VOLUME 24 NUMBER 13 JULY-SEPTEMBER 1994 RETAIL
PHIPPS PLAZA ATLANTA, GEORGIA PROJECT TYPE The transformation of a two-anchor, 467,856-square-foot regional mall into a fashion-oriented, three-anchor mall of 824,674 square feet. The renovation updated and improved existing finishes while adding 40,000 square feet of new retail space to the existing two-level structure. The expansion added a three-level wing that now includes a major new department store anchor, a food court, and a 12-screen theater. SPECIAL FEATURES Renovation and expansion Retail over lower-level parking Streetfront amenities OWNER Equitable Real Estate Investment Management, Inc. (For Pension Fund Clients) 3414 Peachtree Road, N.E. Atlanta, Georgia 30326 404-239-5000 DEVELOPER/MANAGER Compass Retail, Inc. 5775 Peachtree Dunwoody Road Suite 200-D Atlanta, Georgia 30342 404-303-6100 ARCHITECT/PLANNER Thompson, Ventulett, Stainback & Associates, Architects 2700 Promenade Two 1230 Peachtree Street, N.E. Atlanta, Georgia 30309-3591 404-888-6600
GENERAL DESCRIPTION As the Southeast's first enclosed two-level shopping center, launched in 1968, Phipps Plaza served as a focal point for upscale shopping in Atlanta for many years. By the early 1990s, however, the center was in deteriorating condition and no longer offered a sense of place or high quality space. The 1991ñ1992 renovation and expansion of Phipps Plaza dramatically reversed the decline of this prominent facility. The remaking of Phipps Plaza involved renovating retail and common areas in the existing mall and expanding the mall as a whole by adding new space on top of the existing structure and building a new three-level wing. The two existing anchors were renovated and one was expanded; a third anchor was also added. A new parking deck was built below the new wing, and the existing parking deck was renovated. On the outside, the center received new landscaping, lighting, signage, and graphics. To make it easier for shoppers to reach Phipps Plaza, the developer built a new access street and connectors. In addition, the mall benefited from new storm water detention facilities. Altogether, the changes increased the center's gross leasable area from 467,856 to 824,674 square feet. The developer, Compass Retail, Inc., a wholly owned subsidiary of Equitable Real Estate Investment Management, Inc., completed the extensive renovation and expansion of its flagship property, Phipps Plaza, in November 1992. The $172 million redevelopment successfully repositioned Phipps Plaza as a strong Atlanta shopping center and both reconfirmed the loyalty of former shoppers and attracted new ones. THE SITE Equitable Real Estate and Compass Retail undertook the extensive renovation and expansion of the 20-year-old Phipps Plaza primarily because of its location in the heart of Atlanta's most prosperous and fashionable neighborhood, Buckhead. In addition to prominent estates on rolling wooded hills, Buckhead boasts condominiums, apartments, hotels, and office buildings of all sizes, including a number of skyscrapers. The immediate area has more retail outlets, entertainment spots, and outstanding restaurants than any other section of Atlanta. Lenox Square, Atlanta's top-volume superregional mall, is located diagonally across the street from Phipps Plaza, making the corner of Peachtree and Lenox Roads Atlanta's premier retail area and one of the top retail corners in the Southeast. Phipps was designed to complement Lenox Square rather than compete directly with it. DEVELOPMENT PROCESS AND APPROVALS The development concept was designed to accommodate a larger critical mass of retailers, broaden the merchandise offered, and more effectively market to affluent shoppers in Atlanta and the southeastern United States. The master plan allowed for an expansion of Phipps Plaza by one or two additional department stores, new mall shops, and the future development of high-rise residential and office components located adjacent to the mall on the same site. Compass Retail made many redevelopment presentation to neighborhood groups, the city planning staff, the Planning Commission, and the city council. To construct the expansion, the developer needed the city to rezone part of the site from single-family residential to commercial. The effort to rezone involved not only the city of Atlanta, but also several neighborhood organizations and area churches. At the zoning hearing no group spoke against the plans, and the developer had total support for the project. Compass worked with the Georgia Department of Transportation (DOT) to secure access to the mall from the new Georgia Highway 400 toll road. Its only exit on the Buckhead Loop, as originally designed, did not offer easy access to the mall. The developer, however, worked out an agreement with the DOT to provide for a four-lane raised platform in the center of the Buckhead Loop with a northeast egress directly into the site. In cooperation with the DOT, Compass Retail acquired land and constructed Phipps Plaza Boulevard, a four-lane ring road connecting the important streets surrounding the mall and promoting better traffic flow in
Buckhead. PLANNING AND DESIGN The architecture of the redeveloped Phipps Plaza is richly detailed, inviting, and comfortable. Designers used warmly toned, exquisite finishes within clearly defined but spacious volumes. The project's design aims to combine the spirit of the Old South with the high energy of the new Atlanta. Early Southern architecture and interior design, which drew heavily from classical sources, were the foundation for the project's design. The center's grand double staircase, detailed columns, ceiling moldings, and grand crystal chandelier therefore reflect Southern traditions. Overlapping geometric finishes, apparent in floor medallions, ceilings, skylights, floor openings, and canopies, symbolize contemporary Atlanta. Consistent use of finishes throughout the common areas and the exterior strengthened the center's image and design concept. Motifs inspired by native southern flowers appear in the marble floor medallions, the torchere light fixtures, the custom carpet and bench cushions, and the bronze handrail stanchions. The new exterior features precast stone facades with reveals and moldings, complementing brick accents, inviting dining terraces, and soft colors to blend the development into the residential community. Spacious sidewalks and boulevard-style streets, detailed railing and exterior planters, and old-fashioned street lamps also create a pedestrian atmosphere. To maintain a safe and comfortable shopping environment, the developer incorporated a 24-hour, state-of-the-art security system into the project. Cameras installed around the site and at major entrances to the mall track vehicular patterns and access. Call stations are spaced at intervals of 75 feet throughout the parking deck. The developer took care to relate the project to the neighborhood and the natural features of the site. The three-level addition was designed atop three levels of deck parking to take advantage of the gently sloping 29.3-acre site. This slope and the design of the parking allowed the construction to proceed without excavation for parking decks. The three-level parking deck is situated below the retail space to provide direct access to the center of the mall and allow little parking to be seen from the exterior. All construction in existing mall areas took place between 10 p.m. and 6 a.m. and was performed without closing existing stores. The renovation and expansion work was completed on schedule in 18 months. MARKETING AND MANAGEMENT To reposition the center, the developer adopted a marketing strategy that stressed the high-quality shopping experience at Phipps Plaza and its broader merchandise mix. The leasing strategy was to expand the variety of stores to increase the customer base. The experienced leasing staff aggressively pursued targeted tenants and focused on stores unique to the Atlanta area. Throughout the construction process, the developer offered media tours at major development stages, such as the installations of the marble medallions and the custom skylighting. VIP luncheons held during construction allowed a variety of targeted groups to preview the project and to learn more about leasing plans and expanded customer services. Atlanta held its annual citywide Arts Alive gala at Phipps in honor of the grand reopening, and the proceeds of $100,000 went to a local arts organization. To ensure that customers were not inconvenienced during the renovation process, Phipps provided concierge services and complimentary valet parking, and these services continue today. EXPERIENCE GAINED
When undertaking a major expansion and renovation of an existing center, business can be maintained if proper attention is paid to customer needs, access, and safety. Approximately 15 retailers were relocated to temporary spaces with high-level finishes and were relocated again to new stores once asbestos abatement and new store construction were completed. Such a complex project demanded extensive coordination between contractors, on-site designers, and vendors. This renovation cost more than usual for a project of this type, but the rewards have been greater than expected. The new Phipps Plaza has been successful with consumers, received many architectural and industry awards, and gained acceptance by the community. The renovation proved that a struggling project can be infused with new life and strong competitiveness with an appropriate and aggressive development program.
PROJECT DATA LAND USE INFORMATION Site Area: 29.3 acres Gross Building Area (GBA) Before renovation/expansion: 556,167 square feet After renovation/expansion: 1,070,651 square feet Gross Leasable Area (GLA) Before renovation/expansion: 467,856 square feet1 After renovation/expansion: 824,674 square feet Floor/Area Ratio (FAR): 0.83 Number of Levels: 2 levels with one 3-level wing Total Parking Spaces Before renovation: 2,034 After renovation: 4,082 Surface spaces: 1,322 Structured spaces: 2,760 Buckhead Fire Station: 12,000 square feet LAND USE PLAN After Renovation/Expansion(Acres)
Percent of Site
18.3
63%
Paved areas (surface parking/roads)
6.5
22
Landscaped areas
4.5
15
29.3
100%
Buildings/structures
Total RETAIL TENANT INFORMATION2 Classification
Food
Number of Stores
Percent of Total
Total GLA (Square Feet)
Percent of GLA
5
5.46%
27,949
8.90%
Food service
12
13.04
9,043
2.88
Clothing and accessories
34
36.95
113,535
36.14
3
3.26
13,590
4.33
Home furnishings
11
11.96
35,207
11.20
Home appliances/music
3
3.26
8,871
2.82
Hobby/special interest
1
1.09
1,807
0.58
Shoes
Gifts/specialty
7
7.60
18,756
5.97
Jewelry
5
5.43
19,285
6.14
Other retail
7
7.60
9,367
2.98
Personal services
3
3.26
6,707
2.14
Recreation/community
1
1.09
50,000
15.92
92
100.00%
314,117
100.00%
Total
Total Number of Stores before Renovation: 20 Average Length of Lease: 10 years Typical Lease Provisions: Base rent plus percentage rent and charge for common area maintenance, real estate taxes, promotional fund, and utilities Annual Rents Before renovation: Approx. $10 to $26 per square foot After renovation: Approx. $25 to $80 per square foot Average Annual Sales Before renovation: Approx. $325 per square foot After renovation: Approx. $400 per square foot REDEVELOPMENT COST INFORMATION Site Acquisition Cost (Land and Existing Building) $48,550,000 Site Improvement Costs (On and Off Site) Excavation/grading Sewer/water/drainage Paving/curbs/sidewalks
$ 2,000,000 2,100,000 850,000
Landscaping/irrigation
1,000,000
Fees/general conditions
2,100,000
Other
2,000,000
Total
$10,050,000
Construction Costs Superstructure (shell replacement)
$38,000,000
HVAC
2,800,000
Electrical
3,500,000
Plumbing/sprinklers
1,750,000
Elevators
2,500,000
Fees/general conditions
3,200,000
Finishes
27,000,000
Graphics/specialties Parking structure Tenant improvements City improvements(fire station, Wieuca Road connector) Total
500,000 6,750,000 17,450,000 2,500,000 $105,950,000
Soft Costs Architecture/engineering Project management Marketing
$ 4,500,000 500,000 1,800,000
Legal/accounting
410,000
Taxes/insurance
195,000
Title fees Total
45,000 $ 7,450,000
Total Redevelopment Cost $172,000,000 Total Redevelopment Cost per Gross Square Foot: $160.64 ANNUAL OPERATING EXPENSES (1993) Taxes Insurance Services
$1,213,270 236,672 1,007,252
Maintenance
419,901
Janitorial
482,530
Utilities Legal
1,259,420 22,214
Management
504,523
Miscellaneous
461,537
Total
$ 5,607,319
Notes 1
33,151 square feet were demolished entirely, leaving 434,705 square feet of net existing GLA. 2
After renovation and expansion, excluding department stores.
DEVELOPMENT SCHEDULE Original Opening: 1968 Site Purchased: Fall 1986
Planning Started: December 1987 Approvals Obtained: Fall 1990 Construction Started: May 1991 Releasing Started: August 1991 Project Completed: November 1992 DIRECTIONS From Hartsfield-Atlanta International Airport: Follow Interstate 75/85 north until highway splits. Follow Interstate 85 north, staying in right lane. Take exit 29 (Cummings GA 400). Take GA 400 to exit 2 (next exit). At stop sign, turn right onto 141 east. Travel 1 block; Phipps Plaza is located on the left. Driving Time: Approximately 30 minutes in nonpeak traffic.
The Project Reference File is intended as a resource tool for use by the subscribers in improving the quality of future projects. Data contained herein were made available by the Development team and constitute a report on, not an endorsement of, the project by ULI - The Urban Land Institute. Copyright 1994, 1997, by ULI - the Urban Land Institute 1025 Thomas Jefferson Street, N. W. Ste. 500w, Washington, D. C. 20007-5201
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