The First Tennessee Building at Seventh and Market streets has been sold for $4 million and most of it will be converted into downtown apartments. The project is part of nearly $200 million of housing, hotel and commercial projects either proposed or underway within the city’s central business district.Central city rebound
Chattanooga’s central business district lagged other parts of downtown over the years in new development, but projects planned or underway are valued at about $200 million:* Westin hotel, condominiums, commercial space: $88 million* First Tennessee and Maclellan apartments: $40 million* Aloft Hotel: $31 million* 700 block apartments, commercial: $30 million* Tomorrow Building apartments: $8 million
A Memphis developer has finalized a $4 million purchase of the First Tennessee Building and is moving ahead with putting apartments into one of downtown Chattanooga’s tallest office towers.
“It’s a lot more fun than building in the suburbs,” said John Glassell, an owner of Heritage Land and Development. Glassell said the new owner plans as many as 78 apartments in the 16-story building that will continue to house the market headquarters for First Tennessee Bank in Chattanooga.
Heritage Land, which also is redeveloping the historic Maclellan Building into apartments about a block away, is investing $40 million between the two projects, he said. Those join other new apartment buildings, hotels and condominiums underway or planned within a few blocks of one-another in the central business district totalling nearly $200 million in development.
Glassell said work at the First Tennessee Building at Market and Seventh streets will start in October to refurbish the first four floors holding the bank’s offices. Memphis-based First Tennessee has a long-term lease for office space in the building with Heritage Land, which first unveiled the project late last year.
Next spring, work will begin on the one- and two-bedroom apartments, Glassell said, adding that they’ll have “a terrific view.” The apartments are expected to be ready in spring 2018, the developer said, though rents aren’t finalized yet.
First Tennessee’s Chattanooga market President Jeff Jackson said officials are pleased the Memphis development group bought the building that Tennessee’s biggest bank has called home locally for over 40 years.
“We’re excited about the attention to detail they provide on their projects and even more so to retain our presence downtown,” Jackson said. “We’re looking forward to turning new neighbors into customers.”
Glassell said there’s “a mega-trend” nationwide of people moving back to downtowns. His company looks for stable central cities which encourage people to walk around, he said.
“It’s a relatively safe city with a vibrant downtown,” the developer said about the Scenic City.
Kim White, who heads the downtown nonprofit redevelopment group River City Company, said people are coming back to the central city.
“We’ve made it walkable and livable,” she said.
Concerning other development going on in the central business district, Glassell said that increasing critical mass benefits everybody.
“The more people, the more activity,” he said.
At the Maclellan Building at 721 Broad St., pre-leasing on those 78 units is expected to start in late November with rents set about that time, Glassell said. Twelve of that building’s 13 stories are undergoing renovation into apartments, he said.
Retail space will remain on the first floor with BB&T continuing to occupy much of the space.
Glassell said Heritage Land is using federal historic tax credits to redo the Maclellan Building. Also, the company obtained tax incentives locally on the Maclellan, but doesn’t expect to seek those on the First Tennessee building at this time, he said.
Email Mike Pare at mpare@timesfreepress.com.