Portman Holdings is scaling back its redevelopment plans for a stretch of Ponce de Leon Avenue in Virginia-Highland due to changes in the economy that “have simply changed the viability of new projects,” according to a company official.
Mike Greene, senior vice president for Portman, told Rough Draft Aug. 25 that the company has decided not to purchase the parcels at 752, 756 and 774 Ponce de Leon Ave. that include the beloved The Local dive bar and restaurant and Vesta Movement gym. It also includes the former Marcos Pita building that burned down a decade ago.
Portman plans to close by the end of the year on the properties closest to the Atlanta Beltline’s Eastside Trail including the former Paris on Ponce building owned by Cartel Properties, Greene said. Other properties include Chipotle and the strip shopping center where MJQ Concourse and The Bookhouse Pub are located. The addresses are 710, 712, 718 and 738 (also known as 736) Ponce de Leon Ave.
The original proposed development on prime real estate at Ponce de Leon Avenue and Ponce Place adjacent to the busy Eastside Trail included two towers totaling 470,000 square feet of office space, more than 35,000 square feet of retail/restaurant space, and an apartment building with 354 units with underground parking.
But the real estate market has changed from more than a year ago when Portman worked with Virginia-Highland residents and the city to get zoning for the project approved, Greene said.
“The economy is very different today than it was when we started the rezoning,” he said. “High interest rates coupled with already high construction costs, low liquidity in the banking industry, and flattened rent grow, have simply changed the viability of new projects.”
Greene said it will take months to come up with revised plans that would likely include more emphasis on residential than office, but follow the zoning regulations the original project received for density caps and open space requirements.
Retail will still be part of the project as will a connection to the Eastside Trail. Upgrades for street and sidewalk improvements along Ponce Place are still planned.
“The building shapes may change just because they have to because we’re letting go of [one] side of the property, but all of the things we committed ourselves to and agreed on with the neighborhood — all that’s going to stay the same,” Greene said.
“So all that stays true,” he said. “It just will take a little longer to get to it.”
Greene said the decision to not buy all the properties was decided over time as it came time to close on purchasing the properties from the various property owners who own the stretch of Ponce de Leon Avenue across the street from the Ford Factory Lofts, the 725 Ponce office building and Kroger and steps away from Ponce City Market.
“We obviously knew there was an issue with the overall market and starting the projects and so we’re trying to figure out, ‘How do we keep the whole thing together?'” he said.
“Ultimately, we just came down to the conclusion that keeping the whole thing together is too risky for us, and we’d prefer to keep a lion’s share of it together by letting a part of it go,” he said. “We still definitely believe in the BeltLine, and we definitely believe in the Ponce area.”
Coming up with revised plans for the project could take months and construction is not expected to start for a couple years, Greene said.
Greene said building office towers for the project, known as Ponce & Ponce, is unknown at this time, but plans are to move ahead with apartments. The zoning allows for some non-residential to be converted to residential, he said.
“I don’t think anybody will be upset if there’s no office there,” he said. “I would love to do the office. I really would. But it’s almost impossible right now.”
MJQ Concourse co-owner Ryan Purcell announced the iconic dance club was relocating to Underground Atlanta next year because of the planned development. The Drunken Unicorn, a live event venue and part of MJQ Concourse, will remain open at the Ponce de Leon Avenue site until Portman is ready to move forward with its revised project, according to the Atlanta Business Chronicle.
The Bookhouse Pub, another Ponce de Leon Avenue institution, planned to close, but announced Aug. 26 on social media that it will remain open for two more years after Portman announced it was scaling back and slowing down its project.
Greene said he has also been in talks with Ryan Murphy, owner of The Bookhouse Pub, about Portman assisting in maintenance work to the building to ensure it can remain open until Portman is ready to break ground.
Greene said he was happy The Local and Vesta would be able to remain open at their homes.
“Those are two great businesses with great owners and we wish them the best for many years to come. We will do everything we can to be great neighbors and drive business to them,” he said.
This story has been updated with more information from Greene and an update from The Bookhouse Pub.