It was not the celebration they envisioned.
But on a recent Friday, downtown locals met at a real estate office in a brick storefront along Mitchell Street — not for a ground breaking or a ribbon cutting, but more like an Irish wake. There, they paid respects to German developer Newport and its plans for South Downtown. Some 25 properties out of more than 50 that Newport controls have been advertised in recent months for foreclosure, and it’s likely all of Newport’s holdings will eventually return to their lenders.
On this cool Friday evening, dozens of residents sampled charcuterie, offered toasts and perused renderings of Newport’s unfulfilled ambitions in hopes future owners will complete them.
“They have fixed and maintained so many of the historic buildings that could have easily of been torn down by another developer,” said Adam Shumaker, who has lived downtown for 25 years. “They have set us on a path of progress that I think someone else can now pick up on.”
It’s not often a development team is cheered for what it could not accomplish, but the intimate gathering Nov. 3 was a testament to the goodwill Newport built within the long-neglected corner of downtown Atlanta.
Newport entered Atlanta in 2016 with audacious plans to revitalize 10 blocks of century-old buildings and vacant parking lots near the Five Points MARTA station. Economic conditions that soured after the pandemic prompted the developer’s overseas investors to stop financing the project, company executives said.
But many residents said they believe another developer will see the area’s potential and try to pick up where Newport left off.
“South Downtown is the last frontier,” resident Robyn Jackson said. “It’s not been developed, but it’s going to happen. It has to happen.”
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
The firm acquired more than 50 parcels centered around the former C&S bank headquarters at 222 Mitchell Street, a building spanning an entire city block, and a series of historic mid-rises called Hotel Row.
Newport finished restoration work on the Hotel Row block, transforming it into a series of restaurants and creative office spaces. The 222 Mitchell building wasn’t as lucky, and work to rehab the 330,000-square-foot structure with new offices and other uses halted earlier this year.
Newport CEO Olaf Kunkat said his firm’s investors decided to “reprioritize capital investments” in response to several global factors, including the pandemic, war in Ukraine and interest-rate hikes. Henry Lorber, a distressed real estate expert with Henry Lorber and Associates, said those macroeconomic changes have made it challenging to get any project financed, regardless of its location.
“No matter what Newport might have wanted to do, the market really destroyed their options,” he said. “This is the rug being pulled out from underneath their feet.”
A deal over the summer to sell the entire portfolio to Decatur-based Braden Fellman Group fell apart last month, leading to the foreclosure advertisements.
A lawsuit over $7 million in unpaid invoices to a contractor for work on 222 Mitchell postponed the public auction of it and 17 nearby properties that had been slated for Nov. 7. Last week, eight more parcels were advertised for foreclosure, and the rest of Newport’s portfolio seems destined to be sold on the courthouse steps soon.
April Stammel, a Newport executive in Atlanta, said she’s “super disappointed” her team wasn’t able to bring the full project to fruition. But she said the outpouring of community support has her optimistic for the area’s future.
“The neighborhood is bigger than us,” she said. “Always was and was always going to be.”
‘It will loom’
The foreclosures raise question about what comes next for the overlooked corner of the city. Prior to Newport’s buying spree, the properties it bought were controlled by dozens of owners, many lacking the funds to revitalize them.
Many nearby residents fear the properties reverting to different owners who will either neglect the aging buildings or tear them down.
“Downtown has something that is irreplaceable, and that is these historic buildings,” Shumaker said.
The elephant in the room is 222 Mitchell given its incomplete state. Charlie Stanford, managing director of Henry Lorber and Associates, said the building will have to be protected from the elements and kept secure until restoration work is picked up by another developer.
Credit: Katelyn Myrick
Credit: Katelyn Myrick
“The worst thing you can do in real estate is have a partially completed building,” he said. “... Until the Mitchell Street building has resolved its issues, it will loom over the whole area.”
He added that it will be difficult to get the smaller surrounding parcels developed when its in the shadow of a gigantic vacant building.
Jonathan Koes, research manager with real estate services firm Colliers Atlanta, said new office projects downtown also face fierce headwinds. A record amount of unwanted office space is currently on the market, and downtown broadly serves as a cheaper workplace alternative to Midtown and Buckhead.
“You can’t just insert a really nice Class A building downtown and expect to achieve the same rents that you’re going to get in Midtown,” Koes said “That’s definitely going to hamper any office development there.”
At the end of September, downtown office rents were roughly $31 per square foot — $10 cheaper than Midtown’s stock of new high-rise towers. Downtown rents were comparable to the Central Perimeter submarket in Sandy Springs and Dunwoody.
Meredith Selvey, senior associate with Colliers Atlanta, said downtown landlords have increasingly offered steeper more valuable concessions to tenants to stay in the city center.
“The landlords are hurting down there,” she said. “So anytime they get wind of a deal, all of them are trying to throw whatever they can at tenants.”
Reimaging downtown
Many office projects have pivoted to residential in response to the rise of work-from-home culture, and 222 Mitchell nearly joined the list.
When Braden Fellman Group was under contract to buy 222 Mitchell and Newport’s other South Downtown properties, the firm’s plan was to convert it into residences. Many long-time residents said they’d welcome new neighbors.
“What keeps me here is because I know there’s no other place in the region that has the bones of downtown Atlanta,” Shumaker said. “That builds the kind of community that I hope my 2-year-old daughter can grow up in.”
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
The World Cup, for which Atlanta will serve as a host city in 2026, has presented a deadline for downtown stakeholders to increase the city center’s population and street activity.
Under new ownership, Underground Atlanta has rebooted its revitalization efforts, and the city recently purchased the hulking 2 Peachtree Street tower to transform into residences focused on affordable housing.
The largest downtown project is CIM Group’s $5 billion Centennial Yards development, a reimagining of a sea of parking lots and rail lines known as the Gulch. The CIM team has completed the redevelopment of the former Norfolk Southern offices along Ted Turner Drive and Mitchell Street into luxury apartments that are almost fully leased. A Wild Leap brewery is also open there.
Brian McGowan, president and CEO of Centennial Yards, recently said his team is moving forward with two other buildings under construction, adding that he doesn’t think South Downtown’s recent troubles reflect downtown’s trajectory.
Jackson, the downtown resident, said he and many of his neighbors believe the same.
“The right thing is going to come along,” Jackson said. “I’m going to be patient.”
About the Author
