Future of State Office Building up in the air

photo The state of Tennessee's Chattanooga State Office Building is at 400 McCallie Ave. in downtown Chattanooga, Tenn.

NASHVILLE - Tennessee's seven-story Chattanooga State Office Building weighs thousands of tons, but its future appears up in the air as officials weigh findings in a study of state office space.

The state's consulting firm, Jones Lang LaSalle, says the 58-year-old structure at 400 McCallie Ave. is one of four "old and obsolete" buildings owned by the state. Two others are in Nashville, and one is in Memphis.

John Fetz, senior managing director of Jones Lang LaSalle, told State Building Commission members this summer they should start looking to move offices in all four buildings into other space.

The probable price tag for fixing the 47,269-square-foot Chattanooga State Office Building is a hefty $8.49 million. Of that, about $7.9 million is for heating, ventilation and air conditioning problems, according to Jones Lang LaSalle.

The building was built in 1954 by the Interstate Accident and Life Insurance Co. A west wing was added in 1970. The state paid $5.85 million for the building in 1981 and renovated it 20 years ago. Records show some 354 employees in agencies ranging from the Department of Revenue to the Department of Environment and Conservation and the Economic and Community Development Office work there.

The other three "old and obsolete" buildings are the Cordell Hull State Office Building and John Sevier State Office Building in Nashville and the Donnelly J. Hill State Office Building in Memphis.

The consultants also looked at the James R. Mapp Building at 311 M.L. King Blvd. in Chattanooga. Built about 20 years ago, it has structural deficiencies that will cost $3.5 million to correct. Just fixing the foundation for the 75,445-square foot Mapp building would cost $1.5 million.

In its study for a proposed state "master plan," Jones Lang LaSalle examined 33 of the 156 buildings managed by the Department of General Services. The 33 buildings collectively amount to 4.6 million square feet of office space.

The consultants identified an estimated $241.1 million worth of problems requiring immediate or short-term investments in the 33 buildings. They also called for a modern facility management and operation model.

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The Jones Lang LaSalle study dovetails with Gov. Bill Haslam's ambitious statewide Transforming Tennessee for Tomorrow (T3) plan.

T3 aims to move a number of operations and employees from leased office space into state-owned buildings.

The Department of General Services aims to slash operating costs by concentrating workers more closely and boosting efficiency through updated office environments that spur greater collaboration, according to the plan.

Officials aim to cut the amount of owned and leased office space by nearly 1 million square feet from the present 5.47 million square feet over 10 years and save close to 10 percent, or $102.7 million, in operating costs.

Under Jones Lang LaSalle's proposed facility recommendations, Tennessee could save $18.8 million in operating costs a year.

Nervous realtors

T3 is already under way in Nashville, where it is generating concerns in the commercial real estate market. The Nashville Business Journal has reported that private firms nervously are eyeing the loss of a major tenant if the state moves out.

But final recommendations on the Chattanooga building are still under review, said Kelly Smith, spokeswoman for General Services Commissioner Steve Cates.

The building is one of the state's most underused, figures show. The state could move many Chattanooga employees from leased space to that building, or agencies now in the building could move to leased quarters, Smith said.

Smith said a decision would come later this year or early in 2013.

She said the state for years has not "invested the capital needed to keep the buildings up" adequately. The Haslam administration took office 20 months ago.

House Majority Leader Gerald McCormick, R-Chattanooga, said he has heard "very little" about plans for the Chattanooga building, although he has heard about T3 in general terms.

"Until I really look at the details of what they suggest, I don't know how to respond," he said. The legislature should review the issue as it moves ahead, he added.

If the state doesn't want the building, McCormick said, it might be suitable for student housing "because it's so close to UTC."

If not the University of Tennessee at Chattanooga, he said, "I think you'd see some local people step in and make housing out of it."

But if the decision is to move state workers from leased space into the building, McCormick said, "I would hope the state gives some of these property owners as much time" in advance as it can."

The goal, he said, is to spend taxpayer money on buildings as responsibly as possible to "keep government as lean as possible."