Local investors Dan O'Leary and John Aderhold, who lease the 40-year-old Underground Atlanta from the city, are screening over 20 applications from bars and restaurants clamoring for leased space in the district, brokers in a position to know tell GlobeSt.com. Only about 30,000 sf is left to lease.
The $25-per-sf asking rent at Underground Atlanta could double quickly, brokers estimate, easily surpassing the average quoted base rent of $40 per sf at most metro area malls. If the lessees can lease up the remaining space quickly, the deal would be satisfying to city taxpayers as well. City staffers confirm to GlobeSt.com the city paid $6 million last year to cover Underground's $80-million bond debt. The bonds were sold to cover the 1989 reconstruction of the district, brokers tell GlobeSt.com. Underground Atlanta, rediscovered from the Civil War era and redeveloped by the city and local entrepreneurs in the late 1960s and early 1970s, is located under existing retail, office and apartment buildings.
O'Leary, a former owner of the South DeKalb Mall, and Aderhold took over Underground Atlanta five years ago when Rouse Co. of Columbia, MD pulled out of the financially ailing project. Brokers tell GlobeSt.com O'Leary and Aderhold have a 50-year-lease with the city at an annual rent of $100,000. The investors also can lease the property for another 38 years if they choose to do so.
The city and the investors share any profits from Underground Atlanta. O'Leary and Aderhold get to keep the first $330,000 in profit; the city takes the next $400,000. The investors split any profits over $730,000 with the city. "But the take has never reached that level," says a broker intimate with the project's estimated revenue. "However, it could this year, if the lessees fill up Underground Atlanta and charge the maximum rent the project can bear.
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