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Aisha I. Jefferson is a staff writer for Daily Report.

ATLANTA-The two most important factors necessary to ensure a successful resurgence for downtown Atlanta–drawing more residents and retail–have evoked a sort of chicken-and-egg dilemma among the central city’s boosters and business owners.

“If people expect a certain amount of amenities like restaurants, drug stores and nail salons that you would expect for a 24-hour city then they won’t want to move [Downtown]–and the retailers won’t want to invest in a market until the numbers are there, until the people are there,” said Whitney Rusert, president of the Atlanta Downtown Neighborhood Association.

About 500 people gathered recently at AmericasMart for the annual Downtown Development Day to discuss how to continue the area’s revitalization. Sponsored by Central Atlanta Progress, the program discussed many of the findings of the “Downtown Atlanta Retail & Office Market Analysis,” a market study of the area published by Robert Charles Lesser and Co., or RCLCO.

Downtown currently captures an estimated $429 million in retail spending and could potentially capture up to $389 million in additional spending by 2012 if it adds new retail, according to the RCLCO report. The expected increase can be attributed to the 76 development projects that either have been completed or are under construction, planned and phased for Downtown.

The Georgia Aquarium, 55 Allen Plaza, a 323,000-sf office tower that is home to Ernst & Young, and University Commons, Georgia State University’s 2,000-bed dormitory, are among the signature developments that opened Downtown over the past couple of years. Twenty-six of the projects that are under construction, planned or part of a multiphase development will have residences, contributing to the more than 11,000 new households with an average of one or two people the analysis states are expected to have moved Downtown between 2000 and 2012.

A lot of this residential development will take place near the northwestern quadrant of downtown around Barry Real Estate Cos.’ nine-block Allen Plaza, a $2-billion mixed-use development west of Peachtree Street and near Centennial Olympic Park. Novare Group opened Twelve Centennial Park, a 1,034-condo unit and 102-hotel room mixed-use project that is one of two planned residential towers, in September at the corner of West Peachtree Street and Ivan Allen Jr. Boulevard.

Barry Real Estate placed the final beam atop its 28-story W Atlanta-Downtown Hotel & Residences at Allen Plaza Tuesday and celebrated with a fashion show hosted by New York and Atlanta retailer Jeffrey. The hotel portion of the W Atlanta-Downtown will open in December 2008 while the condos will open in January 2009.

“The Olympics was a catalyst in terms of Centennial Olympic Park. If you would’ve told me in the ‘80s that west of Peachtree would’ve been the best side to be on, I would’ve told you were crazy,” said restaurateur Bob Amick, who has operated restaurants Downtown since the early 1970s.

Amick opened two restaurants Downtown this year, Room at Twelve Centennial Park and Stats at 300 Marietta St. Emory Morsberger, whose Gwinnett-based company, the Morsberger Group, is interested in revitalizing the newly branded Railroad District in south Downtown, said he invested in the central city because “much better values exist in the Downtown submarket.”

“In real estate, it’s hard to make money when you are buying at the top price right off the bat…I was amazed at some of the prices we were able to get buildings for in Atlanta–there’s a desire to be Downtown–not everyone can afford a $500,000 condo in Buckhead,” said Morsberger, whose company purchased and will redevelop the 350,000-sf Citizens & Southern National Bank building at 222 Mitchell St. into the Exchange, a $50-million mixed-use condo project. The renovation project, which is planned for south Downtown, will include 231 condo units and 31,000 sf of commercial space.

No longer defined just by the office buildings and hotels that line Peachtree Street or the government centers housed on the southern end, Downtown also includes revitalized neighborhoods like Castleberry Hill, Sweet Auburn and the Martin Luther King Jr. Historic District. The submarket’s boundaries are defined as Interstate 20 on the south, Boulevard on the east, North Avenue on the north and Northside Drive on the west.

With more, higher-priced living quarters available, the average income of new Downtown households is expected to increase from $61,000, the average in 2000, to $71,000 by 2012, the RCLCO report stated. The expected household income increase is key to attracting the “proper retail for the market audience,” said Ellen Mendelsohn, a project manager with CAP’s economic development department. Although the RCLCO analysis observes current Downtown retail is not tailored to the more-affluent population moving into the area, the retailers located south of Five Points on Peachtree Street are some of the highest-grossing retailers per square foot in Atlanta, Mendelsohn said.

Most of these shoppers travel from other submarkets to shop at retailers such as those located at the Mall at 82 Peachtree and a number of storefront businesses along the southern end of Peachtree Street, she added.

Most of the existing retail space Downtown is in older buildings, a reason why one-third of Downtown’s vacant retail space is in “tenant ready” quality where the mechanical and electrical systems are updated and in proper condition. CAP is working aggressively to attract retailers, Mendelsohn said.

“We are trying to market our parking lots and underdeveloped [spaces] Downtown as potential retail space,” Mendelsohn said, adding that a critical mass of retailers is necessary to make retail downtown work and attract customers.

Even though getting “the right tenant” into the 200,000-sf vacant retail space at old Macy’s building at 180 Peachtree St. could help encourage retailers to set up shop Downtown, gaining core retail such as a major supermarket or another drugstore is a bigger priority. The CVS near the Five Points Marta Station is the only drug store Downtown, and while Barry Real Estate Cos. is negotiating with Publix Supermarkets Inc. to build a store at Allen Plaza, there currently isn’t a major grocery store Downtown either. The last grocery store Downtown, a Kroger located across Central Avenue from City Hall, closed in 2005 after a decade-long run.

The 13,000-sf supermarket was set up as a ground retailer for the City Plaza apartment complex at Central and Trinity avenues. The storefront is now a haven for homeless people. “Amenity wise, it would be a challenge to live Downtown,” said Amick, who believes this will change.

“I think retailers need to have a little faith and take a chance on an emerging market and promote themselves as a destination,” said the Downtown neighborhood association’s Rusert. A revised zoning ordinance requires every new building constructed Downtown to have ground-floor use either for retail or service, which would help keep traffic on Downtown’s sidewalks, Mendelsohn said.

Although Downtown’s office leasing market began dropping over the last decade when many companies left for Midtown, it has been reversing over the past year or two. When Cousins Properties Inc. purchased One Ninety One Peachtree Tower in September 2006, it had an occupancy rate below 20% and was 50% leased after tenants Wachovia, King & Spalding and Powell Goldstein vacated.

Now, Cousins, which relocated its headquarters to the class A office building, is aggressively leasing the building and said One Ninety One Peachtree’s current occupancy is 53% and it is 77% leased.

Mendelsohn said Cousins’ faith in Downtown has inspired other businesses to give the submarket another look. Barry Real Estate’s office towers at 30 Allen Plaza and 55 Allen Plaza also have added more office workers Downtown. Georgia State University’s campus expansion and the opening of a 2,000-bed dormitory in August at Piedmont Avenue and Ellis Street also has been vital to Downtown’s comeback, Mendelshohn said, adding that the students living Downtown offer “a ready-made audience” for retailers.

The university plans to open additional housing over the next three years. Although luring retailers Downtown remains a challenge, restaurants have proliferated lately, Mendelsohn said. Ten restaurants opened downtown in 2006, and an additional 20 will have opened by the end of 2007, according CAP.

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