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The Redevelopment Of The Mall At West End Close To Securing Opportunity Zone Funding

Developers of the planned redevelopment of the Mall at West End are ramping up their fundraising, aiming squarely at opportunity zone investors.

Renderings for Elevator City Partners redevelopment of the Mall at West End, designed by Gensler.

Elevator City Partners is seeking to raise upward of 60% of its $400M project budget from opportunity zone funds, co-founder Donray Von said. The first phase of the redevelopment would build 230 apartment units and 30K SF of retail on the existing parking lot.

Von said the firm is in talks with an unnamed family office to invest $35M in equity to kick-start the first phase.

The 150K SF mall would remain untouched in the initial phase to give the developers an income stream during its development, Von said. That will allow Elevator City to hedge some of the risk for investors.

“People are looking to put more OZ money to work earlier,” he said.

Von and co-founder Ryan Gravel — the man whose Georgia Tech thesis was the catalyst for the creation of the Atlanta BeltLine — said they see a lot of potential for opportunity investors in the West End neighborhood, a struggling part of the city just south of Interstate 20.

For one, Gravel said the area is underserved with housing. The West End is home to 30,500 residents, but with only 15,000 houses, according to 2017 U.S. Census Bureau data. Adding housing will create a deeper pool of daytime activity in the area, Gravel said.

While the West End is partly in an opportunity zone, designated so because of its below-average economic output, the mall itself draws from a larger and wealthier customer pool. The Mall at West End draws customers from an 8-mile radius, according to an Alexander Babbage study, where the average income is $67K per year. Twenty-seven percent of the mall's shoppers come from households with incomes of more than $100K per year.

“This is an exceptionally strong base upon which to build, and positions West End Atlanta to successfully compete in the thriving Atlanta market,” Alexander Babbage CEO Alan McKeon said in a release.

Renderings for the entire Mall at West End redevelopment project.

The 12.5-acre site has many of the hallmarks that have been magnets for development in Atlanta this cycle. It is located at the MARTA West End station, within walking distance of the BeltLine and down the street from a nexus of historically black colleges and universities: Spelman College, Morehouse College, Clark Atlanta University and the Morehouse School of Medicine, Gravel said.

Those are the features that made Midtown, especially Tech Square, the hottest development market in Atlanta last decade. Companies have been flocking to the Midtown office market to more easily attract the talent graduating from Georgia Tech and other nearby universities.

At full build-out, the entire project is planned for 450 apartment units, 550K SF of office, 170K SF of retail and 420 hotel rooms, according to Invest Atlanta, the economic development arm of the city. Elevator Partners received a $2M pre-development loan from Invest Atlanta last year. In exchange, the developer is holding aside a portion of the apartment units as affordable and workforce housing.

“We feel that the West End is an opportunity for opportunity zones at their best,” Gravel said. “What we want to do is create economic opportunity in the West End.”

Given West End's proximity to Tyler Perry Studios — just 3 miles to the south — Gravel said the firm will be targeting companies associated with the entertainment and media industry.

“We see it as a tech and media hub,” he said. “Everybody is welcome and included of course, but we see it as a unique opportunity for that.”

Von and Gravel declined to identify other potential investors, but Invest Atlanta loan documents identified a number of big finance names that were in talks with Elevator City, including Prudential, Goldman Sachs, TIAA and Bridge Investment Group.

Elevator City expects to break ground on the first phase in 2021, Von said.