Developers plan second act for Midtown’s Colony Square

Midtown Atlanta’s Colony Square was decades ahead of its time. Now, the venerable mix of office towers and shopping mall is about to play catch-up with the modern era.

This week, developer North American Properties and equity partner Lionstone Investments closed on their purchase of the towers at 14th and Peachtree streets — one of Atlanta’s busiest crossroads. Unlike much of Atlanta’s recent development history, instead of tearing down the towers and starting over, the developers plan to spruce up and reinvent this pioneer of mixed-use urbanism.

Developer Jim Cushman, who died earlier this year, envisioned Colony Square in the late 1960s and early 1970s as a posh mix of shops, restaurants, a hotel, residential and twin office towers. He assembled a team to build it in what was once a shabby part of the city. Today, mixed-use is on everyone’s development radar, but at the time, it was a rarity.

Colony Square struggled in its early years and even filed for bankruptcy, thanks in no small part to a recession that sent office vacancies soaring shortly after it opened. The project also struggled through this most recent recession.

Kevin Green, head of the Midtown Alliance, said Colony Square has “been stuck in time,” but given its location in the heart of a resurgent Midtown “is pretty unbeatable.”

The developers aim to create a “living room” for Midtown, with retailers, restaurants and public events, in a similar fashion to what NAP and partner CBRE Global Investors did with Atlantic Station, said NAP Managing Partner Mark Toro.

The Lionstone-NAP duo has some intriguing ideas about how to remake Colony Square — including taking the top off of the mall. New residential or office space is being considered, but it’s too early to discuss what any additional development might include, Toro said.

He and his partners plan to start their reinvention with a quiet period during which they plan to listen to Midtown businesses and residents, and tour neighborhoods like Brooklyn’s Williamburg and Boston’s Boylston Street.

“Its time has come,” Toro said in an interview Wednesday. Toro, a Midtown Alliance board member and resident in a high-rise near Colony Square, said he’s coveted the site since the alliance started to develop the concept of the Midtown Mile last decade.

“I live right next door. I can tell you, in the five years since I’ve moved to Midtown, it’s astonishing how many feet on the street are multiplying every day,” he said.

Colony Square is a vital part of a re-energized Midtown, which has thousands of new apartment units being built and major companies like NCR, Worldpay and Kaiser Permanente planting thousands of workers in the area.

But Colony Square hasn’t kept up with the times. The office space is about 85 percent occupied, but its roster of restaurants and retailers has dimmed despite office towers around it swelling with tenants.

Green said he is hopeful the development can move from being an inward facing mall to one that beckons pedestrians.

The developers will start with prospect meetings next week in New York City at the International Council of Shopping Centers convention, Toro said.

The acquisition could be well-timed. The Midtown office market is tightening as companies seek digs near Georgia Tech and the MARTA spine. Local amenities include the Woodruff Arts Center, the Four Seasons hotel and the W Hotel Midtown next door (the latter was once part of the complex, but was not part of the sale).

In recent years, Cousins Properties bought the nearby Promenade tower, and Dewberry Capital acquired the former BellSouth headquarters known as Campanile and plans to add floors to the tower.

Office vacancy has improved substantially over the past few years and is now at 16.2 percent according to data from CBRE Research. Colony Square was listed for sale earlier this year by a joint venture including New York real estate giant Tishman Speyer and Rialto Capital.

The new development team bought the towers and retail center for more than $160 million.

In addition to teaming with CBRE Global Investors in a successful turnaround of Atlantic Station, NAP is the developer behind Alpharetta’s Avalon mixed-use community. The CBRE and NAP team recently sold the retail core of Atlantic Station for a tidy profit after buying it during the depths of the region’s real estate collapse.

The NAP philosophy has centered on “experiential” retail, featuring unique brands and luxury hotel-like customer service along with public events such as yoga in the park and the BB&T Atlanta Open tennis tournament at Atlantic Station. Those attributes are expected to feature prominently at Colony Square.

FIG Partners, an investment banking and research firm, has been based at Colony Square for more than 10 years. Chris Marinac, a senior managing principal there, said the retail and restaurant offerings declined in recent years. A Goldberg’s Bagel Co. & Deli location closed, as did the restaurant Shout.

Marinac said the towers are convenient for intown workers, close to MARTA and sit in an affluent neighborhood hungry for new retail.

“We are all waiting with baited breath to see what they’re going to do here,” he said. Marinac said an Apple store and other traffic-generating retail would do well to pull people to the site, and the demographics would support such offerings.

“This has been a diamond in the rough for years,” he said.

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