Warehouse Row grows Atlanta group's downtown Chattanooga stake

Contributed photo / Warehouse Row's new owner, The Simpson Organization, says it wants to continue the momentum in the downtown Chattanooga retail and office complex.

An Atlanta real estate group has bought Warehouse Row, adding to the company's holdings in downtown Chattanooga and emerging as one of the central city's biggest stakeholders.

The Simpson Organization has made the Market Street office and retail complex its third major property downtown, and the company indicated it may not be finished with its buying spree.

"We like the dynamics of downtown Chattanooga," said Boyd Simpson, the company's chief executive. "If there are other opportunities we thought were equally positive, we'd also be interested in those."

He declined to reveal the purchase price for the 260,295-square-foot, five-story collection of former warehouses at 1110 Market St.

Seller Jamestown Properties, which has offices in Atlanta and New York, paid $14 million in 2006.

Just last month, The Simpson Organization broke ground on a 10-story apartment building in the long-vacant 700 block of Market Street - four blocks from Warehouse Row.

Work has begun to erect the 125-unit apartment complex that will also have office and retail space. Simpson said the $30 million project, which will be the tallest structure built downtown in three decades, sits next to the 18-story SunTrust Bank Building his group also owns.

When the apartment building is finished around early 2017, The Simpson Organization may become the single largest private building owner downtown, with 547,021 square feet of space - surpassing Republic Parking and Luken Holdings. TVA holds nearly 2 million square feet in the central city.

Simpson said Warehouse Row will complement the company's other holdings. The Row offers loft-style offices while the SunTrust Building is more traditional.

"It broadens our offerings to potential tenants," said Simpson, whose company has about 80 properties in the Southeast.

Plans are to "continue the momentum" generated at Warehouse Row over the past few years, he said. Simpson likes the upscale retail tenant mix now inside the Row, though he wants to improve the "underperforming" lower level.

"We don't have a specific plan for that," he said. "We're working on possibilities, which could add perhaps another element of commercial interest."

Simpson said the company plans to invest in Warehouse Row's infrastructure, such as its mechanical and electrical systems and elevators.

The Simpson Organization's acquisition keeps the ball rolling on what has been a solid last couple of years for downtown office building sales.

David DeVaney, president of NAI Charter Real Estate Corp. in Chattanooga, said more downtown office structures have changed hands in the past two years than in the prior decade. Some of that space is being converted into apartments, hotels, technology centers and incubators, he said.

"It's a real creative time for Chattanooga," DeVaney said.

Staff Photo by Angela Lewis Foster / Boyd Simpson, chief executive of Atlanta-based The Simpson Organization, speaks during a groundbreaking ceremony in the 700 block of Market Street on Dec. 15, 2015

John Healy, of the Chattanooga real estate firm Sperry Van Ness/Elder Healy, said several parties were interested in Warehouse Row.

"It's a testament to the job Jamestown did in redeveloping that project," he said.

DeVaney said downtown is attracting large institutional investors such as The Simpson Organization.

"Chattanooga historically has been under the radar screen a little bit," he said. Larger investors instead went to Atlanta, Charlotte and Nashville.

Warehouse Row was on the ropes when Jamestown bought it a decade ago. The refurbished collection of warehouses dating to the early 1900s originally flourished as a high-end outlet center when first redeveloped nearly 30 years ago.

But that business had largely faded and the Row was about 20 percent occupied when Jamestown acquired the center. Jamestown plowed an estimated $20 million into the site and repositioned it, attracting new restaurants and some national retailers back to downtown.

Today, the retail space is about 90 percent occupied, while its offices are some 85 percent leased.

Simpson cited the urban redevelopment going on downtown, with a hot apartment market helping drive plans for more than 2,000 residential units potentially in the next couple of years.

"We think the city is on the right track," he said.

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