Underground redeveloper in talks with grocers
By Douglas Sams and Maria Saporta
Published in the Atlanta Business Chronicle on May 22, 2015
The company that plans to redevelop downtown’s Underground Atlanta has entered talks with several grocers, including at least one giant — Kroger.
WRS Inc., the Mount Pleasant, S.C.,-based real estate company, has been in preliminary discussions with The Kroger Co., which has been looking at expanding within intown Atlanta, according to commercial real estate sources familiar with the talks.
WRS declined to name the grocery chains it’s been in discussions with.
The developer said it wouldn’t disclose the grocers until it has a contract. WRS is confident it will have a lease signed sometime next year when it begins construction, probably no earlier than the summer.
“We are talking to more than one grocery store,” said T. Scott Smith, president and CEO of WRS. “We have reached out to several grocery stores, and we have serious interest from a couple — and more interest from some than others.”
The talks represent hope for downtown Atlanta boosters, including Georgia State University, the biggest driver of economic development in the city’s government district.
A grocery store is seen as a sorely needed downtown amenity.
In 2005, Cincinnati-based grocery giant The Kroger Co. closed its only downtown Atlanta location, a 13,000-square-foot store across from City Hall.
Since then, downtown streets have seen a new energy.
Georgia State’s enrollment has soared, student housing projects have taken off, more technology and media companies are interested in leasing the city’s historic downtown office buildings and more residential developers, including Post Properties Inc., are developing apartment units.
“The success of a grocery store at Underground depends on the permanent residents that are living in the area,” said John Bemis, Atlanta retail market leader for real estate services giant Jones Lang LaSalle Inc. “It makes sense, and it could be a great amenity to attract people to live full time downtown, but initially it will have to be geared to serve not only existing residents, but primarily Georgia State, and to some degree Georgia Tech.”
Kroger would make the most sense as an Underground Atlanta anchor, sources said.
Kroger is in the midst of an intown Atlanta expansion, with a 109,000-square-foot location at a new mixed-use project called Glenwood Place in East Atlanta.
Construction will start this summer on another intown Kroger, an 82,000-square-foot store that will anchor a new mixed-use project near Buckhead’s Lindbergh City Center.
Kroger is reluctant to launch new stores smaller than 60,000 square feet, retail experts said.
In previous interviews with Atlanta Business Chronicle, WRS said it plans a roughly 65,000-square-foot grocery store at Underground Atlanta, though the size of the store could be adjusted to fit the design of the project.
Publix is another possibility.
It was close to anchoring a mixed-use project along the Downtown Connector, before the deal fell apart and the economy crashed, the sources said.
In 2008, the Lakeland, Fla.-based grocery chain was in negotiations with developer Barry Real Estate Companies Inc. to put a store in Allen Plaza, the downtown development near Centennial Olympic Park, but that deal fell apart. Publix typically favors stores close to 40,000 square feet. Its latest new intown store was at Town Brookhaven, a mixed-use project just north of Buckhead.
WRS has said it will not pursue a discount chain as an anchor, which would seem to rule out a Walmart.
Downtown would be appealing to grocery chains for several reasons.
It has a strong daytime population of government workers and students, retail analysts said. A grocery store at Underground could spark revitalization around the Five Points MARTA station.
Typically, retail development follows rooftops, or dense areas of population, and Georgia State has continued to expand its enrollment and the number of students living downtown has increased.
The university has had a waiting list for on-campus housing, and developers have started new student housing projects to meet demand.
WRS wants to have apartments, student housing, and a grocery store as key components of its project.
It would also look for opportunities for more stores and restaurants that can serve the surrounding neighborhoods, Smith said.
“We expect that it will be the largest shopping district in the area and it will pull in people from Castleberry Hill,” Smith said.
WRS remains on track to close on the purchase of Underground by the end of this summer, he said.