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A TOUCH OF CLASS

Thor Equities brings elegance, new stores to 1970s Atlanta-area mall

BY JILL MAUNDER

Thor Equities seems to have a knack for finding overlooked opportunities in the inner city. This time it has done so outside a city, in the Atlanta suburb of Decatur, where the firm is halfway through refurbishing a mall in a market encompassing the second most affluent enclave of black Americans in the United States.

The 257,000 Decatur residents living within a five-mile radius of The Gallery at South DeKalb (formerly South DeKalb Mall) report average household income of $55,000 a year. So shortly after buying the mall last year, Thor set about making the place more appealing. The 30-year-old tile floor was replaced with gleaming, light-colored marble — a signature amenity of the firm’s Gallery brand of shopping centers.

“It was very dark and dingy,” said Joseph J. Sitt, founder and president of New York City-based Thor. “Now the place sparkles. We’ve gone very upscale in our decor — high-end Italian marble and granite. It’s what you’d see in any upscale development.”

The retail mix is getting revamped too, with a combination of national and local tenants.

The 1970-vintage mall’s consumer appeal and tenant roster both began to sag over the past decade, as other retail developments sprang up around Decatur, a suburb just 12 miles east of Atlanta. (The downtown is an eight-minute drive away.) The mall also wound up relatively far from the new communities living in their mini-mansions.

“It was a project that needed … tender loving care,” said Sitt, who once bought retail chains as well as real estate after encountering retailer reluctance to venture into inner cities.

In the past two years, Thor has accumulated some 5.5 million square feet of retail space in Chicago, New York City: Norfolk, Va.; and Philadelphia, with a view to revitalizing it. The Gallery is actually Thor’s second holding in the Atlanta market; the firm also owns a small retail building downtown.

The Gallery’s retailers applaud Thor’s progress. “They brought in a breath of fresh air,” said Byran Edwards, owner of The Home Team, an apparel store. He credits Thor with replacing the air-conditioning system for the common area and with establishing new tenant rules, such as the one prohibiting the freestanding fixtures formerly allowed alongside kiosks. In Edwards’ view, Thor also improved the center’s security and cleaning services.

“They have come in and laid down the business law and said, ‘We’re going to run this right,’ ” he said.

Ron Zaken, owner of Unica, a women’s and children’s designer apparel store; and USA Boutique, a men’s clothing store, expanded his metro-area reach by opening two stores at the Gallery: a second USA Boutique and a third Unica. (The other two Unica stores are in Baltimore and Philadelphia.) Thor “did some real work,” he said, noting that the former interior “was pretty boring. It looks much better, and the flooring really brought it up a notch.”

Robin Bennett, a DeKalb Convention and Visitors Bureau spokeswoman, also has praise for Thor. “They’re making strides to being much more attuned to this very affluent area,” she said.

The firm initially said it would spend $15 million to upgrade the 60-acre property. The enclosed mall measures 609,269 square feet. This includes Anchor Rich’s-Macy’s, which spans 176,000 square feet, and the former J.C. Penney space, which measures 167,348 square feet. But Sitt now says he will spend more than $30 million in the hope of landing a second anchor to join Rich’s. Negotiations are under way with two prospects, which he declined to name.

Thor acquired the property from Simon Property Group, O’Leary Partners and an affiliate of Nomura Asset Capital Corp. in March 2003. Sitt declined to disclose the price, but The Atlanta Journal-Constitution put it at $26.7 million. At the time, occupancy was only at about 82 percent, with many stores and kiosks leased to independent local merchants. Thor continues to value them. “It’s a community mall,” said Sitt. “Everybody takes personal ownership of it. If the floor is dirty, we get complaints. It’s their neighborhood, their Main Street.”

In this vein, the Gallery functions as a center for arts festivals, book signings, Sunday concerts and other community activities. More than 130 events were booked this year, says Tene Harris, the center’s retail operations manager.

But Thor also set out to attract more national names. New tenants include Anna’s Linens, a Costa Mesa, Calif.-based chain of 148 stores; hat retailer Lids; and DTLR (formerly Downtown Locker Room), a Baltimore-based 35-store apparel and footwear chain.

Occupancy now approaches 95 percent, Sitt says, and sales per square foot, which were about $350 upon Thor’s takeover, are rising. He predicts they’ll be up about 15 to 20 percent by year-end.

Sitt says tenants were hesitant at first about having a new landlord, but adds that he thinks most of them are now “tremendously happy.” Some tenants were asked to relocate within the mall, but Sitt says he believes that any early inconveniences have paid off. And he is pleased that Thor’s interior changes spurred half the tenants to update their own facades.

Sitt has unusual insight into the retailer’s point of view because, in addition to buying and improving real estate, he has owned stores himself. In fact, he first visited this mall because his Ashley Stewart store was — and still is — a tenant. Created in 1991 and expanded on Sitt’s watch to 380 stores, Ashley Stewart targets stylish, plus-size black women.

One retailer who says she’s grateful to Thor is Fanta Mutota, co-owner of The Oasis bookstore and four specialty-leasing businesses. After book chain B. Dalton left the mall three years ago, she had wanted to convert her book kiosk into a store, but wasn’t allowed to.

“As soon as Thor Equities bought it, they gave us our own bookstore,” Mutota said. “They got here in March, the space was under construction in April, and the Oasis opened in May. They were very cooperative in giving the community what the community wanted: a bookstore.”

This fall tenants and shoppers will have to look upward rather than underfoot to see the next phase of improvements: a new roof and 30 skylights.