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Two North Shore is located on Manufacturer's Boulevard in Chattanooga.

Two North Shore, the shopping complex that was part of a wave of hip and rapid development along North Chattanooga's riverfront, has been sold to a Pennsylvania company.

The $24 million purchase by a limited partnership of Stoltz Real Estate Partners marks yet another investment in the Scenic City by companies outside of Tennessee.

"It's a premier property for Chattanooga," said David DeVaney, president of NAI Charter Real Estate Corp. in Chattanooga. "It has a really cool vibe to it. That really made it exciting to retail investors."

Not just that, though. The city's capitalization rate - investors' rate of return - is higher here than in Atlanta, for example, or in many other cities of Chattanooga's size, DeVaney said. "That's why you're seeing some large transactions recently."

Several apartment complexes have sold to out-of-town investors during the past few years, totaling more than $100 million. Another sale, $15 million for Walnut Commons, is pending to a Nebraska company.

It's unclear just how much the Two North Shore sale compares with similar commercial retail sales in the area. But it's "probably closer to the higher side," DeVaney said. "A transaction like this doesn't come around often in Chattanooga."

Park Mills Properties 2 LLC signed over its deed to 2NS Holdings LP on Oct. 22. Park Mills members are Stephen Arnsdorff, owner of the Chattanooga real estate management firm CS & Associates, and Chuck Pruett, who owned Greenlife Grocery, Whole Foods' predecessor at Two North Shore.

The nearly 100,000 square feet of space on six acres at the shopping center on Manufacturers Road is home to about 20 tenants, most of them locally owned businesses, anchored by Whole Foods and Rock/Creek.

Pruett and Arnsdorff built the complex in two phases, upgrading a run-down stretch of land many assumed had no promise with a Gold LEED-certified building, the first for a shopping center in the Volunteer State, according to the U.S. Green Building Council. Two North Shore's buildings opened between autumn 2007 and January 2009.

"We were making a statement of health and wellness. It's a commitment to the environment we wanted to create. It's something that's important to both of us," Arnsdorff said. "Anything we can do to contribute to a healthy lifestyle for all the people of Chattanooga is a wise thing and a moneymaker as well."

By all standards, the shopping center, which includes an electric vehicle recharging station, has been a success. One North Shore, the upscale condominium complex and retail space, is across the street, and a ripple of businesses rose around the corner on Cherokee Boulevard and Frazier Avenue. More are expected along Manufacturers Road just beyond the U.S. Highway 27 overpass.

Their "vision for this development was ahead of its time," said Rock/Creek marketing director Mark McKnight.

But that doesn't mean the owners wanted to hold on to their creation forever.

"Every property has its cycle, and you develop it and get it to a certain point, and you want to go do something else with your time," Arnsdorff said.

Arnsdorff declined to share how much it cost to build the complex, but noted that the city handled drainage, put in sidewalks and widened Manufacturers Road.

"The city was phenomenal," he said. "Part of the reason the area was improving was because the city was putting in the infrastructure. Without those kinds of improvements and investments on the part of the city, people like me wouldn't take the risk."

Pruett and Arnsdorff hired a broker to market the property nationally. Stoltz Real Estate Partners couldn't be reached for comment on Friday. The company, which has a management arm, was founded in 1957 and has retail, office, multifamily, mixed-use and industrial investments.

"They bought it because they like what's happened so far, so I'd expect them to continue the basic philosophy of what's going on there," Arnsdorff said.

That's what Rock/Creek is hoping. The outdoor store was the complex's first tenant.

"We were concerned from the beginning about what the sale would look like and what kind of management would take over," McKnight said. "I've actually met the Stoltz guys. I think they're committed to keep the parts that are working.

"It's not like they're buying a distressed property. Everybody is happy with the performance of the center."

Contact staff writer Mitra Malek at mmalek@timesfreepress.com or 423-757-6406.

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