EDGE Selling the Scenic City: Inside Chattanooga's $2.6 billion real estate market

EDGE Selling the Scenic City: Inside Chattanooga's $2.6 billion real estate market

August 1st, 2017 by Mike Pare in EDGE

Contributed photo by Beacon Imagery

Photo by Contributed Photo /Times Free Press.

Gallery: Selling the Scenic City

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“There's a lot of room for growth. There's a lot more bandwidth in Chattanooga.”
real estate broker David DeVaney on outside investment in the city

The phone is ringing off the hook.

That's the early response to the pre-leasing of a new apartment complex in Hixson developed by Integra Land Co. of Lake Mary, Florida, says Duane Horton, who's overseeing the development plan for a 190-acre tract off Highway 153 known as Hillocks Farm.

The 280-apartment piece of the Hillocks Farm mixed-use development is the latest in a string of commercial housing projects started by builders headquartered outside of Chattanooga in recent years. The Scenic City is increasingly seen by outsiders as an attractive place to invest, experts and developers say, with more than $300 million plowed into projects over the past 36 months alone.

In the past year, out-of-town investment companies also spent more than $250 million buying apartment complexes across Hamilton County.

Aaron White, a principal of the Nashville-based development firm Evergreen Real Estate, says Chattanooga is one of its favorite cities in which to do business right now.

"The pricing has gone up but compared to Nashville, it's somewhat more reasonable and affordable, but it's not cheap," he says.

Evergreen, along with Chattanooga developer Eugene "Buck" Schimpf, is raising Cameron Harbor, the sprawling residential and commercial project going up off Riverfront Parkway downtown. It's estimated that up to $200 million in new development could make up Cameron Harbor before it's all built out.

White says he likes the layout and beauty of downtown Chattanooga, particularly from the North Shore to the central business district.

"It's certainly one of the most unique and beautiful places in Tennessee and the Southeast," he says.

That allure, combined with Chattanooga's job growth and urban, walkable central city, "paints an attractive development picture for us," White says.

David DeVaney, president of the commercial real estate firm NAI Charter Real Estate Corp., says Chattanooga has become a "a great place" to work and live.

With the Gig — EPB's high-speed Internet service — along with the Innovation District and the Chattanooga area's outdoor amenities, the city has a lot of appeal, especially to younger people, he says.

DeVaney, too, cites the lower cost of doing business in Chattanooga than in some other cities.

"Property is so expensive in Nashville, Charlotte and Atlanta," he says. "Compare that to on the high side of Chattanooga, it's appealing to developers."

The real estate broker says he sees the trend continuing.

"There's a lot of room for growth," he says. "There's a lot more bandwidth in Chattanooga."

Kim White, who heads the downtown nonprofit redevelopment group River City Co., says Chattanooga is seeing a lot of accolades at the national level and that's attracting interest from people outside of the city.

In addition to its Gig City reputation, Chattanooga claimed Outside magazine's 2015 Best Town Ever award. Cities needed to have access to trails and public lands and thriving restaurants and neighborhoods to make that competition.

"Wages are increasing, especially downtown," White says. "More people are moving here. When rents get to this point, developers feel this is a good investment."

She also mentions what's happening in some other larger markets, which she says are "saturated."

"Here you can make a lot of inroads," White says.

She believes that more is coming to Chattanooga, adding that her office has meetings with developers and others about additional central city projects.

"Look at all the surface parking lots and how much can be done," she says. "I don't see it slowing right now."

The Atlanta-based The Simpson Organization is building a $30 million, 125-unit apartment complex on the 700 block of Market Street, next to the adjacent SunTrust Bank Building, which the also company owns.

Last year, The Simpson Organization paid $36.9 million for Warehouse Row, the retail-office project just a few blocks south on Market.

"We've watched the evolution of Chattanooga and its renaissance, particularly as an urban area," says Boyd Simpson, who heads the company. "We like the dynamics of downtown Chattanooga."

Horton, a Chattanooga builder and developer, too, says that the city is benefitting from the attraction of a lot of national attention. Integra ended up as the best fit at Hillocks Farm for the apartments, he says. The garden-style apartments on 20 acres on the north part of the parcel is approaching $40 million in work alone, according to Horton.

Horton says he's continuing to work other components of the plan for the tract. In all, the tract can hold up to 500,000 square feet of retail — about two-thirds the size of Northgate Mall — and another 250,000 square feet of corporate offices.


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