Study: Downtown Chattanooga ready for more retail

Staff Photo by Dan Henry / The Chattanooga Times Free Press- 2/1/16 Construction continues on a new apartment/commercial building being built on the 700 block of Market Street on Wednesday, March 16, 2016.
Staff Photo by Dan Henry / The Chattanooga Times Free Press- 2/1/16 Construction continues on a new apartment/commercial building being built on the 700 block of Market Street on Wednesday, March 16, 2016.
photo Staff Photo by Dan Henry / The Chattanooga Times Free Press- 3/16/16 Construction continues on a new apartment/commercial building being built on the 700 block of Market Street on Wednesday, March 16, 2016.

Retail findings

› Downtown has large gaps for regional retailers› Urban-format Target and/or Home Depot can be supported› Demand for pharmacies, a grocery, clothing, office supply and sporting goods stores› About 21,000 square feet of demand for restaurants and/or drinking establishments› Construction costs and parking are challenges in that most land uses can’t support structured parking in standalone configurationsSource: Noell Consulting Group

With more Chattanoogans living downtown and a flurry of new residential rooftops underway or planned, the city center can now support big-box retailers such as Target or Home Depot, a study says.

"Chattanooga has reached a threshold of in-town residents," said David Laube, a principal in the Atlanta firm Noell Consulting Group. "It has kind of reached that critical mass."

The study, commissioned by the downtown nonprofit redevelopment group River City Co., said there's a need for 600,000 square feet of additional retail space downtown. Such stores could include a smaller-format, urban grocery store as well as drug stores.

Laube mentioned such grocers as Sprouts and Earth Fare as potential matches.

Sprouts stores, with over 212 locations across the United States, are smaller than a typical supermarket and focus on fresh produce, healthy foods and vitamins and supplements. Earth Fare is a chain aimed at organic foods, with an existing location near Hamilton Place mall.

"Some of those folks out by the malls, [downtown] can now support their own facilities," Laube said.

River City chief Kim White said the group is in discussions with some companies looking at mixed-use development. She called them "people who understand retail" in an urban environment.

"They get it," she said, noting that such retail is more dense than in the suburbs, often multi-story and has a lot of amenities for downtown workers and students.

She said the Fourth Street corridor downtown is a potential spot for an urban Target or Home Depot, and the study noted Riverfront Parkway as another possible location.

The report sees retailers drawing residents from the Southside to the North Shore and from the West Side to Erlanger. Each of those areas have housing going up, under construction or on the drawing board.

Despite the array of new housing, mostly apartments, there's still a demand for more downtown rental units, the study showed. Future growth is projected at about 150 new apartments a year, according to Noell.

Also, more rental housing is needed for students downtown - 598 beds, or 51 per year, for the next 12 years, the study said.

"We can still use student housing at the right price," White said.

She said while some people worry that all the downtown housing in the pipeline could lead to overbuilding, the study shows that "we're pretty much on track."

Chattanooga real estate broker Thomas Connolly said more retailers already are coming back to the city's core. But to have retail, there needs to be the housing component, he said.

"You have to have the rooftops," Connolly said. "We see people down here eating. They'll end up living down here, too. We think the trend will stick around for a while."

Laube said Chattanooga's downtown housing story is different than in many markets, which are suffering from an oversupply.

He said Chattanooga is benefiting from out-of-town developers who have in the past looked at bigger cities such as Atlanta or Nashville, but are now eyeing secondary markets such as Chattanooga, which tend to be less competitive for projects.

"That's a lot of where this growth potential and new opportunity will come from," Laube said.

The Simpson Organization, based in Atlanta, is building the biggest new building downtown in about three decades on the 700 block of Market Street. In a $30 million project, 125 apartments, along with new retail and office space, are planned.

Also, the Atlanta group recently purchased Warehouse Row, a 260,295-square-foot, five-story collection of former warehouses at 1110 Market St., for $36.9 million. It features retail, offices and restaurants.

In addition, Memphis developer Heritage Land and Development is remaking the historic Maclellan Building on Broad Street into apartments. Also, it has announced plans to redo more than half of the First Tennessee Bank building's 16 floors on Market into rental housing.

Across from Erlanger Hospital, city planners last week endorsed plans for a $30 million to $35 million mixed-used building that will include 220 apartments.

Laube said Chattanooga is bolstered by an economy that is "pretty nicely diversifying" with strong job growth projections.

"The next five years shows there is a very strong employment market with Chattanooga on the early stage or urbanization," he said.

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

Upcoming Events