Blog: City Blog

Downtown Continues to Grow: $180 Million in New Investment

A crane marks the spot where one of the biggest private construction projects in the history of downtown Knoxville began last fall. Dover Signature Properties and Bristol Development Group are transforming the vacant state Supreme Court city block into a 237-unit apartment community and hotel. The mixed-use project is a $76 million private investment.

Despite the pandemic, work cranes dot the downtown Knoxville landscape, lifting and toting.

More than $180 million is being privately invested in condominiums, apartments, restaurants, offices and hotel renovations.

Anticipate another 1,000 new residents to be living in or near downtown by next summer.

Tim Hill, co-owner of Hatcher-Hill Properties, which is managing two current construction projects, summed it up this way: “We’re very bullish about downtown. We’re not looking at short-term development – we’re looking at 20 to 50 years. So if there’s a little blip in the economy, that’s OK, we’ll continue on about our business.”

Deputy to the Mayor Stephanie Welch, the City’s Chief Economic and Community Development Officer, noted that several of the projects have been assisted with City tax incentives, and one has received Commercial Façade Improvement Program funding. But some projects are entirely privately financed.

“Development projects face different sets of circumstances,” Welch says. “Some, like the mixed-use development under construction at the former state Supreme Court site, are so challenging, it’s almost impossible to envision them happening without some help from the City to close the financing gap and make these projects viable.

“It’s affirming to see owners choosing to invest in downtown, even during a tough short-term economic period. In the end, their willingness to assume risk plus some strategic City supplemental assistance will lead to new jobs and an expanded tax base for the City.”

Under construction: Here is a short update on nine projects going vertical or getting a makeover in or near downtown Knoxville.

The Overlook
608 W. Hill Ave.

This is a sleek six-story 10-unit condominium building with commanding views of the Tennessee River and Henley Bridge.

Developed by husband-and-wife architects Joshua and Jessica Wright, The Overlook exemplifies creative quality infill as well as the concept of a "vertical neighborhood" in a quiet corner of downtown. The site had been a gravel parking lot, and the Overlook is nestled comfortably beside the Historic Riverhouse, walkable to the University of Tennessee, the busier parts of downtown or the waterfront.

The Overlook, 608 W. Hill Ave.

The Overlook, with condo sales so far totaling $6.2 million, is scheduled to open later this year. This greenfield project is completely privately financed.

Joshua Wright describes a "front porch" experience at The Overlook, "a layering of public and private space," where people can get to know their neighbors.

"We fell in love with the city when we were at UT," Wright says. "We are excited to be a part of this time in Knoxville when the city is rebuilding itself.

"Developments downtown have a long lasting impact on the community, and we take that seriously. That is why we build with institutional quality materials that can be a part of the city indefinitely. Quality urban infill has always been our passion."

State Supreme Court site
Bounded by Henley Street, Cumberland Avenue, Locust Street and Church Avenue

Twice before, different development teams tried unsuccessfully to make the numbers work for a revival of this long-dormant city block. They couldn't make it financially viable.

Last year, Dover Signature Properties and Bristol Development Group teamed up to launch a $76 million project, believed to be one of the largest private construction project in downtown history. Their concept includes a 237-unit apartment community (to be named Church & Henley) with a pool, a fitness studio and outdoor kitchens, garage parking, 62 units of short-term rental apartments with a rooftop deck, and some retail, such as a coffee shop on Henley Street.

The 65-year-old former Tennessee Supreme Court building, with its iconic East Tennessee marble and mid-century modern style points, is being preserved. (That's a strength of redeveloper Rick Dover, who is credited with pulling off several near-impossible rejuvenations of neglected historic buildings in Knoxville - the Farragut Hotel, Historic Knoxville High, Oakwood School and South High.)

The old court facility and state office space is the part of the property that will house the short-term rentals; it will be branded as The Courthouse.

Why do the dauntingly big restoration projects downtown?

"That's where most of the historic buildings are, plus there is a high concentration of people, entertainment, food, etc.," Dover says matter-of-factly. "It allows you to build something that is lasting, smart and sustainable."

To make the redevelopment financially viable, the City negotiated a 25-year Payment in Lieu of Taxes (PILOT) agreement.

Taxes will be frozen at a property valuation of $2.6 million, roughly the amount that Dover/Bristol paid the City for the property. But the site - completely vacant for 15 years and government-owned for decades - had been generating zero tax revenues. And when the PILOT expires, the property will generate about $1 million a year in taxes.

Construction is ahead of schedule and is anticipated to be completed by early 2022.

Crews are building the foundation for the new apartment complex on the former parking lot next to the Supreme Court building.

125 E. Jackson Ave.
The Old City

Hatcher-Hill Properties is investing more than $3.5 million to overhaul the buildings that formerly housed the NV and Bowery nightclubs.

The buildings are large, and so is their potential. Co-owner Tim Hill says his company this summer began converting the 19,000 square feet into two restaurants and two office suites. In addition, the property features a courtyard / entertainment patio.

The City contributed $125,000 in Commercial Facade Improvement Program funding to support the top-to-bottom renovation project.

Rendering of what 125 E. Jackson will look like about a year from now.

Work has started at 125 E. Jackson.

Renovation work has just begun and is in an early stage at 125 E. Jackson.

Work has started at 125 E. Jackson.

Stockyard Lofts
215 Willow Ave., the Old City

This month, the six-story 152-apartment building has started going vertical from its foundation, located next to the Crozier, behind Central Street and Jackson Avenue retailers and restaurants, and just off Summit Hill Drive.

Being built by Leigh Burch of Terminus Real Estate and Daniel Smith of Legacy Capital, Stockyard Lofts will also feature 5,000 square feet of street-level retail space when it opens in about a year.

Stockyard Lofts is going vertical in the middle of the Old City.

Stockyard Lofts is going vertical in the middle of the Old City.

The project is being assisted with a 12-year PILOT, and it's a good case study of how a PILOT works.

Right now, the property is valued at $1.9 million. Once Stockyard Lofts is constructed, its estimated value will grow to $28.4 million.

During the timeframe of the PILOT, the owners are paying $37,600 a year in City and Knox County taxes. But when the PILOT expires in nine years, tax collections will increase 15-fold to more than $570,000 a year.

Hyatt Place rooftop bar
530 S. Gay St.

Before he was wrangling with the vacant state Supreme Court site or the dilapidated South High Building in South Knoxville, Rick Dover had given a new life to the stately but long-dormant Farragut Hotel, a downtown anchor, covering an entire city block.

Twenty months of painstaking restoration and $25 million in private investment later, the Hyatt Place opened at the end of 2017.

Hyatt Place, formerly the Farragut Hotel, 530 S. Gay St.

Hyatt Place, formerly the Farragut Hotel, 530 S. Gay St.

Not one to rest on his laurels, Dover is currently building a $3 million 6,000-square-foot interior/exterior open-year-round rooftop bar and deck atop the Hyatt Place.

He anticipates it being open this fall.

Dover wasn't the first suitor to approach the City and try to reopen the Farragut Hotel. Like Dover and his team, others were offered historic tax credits, PILOT deals and whatever other tools the City could wield. Dover was the only one who took the financial leap - and he made it work.

The pre-redevelopment property was appraised at $3.6 million. The building's valuation is now estimated to be $18.4 million. City and County tax revenues will grow five-fold once the 25-year PILOT expires.

City House Town Homes
535 Vine Ave.

City House, 535 Vine Ave.

Another Hatcher-Hill development, these seven rowhouse condos command stunning views from the highest point in downtown. Each unit is 3,000 square feet with a 500-square-foot rooftop deck.

Hill said the development team invested more than $5.5 million to build City House, which is nearing completion. One unit has been sold and another is under contract. The project was entirely privately financed.

Holiday Inn World's Fair Park / Hilton
Western end of downtown

Look for major investments to change the look and feel of two downtown anchor hotels, which both directly service the Convention Center crowds.

The Knoxville News Sentinel reported this spring that Rockbridge Capital has bought the downtown Hilton and will invest $24 million to renovate the 320 rooms, lobby, restaurants and exterior. Rockbridge, the paper reported, also had purchased the Holiday Inn World's Fair Park and is planning a $20 million upgrade to the 286-room hotel, which will become a Marriott brand.

Holiday Inn, World's Fair Park

City South
Sevier Avenue at Davenport Road

Just across the river and 6/10 of a mile from downtown proper, Dominion Development Group is building the $14 million City South mixed-use project: 117 residential units and 3,500 square feet of ground-level retail space.

Dawn Michelle Foster, the City's point person on South Waterfront projects, has called City South "the latest private-public partnership in the South Waterfront Redevelopment District." The City next year will be starting the Sevier Avenue Streetscape Project, and Foster frequently touts what she calls the "Main Street vibe along Sevier Avenue."

Construction is moving quickly on City South; here's what it looked like last week.

Construction is moving quickly on City South; here's what it looked like last week.

Posted by evreeland On 26 August, 2020 at 9:34 AM