Downtown Being Rejuvenated As Residential Development Surges

After years of slow decline, Chattanooga’s downtown renaissance has taken hold and is surging forward with multiple residential developments accompanying the business revival.

In recent years, the pace of residential development has increased dramatically with 165 units of housing committed or under construction in 1999.

Renewed interest in downtown area living has played a key role in the rejuvenation of the central city which has also included restaurants and lounges, theaters and the major attractions of the Tennessee Aquarium, IMAX Theatre, and the football and baseball stadiums.

Among the more recent residential developments are the St. John’s Apartments, 1st and Market project and Crabtree Condominiums. The long-stalled 800 Town Centre at 8th and Market streets has also gotten a new start.

Until recent years, Chattanooga’s downtown renaissance has included comparatively little residential development. But the pace of residential construction has now excellerated significantly including apartments, condominiums and townhomes.

Earlier this month, a newly formed group paid $880,000 for the mortgage on 800 Town Center and is giving original developer Ronnie Rothwell a short time to resume work on the former Loveman’s Department Store and complete the $15 million project.

The project had stopped several months ago when Mr. Rothwell ran out of money after spending $6 million of his own funds on the project.

One of the earliest returns to downtown area living was development in the mid-1980s of the Heritage Landing condominiums in North Chattanooga. That area had been extremely popular in the early part of the century with some of the most desirable residential property linked to downtown by the Walnut Street Bridge.

Renovation of the bridge and its popular use for walking has sparked renewed interest in North Chattanooga property.

After Heritage Landing, residential development in close proximity to downtown did not resume until 1994 when Riverset Apartments provided 41 new apartments in the $3 million project on the Tennessee Rover.

Then Chattanooga Neighborhood Enterprise renovated the old Grand Hotel in 1997 to create Apartments at the Grand, a $3.8 million project providing 36 apartment units for lower income residents along with retail space on the lower levels.

The growing attractiveness and popularity of downtown residential property prompted the quickly following development in 1998 of Robinson Apartments, 18 units in the restored building; Lindsay Courts adding 13 new condos at a cost of $3 million; and Albemarle Apartments, providing 31 apartments in the restored apartment building.

Also under development are the St. John’s, a $2 million restoration to provide 14 upstairs apartments with retail space on the ground floor of the former hotel; First and Market, a new $5 million construction project featuring 20 new apartments and townhouses plus retail space; and Crabtree Condominiums, a $3 million renovation offering 24 condo lofts in the former warehouses along with retail space.

Also in the central city area is Cowart Place, a $2 million project providing 19 new townhouses.

North of the Tennessee River on Manufacturer’s Road, the old Signal Knitting Mills has been proposed as a location for redevelopment as condos, but Realtor Lynn Short said work is now being done on plans for future use of the former factory. How to best utilize the property is still under study, she said.

Renewing work on the Eighth and Market complex, the new Town Centre LLC group got it charter on March 27. Attorney Bobby Dann said members of the new group want to remain anonymous, but they plan to finish the project if Mr. Rothwell is unable to complete it. It is planned to provide 50 condos on the upper floors and retail space at the ground level.

By Irby Park

Home sales continued at a near-record pace in March with Chattanooga Association of Realtors (CAR) reporting a total of 410 sales through the Multiple Listing Service (MLS) while interest rates continued favorable at just over 8 percent on 30-year, fixed-rate loans.

The March total was 30 below last year’s 440 sales and brought the total for the year to 1,127. Sales so far this year are 164 above the first quarter of 1999.

Strong first quarter sales here are in keeping with the national housing market which the National Association of Realtors (NAR) described as “changing but still favorable” in its Real Estate Outlook publication.

Dr. Fred Flick, NAR’s vice president of economic research, said overall conditions remain good. “Higher interest rates, volatility in the stock market and rising gas prices are starting to erode consumer confidence and will dampen economic growth. However, housing demand continues to be strong and mortgage financing remains fairly affordable, so this year will still be in the top three as far as markets go,” he said.

The national average commitment rate on a 30-year, fixed-rate mortgage, said Freddie Mac, rose to 8.16 percent by the end of last week, ticking up from the previous week’s 8.12 percent. The average for a 15-year, fixed-rate mortgage was 7.82 percent with an average 1.0 points, ticking up from the previous week’s 7.76 percent. A year ago, the 15-year, fixed-rate mortgage averaged 6.51 percent.

Dr. Flick said part of the current housing market’s strength results from equity gains in both homeownership and the stock market. “Tangible real property assets provide a level of security not found with investments in the generic dot-com, he added.

In fact, the existing-home market this year should be the third best on record. NAR expects home resales to drop 8.7 percent in 2000 to a total of 4.74 million units while new-home sales are expected to slide 5.3 percent to 858,000 units

The association expects 30-year, fixed-rate mortgage rates to rise slightly to about 8.5 percent and hold at that level for most of the year. One-year adjustable-rate mortgages (ARMs) should average 7.0 percent in 2000.

Frank Nothaft, deputy chief economist for Freddie Mac, said, It is worth noting that through all the recent turmoil in the financial sector, mortgage rates have remained amazingly stable and affordable.

While NAR said higher mortgage rates have slowed the housing market slightly, inventory shortages keep residential construction strong.

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