German-backed private equity firm Jamestown has reportedly closed on its purchase of The Shops Buckhead Atlanta according to multiple sources familiar with the transaction, but who spoke to ToNeTo Atlanta on the condition of anonymity given the transaction has not yet been made public. The purchase, which reportedly closed last week, gives the beleaguered center its third overall owner. Sources familiar with the transaction indicated the purchase price was between $175 million and $200 million.The purchase of The Shops Buckhead Atlanta would be the fourth acquisition by Jamestown in metro Atlanta in the last fifteen months. In early 2018, Jamestown purchased the Parkaire Landing, a Kroger anchored shopping center in East Cobb, for $42.1 million. In November, Jamestown spent an undisclosed amount to acquire The Exchange at Hammond and Parkside Shops, both in Sandy Springs, from Atlanta based Mimms Enterprises. The two contiguous centers feature nearly 335,000 square feet of retail space across 25 acres. Originally conceptualized as Buckhead Avenues, the Buckhead project was later (but long before it actually opened) re-branded as The Streets of Buckhead after a legal challenge from Cousins Properties and their assertion that the name might be confused with their "Avenue" retail developments. The project stalled in 2009 amidst the global recession and was eventually sold partially built to San Diego-based developer OliverMcMillan who later renamed it Buckhead Atlanta and later the retail portion, The Shops Buckhead Atlanta. Almost immediately, the project struggled to attract the traffic the developer, retailers and restaurateurs expected that it would.The center focused nearly exclusively on high end, luxury brands, creating a "Rodeo Drive" of the south, as some called it. While such a high concentration of premium offerings might thrive in Beverly Hills, New York or Chicago, among other cities, Buckhead Atlanta has failed to resonate with a large enough demographic of locals or visitors to be viable.
This past November, OliverMcMillan hired JLL to "broaden retail appeal" of The Shops Buckhead Atlanta. "What we need at the project is to bring in a more diverse customer base and really bring in the community." said JLL Director of Retail Agency Leasing Coleman Morris to Bisnow. “Right now, you don't have that kind of entertainment nightlife in Buckhead like you do maybe in Ponce [City Market] or West Midtown,” added Morris. It's worth noting, of course, that it is entertainment and night life that the development replaced. When Jamestown purchased what was then City Hall East in 2011 for $27 million, it was essentially a blank canvas. The firm, led by CEO Matt Bronfman, saw the former Sears warehouse, store and regional office as a unique opportunity to reshape a community. The property, spanning sixteen acres and over 2 million square feet, is the largest brick structure in the southeast and inherently created high barriers to entry to any other development. There's also that little thing called the BeltLine that brings literally tens of thousands of people to Ponce City Market's door.
The Shops Buckhead Atlanta is completely different from Ponce City Market, as unlike it, The Shops is already built, merchandised and situated in ways that will make it difficult to change in any significant way. “Buckhead Atlanta will be woven into the fabric of this world-class community,” said Morgan Dene Oliver at ICSC's RECon in 2011. What he meant by that was that Buckhead Atlanta is literally a development within existing streets and is essentially "woven" into the community.
Buckhead Atlanta and its eight acres feature 300,000 square feet of retail and restaurants, plus another 100,000 square feet of class-A office space. There is an office presence, there are residential units, and there are isolated success stories in the development's retail and restaurant roster. Unlike Atlantic Station, however, which when North American Properties and later Hines purchased it, came with anchors like a 16 (now 18) screen Regal Cinemas, Dillard's and a Target store to build around, the closest thing The Shops has to anchors are Hermes and Le Bilboquet, both seen as the most successful in the development, but hardly the traffic drivers of a movie theater or mass market department store.
The Shops lack a "high/low" mix, and while paid parking at Ponce City Market is a complaint of some, the logistics and cost of the parking at The Shops is a complaint of many, including patrons, would-be patrons and many retail and restaurant employees.
The development does have a couple of openings in the pipeline. Le Colonial, a French Vietnamese eatery is to open in place of the failed Dolce restaurant, and co-working space No. 18, is to open in previously unleased space, but neither is significant enough or mainstream enough to move the needle in any major way. ToNeTo Atlanta reported earlier this week that designer handbag consignment store Bella Bag recently closed in the development, replaced by a similar concept, while rumors persist of other likely closures of poor performing retailers. ToNeTo Atlanta exclusively reported in January that luxury retailer Tom Ford was essentially dumping The Shops in favor of a new store at Phipps Plaza, a clear indication that the luxury retailer has faith in the Atlanta market, just not in The Shops Buckhead Atlanta. This move is definitely a win for Phipps Plaza owner Simon Property Group, but seen differently, provides The Shops the opportunity to recapture a marquee space with Peachtree Road frontage to transform into something more appealing for the center's new owner and new direction. Former locations of both Jonathan Adler and Corso Coffee/The Mourning Dove also remain vacant in the project along Peachtree Road and while their visibility is high along the road, trips to them from within the project are likely not top of mind given their locations. Employees of The Shops retailers who spoke with ToNeTo Atlanta in preparation for this post lamented the lack of affordable lunch options and questioned whether a Starbucks or Subway or something similar might make sense in the former Corso space. Other less likely ideas such as a Mattress Firm or a nail salon have also been suggested as things that would draw people in.
Lenox Square and Phipps Plaza, which between them have five anchor department stores, three of which represent the store's only location in Atlanta, are well entrenched in the market and have proven to be the premier choice for retailers looking to open in Buckhead. Both malls have a good mix of affordable, aspirational and luxury goods, a mix missing from The Shops Buckhead Atlanta. The two malls, Lenox which opened in 1959, and Phipps which opened in 1969, are both established in the market in ways that The Shops Buckhead Atlanta likely never will be, and together generate just north of $1 billion in sales.
What could Jamestown do to make The Shops Buckhead Atlanta more appealing to more people? What retailer/restaurant do you think will be the next to close in The Shops Buckhead Atlanta? Do you think Jamestown made a good decision in purchasing the Shops Buckhead Atlanta?
Please share your thoughts below
