Diamond In The Rough

Downtown's last major frontier

Charles Molineaux

September 11, 2007

The hats made the photo op. And while the sight of eight developers, property owners and politicians lining up wearing classic railroad engineer caps may have had a comic aspect, Atlanta City Councilwoman Mary Norwood finds it more thrilling than funny. “I thought it was a very clever twist,” she declares. “If it had been hard hats, we wouldn’t be talking about it.”

Norwood wore her engineer hat, and a big smile, as she joined the June ribbon cutting celebrating the extension of Atlanta’s Downtown Improvement District into the newly dubbed “ Railroad District.”

Home to the city’s Terminal Station until 1970, the Railroad District is one of the last major frontiers in the redevelopment, resuscitation or reinvention of commercial real estate in Downtown, a process making slow, but boosters say increasingly sure, steps.

Attending the ribbon-cutting ceremony were (L-R) Bruce Gallman, Gallman Development; Kwanza Hall, Atlanta City Council; A.J. Robinson and Paul Kelman, Central Atlanta Progress; Mary Norwood and Ceasar Mitchell, Atlanta City Council; Robert Cizek, Central Parking; and Emory Morsberger, Morsberger Group.


At present, the district shows only scattered signs of being on the verge of anything auspicious. It covers 20 blocks between Martin Luther King Drive and I-20, and between Peachtree Street and the Norfolk Southern Railroad tracks. A birds-eye view reveals its most distinctive feature: parking lots. Its stock of historic buildings is largely empty. But developers imagine it eventually becoming a new kind of neighborhood, dramatically transformed into something it has never been – a live-work-play community of retail, office and residential, full of history and access to I-20, I-75-85 and MARTA’s Garnett Street station. Eventually.

“It has lot of great historical assets,” says Sarah Kirsch, principal with the real estate consulting firm Robert Charles Lesser. “It has a lot of ‘diamond-in-the-rough’ type opportunities. But ‘rough’ is the operative word.”

“A tremendous blank slate is what it amounts to,” adds Bruce Gallman of Gallman Development Group, which owns property on Garnett Street in the center of the Railroad District. “What we propose to do is create a neighborhood which is on a human scale, not high-rise buildings but mid-rise to low-rise buildings, and very good, walkable, streets and sidewalks.”

While he envisions projects similar to his highly successful development of the eclectic Castleberry Hill loft/gallery/retail neighborhood next door, Gallman’s intentions in the district remain conceptual.

A vastly more concrete proposal comes from the Morsberger Group, whose $50 million plan will turn the vacant Citizens & Southern Bank (most recently Bank of America) building at 222 Mitchell Street into 30,000 square feet of retail and office space and 231 condominium units. The large residential component, previously alien in the district, reflects the growing trend toward in-town living well underway elsewhere. “We’re looking at a few thousand people living in this area,” Gallman says, “at least initially, over the next five years.”

“In housing, you have new construction in Buckhead and Midtown, but it’s pricing out a majority of people who work in town,” Kirsch says. “Something like 80 percent of the people who work in those cores could not afford to buy the new housing, whereas in Downtown, there are places where at least a larger portion of people who work in town could afford to live.”

Morsberger plans to sell condos for an average price of around $235,000.


A neighborhood from scratch

The reimagining of the neighborhood also gets vigorous support from parking lot owners. Robert Cizek is senior VP of Central Parking, which owns 12 parcels in the district. He says the area’s future is residential. “Once you get the people, then you get the retail,” he says.

Morsberger VP David Laube says the commercial potential is a hit already. “It has extremely high visibility with all those government workers and the amount of traffic you have. This area is really a commuting corridor, a back door to downtown Atlanta. Our 30,000 square feet of retail is almost completely spoken for and we haven’t even started construction yet.”


The presence of substantial government anchors, and investment, in the neighborhood is increasing. The district will be home to Atlanta’s $65 million new police and fire headquarters. Work also continues on the $55 million renovation of the Richard Russell courthouse and the historic MLK building, as well as the $22-million Department of Justice and Homeland Security building. Between the public and private sector initiatives in the area, Central Atlanta Progress trumpets a total investment of $200 million now underway or in the works.

Like a vintage locomotive, the area’s resurgence isn’t moving without fits and starts. The future of one Railroad District asset that’s still actually a railroad asset remains undecided. The developers of Wood Partners have been trying to buy and develop the old Norfolk Southern headquarters on Spring Street. That project was slated to become rental and condo residential units but the deal derailed when Wood failed to get funding through the Westside Tax Allocation District because it doesn’t own the property.

Tax Allocation District, or TAD, money has become a key part of turning around the district. TAD funding enables developers to secure loans based on the higher future tax yields expected after their projects increase the value of their property.

“It’s made a huge difference,” says Ellen Mendelsohn, an economic development project manager with Central Atlanta Progress. “The TADs are meant to go to areas that are lacking investment from the market on their own.” Laube adds the C&S building project “would not be feasible today” if not for the TAD subsidy Morsberger is making part of its financing.


But would you live there?

While brave urban pioneers may be willing to move anywhere, Railroad District boosters do acknowledge other would-be tenants might see some challenges from a surrounding environment that can range from unpleasant to scary.

Gallman wryly concedes his development of Castleberry Hill is something of a “buffer” between the district and the troubled Vine City/English Avenue area. “The crime has such a hold over there; it’s going to be hard to uproot it. There’s some spill over,” he says. “It’s a matter of good police protection, neighborhood watches, an active neighborhood association. You see a problem with crime and you jump all over it and you solve it right quick.”

Even Central Atlanta Progress acknowledges on its Web site “the perception” that Downtown is less than safe. Efforts to even control panhandling in the area cause controversy. But Gallman says the Railroad District can fight back and be both pleasant and safe through a comprehensive application of city zoning requirements that already require open spaces. “Instead of creating all these courtyards and small pockets of unutilized space, carve out some meaningful area that can be a park. As a privately owned park it can have its own rules and security. It won’t be like a city owned park where people’s rights get involved and that sort of thing.”

Some surrounding communities have seen steady improvements. Mendelsohn points to residential development in the Sweet Auburn and Fairlie Poplar historic districts, as well as around Centennial Olympic Park. Gallman says the existence of Castleberry Hill, with its retail and restaurants already in place, will make the Railroad District an easier sell than Castleberry Hill was in its early days.

The site also remains under consideration as a possible location for a regional multimodal transportation center. This could resurrect the district’s onetime role as a transit hub and provide a home and an answer for another Railroad District question mark, the dilapidated “ temporary” Greyhound bus station on Garnett Street.

Laube says developers anticipate the area resembling Portland’s Pearl District, or Denver’s LoDo: historic industrial areas renovated into trendy enclaves of galleries, nightclubs, upscale retail and residences. This early in its development, Norwood is especially enthused over the area’s branding and marketing, its catchy name, as well as the involvement of marketing firm A. Brown-Olmstead Associates.

They’re the ones who came up with the hats.