Warehouse Row on the block

Warehouse Row on the block

Owners put Warehouse Row complex up for sale after a $34 million investment

August 2nd, 2015 by Mike Pare in Business Around the Region
“Chattanooga is a town firing on all cylinders.”
Michael Phillips, Jamestown president

Warehouse Row, the office and retail complex whose comeback has helped propel Chattanooga's ongoing downtown revival, is up for sale.

After nearly a decade of ownership by Atlanta- and New York-based Jamestown Properties, during which it plowed more than $20 million into what is one of downtown's biggest mixed-use centers, the Row is on the block.

Michael Phillips, Jamestown's president, said the Market Street property is part of a fund of 28 assets that the investment and management company owns, and the time has come to sell.

Timeline

1989 Downtown warehouses used through most of the 1900s repurposed into the $37 million retail and office complex called Warehouse Row.

1993 Warehouse Row owner Prime Group Inc. of Baltimore expands to Freight Depot building across Lindsay Street. However, Freight Depot is later sold off.

2006 Jamestown purchases Warehouse Row for $14 million.

2014 Jamestown woos hip national retailers Anthropologie and J.Crew to the downtown center.

2015 Owner puts the downtown center on the block.

Source: News archives

"The fund life was seven to 10 years," he said. "As much as we love it, it's part of the real estate business."

Phillips said no buyer is in mind, and it may take until the end of the year or early 2016 to finalize a sale. Jamestown isn't quoting an asking price for the 260,295-square-foot mix of boutiques, restaurants and offices.

When Jamestown paid $14 million in 2006 for the collection of refurbished warehouses, that date back to the early 1900s, the site was on the ropes.

While the five-story location had flourished for a time as a high-end outlet center, that business had largely faded even before the 2009-2010 recession hit.

"We bought a project that was 20 percent occupied," Phillips said. "We've filled up most of the office and retail."

He estimated the retail space is about 90 percent occupied today, and the office side is at about 80 percent.

Kim White, who heads the nonprofit downtown redevelopment group River City Co., said the central city has been "lucky" that Jamestown owned the center.

"They've put the right mix in, instead of the lowest common denominator," she said.

The Row has some of the best local retailers, White said, and it has wooed national merchants back to downtown Chattanooga.

"They've created a lot more walking traffic for others," she said.

Two national retailers, Anthropologie and J.Crew, within the past year opened stores in Warehouse Row in what Phillips termed a "defining moment" for downtown's continued renaissance.

The entry of the two retailers, along with just-named yoga apparel expert Lululemon Athletica, helped reverse an exodus of household names such as Sears, JCPenney and Woolworth from the city's core.

"The fact that the [national retailers] came here instead of at the mall says a lot," White said.

That said, Hamilton Place mall, one of the state's largest, and its nearby stores are estimated to draw 2 million people annually, according to owner CBL & Associates Properties Inc.

Chattanooga-based CBL estimated three years ago on the 25th anniversary of the mall that the shopping center and the company's adjacent retail footprint produce sales of about $420 million annually. That amounts to sales taxes of about $40 million a year, according to CBL.

Cayci Perry, manager for the Embellish shoe and accessory store at Warehouse Row, said she's pleased with its location in the center and how the property has filled up.

"The more activity, the better," she said.

Over the past decade or so, downtown has continued to grow new retail space and housing units, ranging from condominiums and a Publix supermarket on the North Shore to an array of Southside residences and eateries in addition to Warehouse Row.

New apartments have received the attention of a number of developers recently, with upwards of 2,000 residential units potentially going up within the next couple of years.

 

About Jamestown

Formed in 1983 as an investment and management company focusing on income-producing real estate in the United States. It has $8.3 billion of assets under management and employs more than 230 people.

Source: Jamestown

Perry said the new housing downtown is a positive.

"New apartments are a great thing for the city as a whole," she said.

Paul Gaither, of the real estate firm CBRE, said the Row represents "a significant investment opportunity" with downtown holding daytime workers, major employers, college students and tourists.

"It's an architecturally distinct asset with tremendous long-term potential," he said.

Phillips said Jamestown potentially could stay involved with Warehouse Row as a property manager.

"We're excited to see who the next stewards will be," he said. "Warehouse Row is one of my favorite projects."

Phillips said Chattanooga is a city that's "firing on all cylinders," citing its ultra-fast Internet, efforts attracting young high-tech entrepreneurs and companies, industry such as automaker Volkswagen, and outside recreational activities.

"It's Asheville without the patchouli," he said. Chattanooga is "sort of a hybrid, " Phillips said, an urban center that's also walkable.

"It has a great historic fabric in its building architecture, which is rare," Phillips said.

The Jamestown president said Warehouse Row has emerged as retailing has evolved, offering brands and boutiques in a street-retail culture and an alternative to the suburban mall.

"There's room for both," he said. "It's a matter of creating choice."

Such activity adds dimension to communities and nourishes neighborhoods, Phillips said.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

 

Gallery: Warehouse Row on the block

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Updated August 3, 2015, to correct a quote from Michael Phillips.