Key building block in downtown Chattanooga's rebirth sold

Key building block in downtown Chattanooga's rebirth sold

December 7th, 2012 by Mike Pare in Business Around the Region

Autumn colors highlight the Riverset Apartments, located along Riverfront Parkway in downtown Chattanooga.

Photo by John Rawlston/Times Free Press.

A downtown Chattanooga apartment building that helped kick-start the central city's renaissance has been sold.

The Riverset Apartments at 2 Market St. near the Tennessee Aquarium was bought by Brookside Properties of Nashville, said Kim White, chief executive of River City Co., which was the seller.

"It was the first new multifamily housing built [downtown] in 20 years," said White, who heads the nonprofit downtown redevelopment group, about the apartment building that was completed in 1994.

White declined to reveal the purchase price of the 41-unit apartment building, but said the buyer took a $4 million loan in the deal.

She said River City is using the money raised from the sale to redeploy to other projects, such as former Bijou Theater nearby at Second and Broad streets.

River City is plowing $1.6 million in the $4 million redevelopment of the Bijou that will house new retail space and a 55-foot-high climbing wall attached to the outside of the six-level building's parking garage.

White said the Riverset's buyers plan to keep the building as apartments.

Ken Hays, a principal in the Chattanooga development firm Kinsey Probasco Hays and a former River City CEO, recalled that the Riverset Apartments was novel at the time and a key to downtown's rebirth.

"It was to show that people wanted to live back downtown," he said. "It leased up in record time."

Marcus Lyons, a multifamily broker with the Lyons Group, said the apartment market is taking off in Chattanooga as new investors come into the city.

He said that many existing apartment complexes were held by owners for a long time and rents tended to remain flat. New investors are coming into the market, renovating the properties and moving up rents, Lyons said.

Over the past two decades, the city's core has seen an array of new development, including the construction of condominiums.

But White said more work needs to be done, especially in spurring the new apartments in the central city.

A group led by Chattanooga developer John Clark is building Walnut Commons, an $11 million project that will erect 100 new apartments at Walnut Street and Aquarium Way.

In addition, John Wise, another local developer, has built new apartments on the North Shore and has more planned in Chattanooga's Southside.