By Maria Saporta and Amy Wenk
Published in the Atlanta Business Chronicle on Jan. 16, 2015
The potential owner of the long-struggling Underground Atlanta project has been in talks with the operator of a sorely needed downtown amenity — a grocery store.
Mount Pleasant, S.C.-based real estate investment firm WRS Inc. reached an agreement with the city of Atlanta in December to buy Underground Atlanta for $25.75 million. The 12-acre site is planned as a mixed-use development with retail and residential space.
“We are in negotiations with a grocery store,” T. Scott Smith, president and CEO of WRS, said in a Jan. 14 phone interview.
Smith added, “It’s premature to name names.”
A downtown grocery store has been talked about for more than five years.
In 2005, Cincinnati-based grocery giant Kroger closed its only downtown Atlanta location, a 13,000-square-foot store across from City Hall.
In 2010, Barry Real Estate Companies Inc., which initially developed parts of the Centennial Park area into Allen Plaza, almost brought a grocery store to downtown — a move meant give recent graduates of intown universities, such as Georgia State University and Georgia Tech, more reason to live downtown. But that deal fell apart.
Since then, as more people have started to move back to the city, and Georgia State and Georgia Tech have continued to grow their campuses, the need for a downtown grocery store seems more plausible.
Downtown boosters certainly believe residential and student population growth has strengthened the argument for additional retail, including a grocery store.
National chains such as Publix Super Markets Inc. and discount grocer ALDI Inc. could be frontrunners for the project. Both retailers have scouted downtown for new stores, according to a real estate insider. Other operators, such as new-to-market grocer Sprouts Farmers Market, have been locating among more affluent neighborhoods.
WRS declined to offer more detail at this stage.
Although the firm has invested in many Walmart-anchored shopping centers, Smith has said his company is not pursuing Walmart as an anchor for Underground.
Smith has said repeatedly that his vision for Underground is for a higher-end residential community with retail that serves both the community and visitors.
At a Jan. 14 city of Atlanta finance/executive committee meeting, news emerged that WRS submitted the only bid for Underground, which is still owned by the city of Atlanta.
That news caught Smith off-guard.
“They never told us how many people had responded to [the RFP],” Smith said. “I wish I had known that.”
Smith said WRS will pay several million dollars more than the price that the firm originally offered in its bid.
City of Atlanta Chief Operating Officer Michael Geisler, during the Jan. 14 meeting, said there had been several inquiries for Underground, but all would have kept the project as it is today — a retail and entertainment venue, which has not been that successful.
There also were ideas for a gambling venue, which is not legal under state law. Geisler said that the WRS proposal was the only one that provided a sustainable plan and vision that was in line with what the city envisioned for the property.
The sale of Underground could close by summer, said Councilman Kwanza Hall.
“I’m ready to leave the keys on the mat,” said Councilman Howard Shook during the meeting. The city pays about $8 million annually in debt service for Underground, while it generates about $100,000 in income. “At the very first opportunity, I’m going to support this deal.”
Another issue that came up at the Jan. 14 meeting was the possibility that Smith could turn around and sell Underground.
Smith, who has been eyeing the property for about two years, almost laughed at that suggestion.
“We have absolutely no desire to flip this piece of property,” he said. “Our intent is to build out the community that we envision on top of Underground.”