Gambling on Underground
Turnaround artist faces biggest test
Renee Degross and Walter Woods - Staff

It's been nearly eight years since Dan O'Leary chucked a steady salary and a corner office high over Buckhead to risk his future on a failing mall, and later Underground Atlanta.

His peers thought he was crazy.

Today, such deals are O'Leary's calling card in the real estate world. He sees opportunities in developments others would run from.

"When someone says it can't be done, it motivates me to prove them wrong," he says.

Back in 1996, O'Leary abandoned his comfortable, clubby world of leasing suburban shopping centers and risked everything to be his own boss.

He decided to tackle despairing turnaround ventures, first buying Decatur's South DeKalb Mall, which lacked both foot traffic and sales.

Three years later, he stitched together a deal with the city of Atlanta to become manager at Underground, the sputtering downtown entertainment complex.

The first risk paid off. O'Leary revived South DeKalb Mall, and his company, O'Leary Partners, sold it for a tidy profit last year.

Underground remains a dicier proposition. For O'Leary, its success or failure could determine if he becomes known as a turnaround artist extraordinaire or a hopeless optimist whose reach exceeds his grasp.

O'Leary and his partner in the Underground venture, local real estate veteran John Aderhold, have millions of dollars, their good names and their chances at other projects at stake.

They have invested more than $600,000 in repairs, renovations and a security camera system. They pay $100,000 a year in rent and share profits with the city.

O'Leary's latest batch of big ideas for Underground is an ambitious but disparate mix.

He wants to lure nightclubs and bars to the Kenny's Alley entertainment area with the offer of wee-hours closing times; he talks of landing an interactive NASCAR attraction; and he hopes for state approval of gambling at the complex.

Whether any of these plans will pan out remains unclear, and other recent events have worked to Underground's disadvantage.

The holiday Great Tree, an Atlanta institution, relocated four years ago to Rich's-Macy's at Lenox Square mall in Buckhead. The World of Coca-Cola will leave in 2006 for a new spot near the Georgia Aquarium in the increasingly popular Centennial Olympic Park area, several blocks north of Underground.

A plan to build two 10-story residential units above part of Underground on Upper Alabama Street fell victim to a soft rental market and structural issues.

Critics have long complained that Underground lacks a clear identity --- and they still do.

"They have to decide what Underground is," says Ken Bernhardt, a marketing professor at Georgia State University. "They've toyed with a jewelry district, a family-oriented attraction, late night, and each has a different requirements and a different retail mix."

O'Leary and his partner claim some successes. They say occupancy is 72 percent, up from 46 percent in 1999. Sales last year were $32.3 million, up from $25.8 million in 1999.

"Underground still has challenges," says Aderhold. "But O'Leary is carrying on in fine fashion and not getting worn down, which would be easy to do. ... He keeps getting up and moving ahead."

Aderhold, 77, was a prime mover in construction of the Georgia Dome and is an equal financial partner in Underground. He makes key decisions with O'Leary but has spent a majority of his time on the loft apartments project and, more recently, lobbying NASCAR for rights to an attraction.

The two met during O'Leary's 1999 Underground negotiations with the city, which at the time needed a management firm to replace the departed Rouse Co. Aderhold's deep city connections and O'Leary's retail background won them the job.

Life-altering accident

O'Leary, a youthful and lean 41, grew up in New Jersey and Orlando, but his family moved to metro Atlanta when he was a teen. He graduated from Stone Mountain High School and got a business degree in finance from Georgia State University.

A defining moment in his early life was a near-death experience while training with the Marine Corps during college. He was in a canvas-covered troop carrier at Quantico, Va., when it flipped and tumbled into ravine on a hot summer day in 1983.

Soldiers pulled an unconscious O'Leary from the flaming wreck, then tried to stop the bleeding from a head wound by wrapping a shoelace around it. Drifting in and out of consciousness, O'Leary knew his condition was grave when he was airlifted to Bethesda Naval Hospital and other injured soldiers stayed behind.

The most frightening moment came as he lay on his stomach staring at a pool of blood from his head wound. A cleric asked his religion.

By answering, "I felt like I just told [the cleric] I was dying," he says.

O'Leary's head wound and other injuries healed with the help of 75 stitches. But an inner ear injury ended his his aspirations of becoming a Marine pilot. He re-entered the civilian world without a career direction.

The experience still affects his outlook, he says.

"Business can be such a scary thing. One day you're on top of the world, and the next day you're finished."

Back home in Stone Mountain, his father, who worked in commercial real estate, encouraged him to get into the field when he finished college.

O'Leary bought his first piece of real estate along Memorial Drive in Stone Mountain.

He worked for Carter & Associates and then Koll Management, where he had a plum Buckhead office, before deciding to step out on his own. He formed O'Leary Partners when he acquired South DeKalb Mall, where he filled vacant spaces and lured new retailers. That helped him sell the mall to its current owner, Thor Equities.

O'Leary Partners also is Underground's management firm, with about 150 employees including contract workers who oversee housekeeping and security. O'Leary's father, Ed, handles Underground's leasing efforts.

Suburban roots

Still a suburbanite, O'Leary lives in Alpharetta with his wife and two children. He works out of a well-appointed loft office atop one of the stores overlooking Underground and Peachtree Street. He spends his days talking up Underground at various local business meetings, and he knows a lot of Underground's tenants by name.

As a deal-maker, O'Leary is low-key and self-effacing, without the aggressiveness of many career sales pros. He relies on sunny, glass-half-full optimism as his main pitch.

Even so, O'Leary admits the complex suffers from mixed perceptions --- especially among Atlantans.

"Within metro Atlanta, we have a very bad reputation," O'Leary says. "Outside of metro Atlanta, we have a very good reputation."

The Atlanta Convention and Visitors Bureau ranks Underground as the No. 1 tourist destination, with 6 million visitors in 2002.

"When we talk to convention-goers, they say, 'Give us something to do at night,' " says Spurgeon Richardson, president of the bureau.

He thinks O'Leary is on the right track.

"The future of Underground lies as an entertainment center with a variety of offerings," Richardson says.

O'Leary says he has long envisioned entertainment as Underground's top draw. At one time he pondered a glass enclosure over Kenny's Alley. Underground's lower-level bar district is now home to Hooters, a Jamaican restaurant, Blues In the Alley and Frost Bite bar. Several spaces are empty.

As retailers such as Gap and Victoria's Secret left Underground, O'Leary Partners worked to attract restaurants and bars, with mixed success.

The latest idea --- luring nightclubs and bars from Midtown and Buckhead --- came from a friend at City Hall.

City Councilman H. Lamar Willis last summer helped O'Leary secure the rights to allow patrons to walk the complex with open containers.

This fall, as other city lawmakers moved to close city taverns 90 minutes earlier in response to disturbances in Buckhead, Willis had an idea: exempt Underground from the early closing hours, letting its clubs pour until 4 a.m.

The City Council approved the idea in December.

Ghost of the '70s?

Willis and O'Leary claimed quick success in selling the new hours to club owners with proven track records. Several bars, from Mako's in Buckhead Village to Smith's Olde Bar in Midtown, are thinking of joining a revived Underground, according to O'Leary.

O'Leary says he's carefully screening bar and club owners to be sure there's no overlap of concepts. He also says there will be no strip clubs and that after 10 p.m., patrons will pay a small cover charge and must be 21 years of age to enter the complex.

"Their energy and positive attitude made us change our minds and go back downtown," says Dean Riopelle, an owner of Masquerade, a 14-year-old Midtown concert hall that features alternative music.

But creating a late-night bar district may do little to quell suburban uneasiness with Underground. Indeed, it could revive the ghost of the late '70s, when Underground became associated with little more than booze, drugs and crime. Underground shut down for several years until it was rebuilt and reopened in 1989 under management of Rouse Co.

Cognizant of that history, the City Council has formed a task force to devise security and traffic plans.

O'Leary believes the complex can have a vibrant late-night bar scene without being dragged down again. He plans to use part of the cover charge to add security, in addition to the 32 cameras already in place.

"Is that overkill?" he says. "Absolutely, but we're serious about security."

O'Leary's other tenants, including the food court and other restaurants, need a daytime attraction to compete with the Georgia Aquarium and to replace the World of Coke when it decamps to a spot near the new fish tank. O'Leary counts on an interactive NASCAR shrine to replace the World of Coke.

He envisions a NASCAR attraction featuring an interactive driving experiences, a 3-D movie, an arcade full of motorsports games and guest appearances by teams and drivers. The attraction would also have a store with NASCAR merchandise and a restaurant.

"The NASCAR attraction will bring in more traffic over time than the aquarium. It will be every bit as strong," O'Leary says.

O'Leary says he has spoken to NASCAR officials about the idea, adding they are supportive. But serious talks are on hold until he gains control of the World of Coke site, a task requiring a separate series of delicate negotiations.

Gambling a long shot

Probably the longest shot in O'Leary's bag of ideas for Underground is gambling.

State Rep. Kathy Ashe (D-Atlanta) introduced a bill in this year's General Assembly that would bring pari-mutuel and casino gambling to Underground. Some city and county officials want gambling at Underground, too, and the Atlanta Convention and Visitors Bureau is open to the idea.

But the bill has had little traction this session and could to take years to pass, if ever. But O'Leary, eternally hopeful, has dreams of a Las Vegas-style hotel one day rising above Upper Alabama Street.

Meanwhile, the development of the Centennial Olympic Park area is creating a strong competitor for downtown visitors. Large crowds tour the adjacent CNN studios, stroll through the 8-year-old park and visit the Imagine It children's museum. Sports events at Philips Arena and the Georgia Dome bring throngs that Underground merchants can only dream of.

The aquarium will add to the nucleus of draws to the park area, and the World of Coke will take 750,000 annual visitors with it to the burgeoning park.

Still, many believe that if Underground can re-establish itself as a premier downtown attraction, O'Leary is the one to pull it off.

"O'Leary has provided a lot of good leadership to Underground, and there have been difficult hurdles in the road," says Richardson, of the ACVB. "But he has done that with a smile on his face, and optimistically. He has a lot of good things going for him, and the best is yet to come."

Says O'Leary: "The day I walk around and people talk positively about Underground is the day I feel I will have reached the ultimate benchmark."