Apartment building near chicken plant on Chattanooga's Southside sells for $37.5 million

Buyer calls Chattanooga the 'next Austin'

Staff file photo/ The 17 Broad apartment complex on Broad Street in downtown Chattanooga borders 17th Street and the 50-year-old Pilgrim's Pride poultry plant.
Staff file photo/ The 17 Broad apartment complex on Broad Street in downtown Chattanooga borders 17th Street and the 50-year-old Pilgrim's Pride poultry plant.

A 158-unit apartment building that sits across from the Pilgrim's Pride chicken processing plant in downtown Chattanooga's Southside has sold for $37.5 million.

Capital Square, a Virginia-based real estate firm specializing in tax-advantaged investments, brought 17 Broad, which opened last year at 1701 Broad St.

The deal is Capital Square's fourth apartment acquisition in Chattanooga, with its chief executive saying that the city is poised as the next Austin, Texas.

Louis Rogers, founder and CEO of the company, said his business is bullish on Chattanooga because the area is projected to have high occupancy and rent growth. He cited Chattanooga's location near Atlanta and Nashville, substantial area gross domestic product growth, low cost of living, and high quality of life.

The five-story Broad Street complex was sold by J.A. Murphy Group of Knoxville.

Builder John Murphy said the proximity to the poultry processing plant is part of urban living.

"If people want to be in downtown with all the activity, they'll unfortunately have to put up with some things not as nice as the suburbs," he said earlier.

The plant and its odor have been a lightning rod for criticism by some, even as others defend the facility and the jobs it provides.

Murphy said he builds in other cities' downtowns and sees the same type of tension.

"The outskirts of central business districts were light industrial," he said. "In the last decade, it has changed dramatically."

On the other side of the chicken plant, across Main Street, grocer Food City is planning to construct a new supermarket and housing that's scheduled to open in 2023. It's the first full-scale supermarket to open in downtown's core in some three decades.

Abingdon, Virginia-based Food City is putting up the first multi-use complex in its long history. The site will hold a 53,000-square-foot store, 115-seat eating area, 16,000 square feet of retail and offices on two levels and six two-story townhouses.

Austin, Texas, is one of the nation's fastest-growing metropolitan cities, having gained more than 570,000 residents, up 34%, since 2010, according to U.S. Census Bureau figures released this year. The city is seen as a bustling technology service city with it having benefited downtown.

The 17 Broad Chattanooga apartment building bought by Capital Square is its third in the city within a year.

The real estate investment firm purchased one of the biggest apartment complexes in Hixson in October 2020. The 308-unit Marina Pointe Apartments was sold for $44.5 million.

Just last June, Capital Square bought the Integra Vistas apartment complex near Highway 153 and U.S. 27. It paid $57.2 million for that 280-unit property.

According to Capital Square, it specializes in tax-advantaged real estate investments including Delaware statutory trusts for Section 1031 exchanges and qualified opportunity zone funds for tax deferral and exclusion.

The company said the acquisition of 17 Broad is on behalf of a Delaware statutory trust investment offering that seeks to raise $18.4 million in equity from accredited investors.

Since 2012, Capital Square has completed more than $3 billion in transaction volume, according to the company.

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

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