Luring Costco to mall is tricky, Hartman Simons' Sandler says

Posted on May 29, 2008 17:06 by Andy Peters

An under-performing shopping mall in a decent location—in this case, North DeKalb Mall near Decatur—seems like it would be an easy fix, right? Just bring in a popular retailer, and the mall’s foot traffic and car traffic will rise instantly.

Costco But it’s not that easy. Just ask Hartman, Simons, Spielman & Wood partner Theodore J. “Ted” Sandler, who’s advising his client, Hendon Properties, on how to remake North DeKalb Mall. Hendon has been negotiating with Costco Wholesale Corp. for a considerable period of time about opening a store at North DeKalb Mall. A thicket of legal and business issues have prevented the two sides so far from inking a deal, although Hendon is still trying.

One matter deals with the mall’s unusual zoning situation. The vast majority of the property, which is located in unincorporated DeKalb County, is zoned for commercial development, Sandler said. But a section is zoned neighborhood-commercial. Costco wants to be able to sell gasoline at North DeKalb Mall, and it wants at least part of its building to be located in the area zoned neighborhood-commercial. Gasoline sales are forbidden on property zoned neighborhood-commercial.

“We’re just trying to correct that zoning category,” Sandler said. “That’s the main motivating factor at this time.”Ted Sandler

Another issue deals with how extensively Hendon will re-design the mall. One option would entail “de-malling the mall and looking at a complete reconsideration of how the property operates,” Sandler said.

The second option would come into play if Hendon is unable to reach an agreement with Macy’s Inc. about acquiring its building at the mall, where it still operates a store. If Macy’s won’t sell, Hendon will pursue a scaled-back redevelopment of North DeKalb Mall, Sandler said.

Sandler said he’s not aware of any nearby neighborhood association having hired legal counsel to negotiate with Hendon.

Other legal issues are less challenging, such as variance issues dealing with setback requirements within the mall’s property.

Also, some nearby wetlands are not an issue in Hendon’s current plans. An earlier version of the mall’s redevelopment called for a larger footprint which would have encroached on the wetlands. But since then, the plans have been scaled back, Sandler said.

Hendon CEO Charlie Hendon wants to be sensitive to the needs of the surrounding residential neighborhoods, Sandler said.

“Charlie is very understanding of the neighborhoods’ concerns,” Sandler said. “Whatever we do here, the neighborhood will have a voice in how this goes forward.”


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Janet ConleyThe Deal Watch Blog is devoted to bringing you the latest news in business law in Atlanta, the Southeast and the U.S. The lead writer is Daily Report associate editor Janet L. Conley.

Janet L. Conley is an attorney who returned to journalism after practicing law with Akin, Gump, Strauss, Hauer & Feld in Washington and with the Georgia Legal Services Program in Atlanta.

During her tenure at the Daily Report, Janet, now the paper's associate editor, has covered law firm economics and management, business and federal courts. In 2007, she received the Georgia Associated Press Story of the Year award and the Atlanta Press Club’s Journalist of the Year award, both for small circulation newspapers, for "Green to Gold," a series of articles on how climate change will alter business and the law.

Janet has written for The American Lawyer magazine and the National Law Journal, among other publications. She also served as managing editor of GC South magazine.

Janet holds a journalism degree from Southern College and a juris doctor degree from the University of Pennsylvania. She lives in Decatur with her husband Mark Harper, also an attorney, and their three children.

She can be reached at jconley@alm.com.

Andy PetersThe contributing writer is Daily Report staff reporter Andy Peters.

Andy Peters has been a journalist since graduating from Furman University in 1992. A short list of the subjects he’s covered includes the Georgia state Legislature, the U.S. semiconductor industry, the Alabama-Florida-Georgia “water wars” litigation, the 1999 American Airlines pilots strike, Coca-Cola and PepsiCo’s battle to acquire the Gatorade sports-drink brand, indie rock music and high school football. Andy has written for Bloomberg News, the New York Times Web site, the Macon Telegraph, the Spartanburg (S.C.) Herald-Journal and the Atlanta Business Chronicle.

Andy has written the Deal Watch column for the Daily Report since March 2006. He was born in Chattanooga, Tenn. in 1971 and grew up in Ringgold, Ga. He lives in Decatur with his wife and two children.

He can be reached at apeters@alm.com.

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