ABOUT THE BUILDING
The 16-story office tower at 701 Market St. was built in 1910. For many years, it housed Hamilton National Bank, which failed in 1976. At the time, it was the third biggest bank failure in U.S. history, according to news archives. First Tennessee acquired Hamilton National Bank’s assets in 1976.
The First Tennessee Bank Building, one of downtown Chattanooga’s tallest structures, is being sold, with much of the landmark office tower slated to become apartments in a $14 million project.
While the bank will stay at Seventh and Market streets, a Memphis developer plans to remake more than half of the building’s 16 floors into rental housing as the central city continues to see an array of new apartment space.
“We like Chattanooga,” said Will Yandell, president of buyer Heritage Land and Development, which is already redeveloping the nearby Maclellan Building into apartments. “We like the city life and have faith in it.”
The bank will have a long-term lease on the building’s first three floors and the basement, and office space is expected to take up another one or two stories, Yandell said.
He said 70 to 90 apartments are to go in the rest of the 130,000-square-foot building, which was raised in 1910 and had held Hamilton National Bank for many years.
Also, Yandell said his company is talking with the city and Chattanooga businesses about joining in the construction of new structured parking close to First Tennessee, though nothing is final.
Kim White, who heads the downtown redevelopment group River City Co., said much of the First Tennessee building is vacant office space. She cited a market study showing pent-up demand for more housing, including 2,300 apartment units.
“This project showcases how we can think differently about our downtown buildings,” White said, adding she’s excited about First Tennessee’s new take on the building as well as Heritage Land’s interest.
The latest project is one of more than a dozen such ventures under development or consideration by companies that would create upwards of 2,000 new residential units downtown within the next couple of years.
Keith Sanford, Chattanooga market president for First Tennessee, said the bank isn’t in the office business, noting it’s also selling its headquarters building in Memphis.
“When you’ve got to be the landlord, it isn’t banking,” he said.
Sanford, too, cited empty office space in the First Tennessee Building as well as in other structures downtown.
The First Tennessee Bank building is located between Market and Broad Streets in downtown Chattanooga.“This is a much better use of it,” he said. “Yet, the sale of the building will not change First Tennessee’s commitment, services or presence “
Sanford said latest figures continue to show First Tennessee as Chattanooga’s biggest bank.
Yandell said Heritage Land plans to seek tax incentives for the apartments from the city. The building will house a mix of one- and two-bedroom units and a few three-bedroom apartments, he said. Rent for the one-bedroom units is expected to range from $800 to $1,000 a month, the developer said. Plans are to close on the tower’s purchase early next year with construction starting shortly thereafter, he said.
In August, Heritage Land started converting the Maclellan Building at 721 Broad St. into mostly apartments in a $13.5 million project.
That 13-story structure, raised in the 1920s to house what is now insurer Unum Group, will hold 90 rental units. Most of that building had been empty for the past decade.
Nearly across Market Street from First Tennessee, an Atlanta group has bought a long-vacant parcel on the 700 block with plans to raise one of the biggest apartment buildings in the central city.
That 10-story tower will hold 125 apartments in addition to retail and office space in a project estimated at $25 million to $30 million, said Boyd Simpson, chief executive of The Simpson Organization.
In addition, 98 new Southside apartments are now for lease on the Chattanooga Choo-Choo campus after those were converted from hotel rooms.
Contact staff writer Mike Pare at mpare@timesfreepress.com or 423-757-6318.