent. Many say the city is poised for the next growth phase, one that will look quite different from the retail centers on every corner that have defined the city.
“It’s an urban renaissance,” said Jeff Humphreys, director of the Selig Center for Economic Growth at the University of Georgia. “Overall, Atlanta’s overstored, but the in-town market is ripe for high-end, convenience-oriented stores and new housing. “The areas having trouble are the success stories of the Eighties —the big malls that aren’t being revitalized and are looking tired.”
Several department stores have consolidated and announced closings in recent months. Federated Department Stores started the ball rolling last spring, when it closed six Atlanta-area Macy’s stores. Macy’s Lenox Square and Perimeter Mall stores were converted to Bloomingdale’s, which opened Oct. 18 (see story, opposite page), but three Macy’s remain vacant in local malls. The downtown Macy’s has been partially leased by a California fiber optics company. Rich’s stores, based here and once revered locally, have been renamed Rich’s-Macy’s, and strong speculation is that the name Rich’s will eventually be dropped, though Federated officials have denied it.Lord & Taylor announced in July the closing of three Atlanta stores, as part of a divestiture of 32 underperforming units nationwide. Officials are uncertain on specific closing dates, but stores are expected to remain open through the holidays. Lord & Taylor’s exit will leave 350,000 square feet of empty space in three Atlanta malls, including Phipps Plaza the tony Simon Properties center, also anchored by Saks Fifth Avenue and home to such designer boutiques as Versace, Gucci and Jeffrey.
“Atlanta is losing anchor stores, and has more available space now than anywhere,” said Jennifer Pritchard, senior manager, Kurt Salmon Associates, a consulting firm here. “Everybody’s running from the malls to smaller boutiques, vertical retailers or discounters.” Pritchard said once Lord & Taylor closes there will be 1.3 million square feet of empty department store space, and that eight of 16 metro-area malls will have anchor real estate space available.
She added that multiuse mixed space, combining retail with residential, for example, is taking the place of traditional malls.
Indeed, discounters and off-pricers are infiltrating luxury markets’ once-sacred territory, the heart of Buckhead, home to Phipps Plaza and Lenox Square. Right across the street from the malls, Filene’s Basement opened its first Southeast store in June. The 50,000-square-foot multilevel store shares a center with a two-level, 180,000-square-foot Target, which opened in 1999. After the most successful store opening in the firm’s history, the Atlanta store has had sales between $400 and $500 a square foot, said Filene’s Basement chief executive Heywood Wilansky. Officials said they were pleasantly surprised by the fashion-savvy customers, who knew designer labels and how to shop for bargains. That shouldn’t have been a shock, since they can comparison shop at luxury stores across the street.
“The future is in high-end, low-end and off-price retailing,” said Wilansky, adding that Filene’s Basement is pursuing several more locations to open here as soon as possible. The Boston-based store has 21 stores, on the East Coast and in the Midwest.
In contrast to Atlanta’s suburban sprawl of recent years, the focus is moving inward, around Midtown, a nine-square-mile area north of downtown, south of Buckhead. Centered around Peachtree Street and encompassing the city’s major interstate highways and largest art and theater venues, the area has steadily gentrified since the Seventies, when it had degenerated to a rundown mix of porn shops and bars.Midtown’s most exciting project, Atlantic Station, is a city unto itself. The massive, $2 billion, 138-acre mixed-use development is on the former site of the 100-year-old Atlantic Steel Mill in Midtown. Conceived in 1997, construction began in January 2002. The complex includes 12 million square feet of retail, office, residential and hotel space, along with 11 acres of public parks. Set to open phase one in spring 2005, Atlantic Station already has dramatically altered the cityscape, with a new bridge constructed over the summer. The bright yellow bridge should provide easy access to Atlantic Station, with transit shuttle systems and bike, pedestrian and auto lanes.
With 1.5 million square feet of retail and entertainment, Dillard’s has signed on as an anchor. The 225,000-square-foot multilevel store will be the only department store in the Midtown or downtown areas. With four Atlanta Dillard’s, all located in outlying suburbs, the retailer will try to gain more traction in the market, having announced over the summer its plans to update advertising campaigns for a hip, in-town customer when the store opens.
Atlantic Station is 50 percent leased, with mostly restaurant tenants to date, such as Rosa Mexicano and Cheesecake Bistro, for a total of nine sit-down restaurants. A Regal/United Artists Theater with 16 screens, two with 500-seat theaters, bucks the current trend of megaplex, small-size screen presentations. Atlantic Station’s most recent retail announcement came in September, when home furnishings store Ikea purchased 15 acres for a 366,000-square-foot store.
Bruce McLeod, managing director of retail for Atlantic Station LLC, said 60 to 70 stores would balance the retail-entertainment mix, with the focus tilted toward apparel, in upscale, better to bridge stores, mostly national chains.
Atlantic Station is a prime example of the “New Urbanism” retail trend, said Bob Gibbs, president, Gibbs Planning Group, a Birmingham, Mich., retail consultant specializing in urban developments.
“The big, old-fashioned mall is no longer necessary,” he said. “National retailers like the urban mixed-use centers because they’re more recession proof. Residential and office tenants offer built-in customers. Even big department stores are looking to smaller formats that offer convenience.”A forerunner of the trend, The Avenue, a Main Street-style development with pedestrian-friendly settings, landscaping and convenient parking, has been a success story. The centers, averaging around 200,000 square feet with 50 retailers each, now have three locations in Atlanta. The most recent, The Avenue at West Cobb, opened Oct. 3. Atlanta-based Cousins Properties Inc. developed the concept and opened the first center in 1999.
The new formats give retailers advantages over major malls, according to Joel Murphy, president of the retail division of Cousins Properties. He estimates Avenue tenants, including Banana Republic, Ann Taylor and Talbots, have sales per square foot between $500 and $1,000. Total occupancy costs for smaller centers, with lower common-area maintenance fees and taxes, are 50 percent less than major malls charge, added Murphy.
Atlanta, with its former emphasis on malls and big centers, often has been criticized for having too few independent boutiques that give flavor to neighborhoods. With the resurgence of Midtown, which has added 6,000 new housing units just this year, and 6 million square feet of office space in the past five years, the local retail scene is also changing.
Andrew Capron relocated his Andrew: Men Women Home store from Buckhead to Midtown in 2001. The store offers a loft-like minimalist setting, designer labels like Paul Smith, Y3 by Yohji Yamamoto for Adidas, vintage apparel, as well as high-end home and gift items.
“Atlanta has had no real identity outside the malls,” said Capron. “Midtown is just the tip of the iceberg of what it can become — a street-friendly shopping district where people walk, like other great cities have.” In the past few years, similar boutiques have sprung up, including Fab’rik, French Kiss and Lui-B, all with eclectic offerings and distinctive interiors.
KSA’s Pritchard said Atlanta, with Midtown as its “undiscovered gold mine,” is poised to become an international retail force, with a little luck and a lot of strategic planning.
“The Atlanta retail market is fragmented and retrenching,” she said. “There’s plenty of opportunity for specialty stores to serve disappointed department store customers, but Atlanta needs smart, proactive city and suburb planning to help funnel all this growth.”
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