Rising downtown Chattanooga property values are pushing developers outside of the city's core as they look for the next growth areas.
That strategy has led a group to make over longtime McCallie Avenue commercial space that held the once popular retailer Service Merchandise decades ago.
"We've looked around to where growth is heading and want to get ahead of that growth," said Matt McGauley, president of Fidelity Trust Co., about the 1304 McCallie Ave. building his group is refurbishing in a $4 million project.
Staff photo by C.B. Schmelter / Building owner and developer Matt McGauley looks up at the ceiling in proposed restaurant space at the development located at 1304 McCallie Ave.The 21,000-square-foot site, located near Holtzclaw Avenue and Warner Park about a mile from downtown, is where McGauley sees new offices, a restaurant, and housing among other uses.
Bo Oglesby, an investor in the project, said that with the University of Tennessee at Chattanooga not far away, he sees more student services and housing headed down the McCallie Avenue corridor.
"Go back in the neighborhood," he said about the adjacent Highland Park area. "There are a lot of families and students."
The space, part of which is two stories high, dates back to around the 1930s, said McGauley. One portion features an unusual wood-barrel ceiling with clear-space steel bow trusses and skylights.
"It had a dropped ceiling," McGauley said. "I climbed up a ladder and saw the structure and I knew I couldn't tear all that out. It took a lot of work to get clean and restore."
That part of the building's entrance was facing McCallie Avenue, he said. But, he said, the new entrance is on the side facing some of the 80 parking spaces on the 1.25-acre site.
Prestige Property Brokers has leased up part of the space, McGauley said, and he's talking with other potential signees.
He said a 4,600-square-foot location for a restaurant is fashioned up against McCallie Avenue complete with new windows, an installed 1,500-gallon grease trap and exterior patio.
Staff photo by C.B. Schmelter / Todd Bradley, with Southeast Painters, Inc., paints part of the outside of proposed restaurant space at a development located at 1304 McCallie Ave."This place will really pop," the developer said about the building renovation project fashioned by Artech Design Group.
McGauley said the McCallie-Holtzclaw intersection sees about 35,000 vehicles daily, while Warner Park has some 600,000 visitors annually.
Mike Berry, of Berry Construction and another project investor, said there's not a lot of restaurants in the area.
"Certainly in proportion to all the people living here," he said.
In the rest of the site, McGauley said he sees potential retail including a coffee shop, a fitness business, or technology, medical or professional ventures interested in open or creative space.
The second-level part of the property could hold apartments, he said.
Fidelity Trust Co., which has long had downtown holdings and continues to work in the central city, is among developers looking outside the core.
McGauley noted McCallie Avenue and South Broad Street as two arteries seeing more growth. Earlier this week, a new Publix supermarket is part of a proposed new commercial project on South Broad to win approval from a zoning panel.
Also, the East Main Street corridor between Central and Dodds avenues has more than 200 new apartments, townhomes, or lofts planned by developers.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.