A Tour Inside the Medical Arts Building

Medical Arts Building, Main and Locust, Knoxville, December 2012

Medical Arts Building, Main and Locust, Knoxville, December 2012

Brothers Michael and Thomas Grace co-own and plan to renovate the Medical Arts Building, transforming it from office space to 49 residential units with 77 bedrooms. Additionally, three retail spaces will be included on the first floor. Michael generously hosted me on a tour of the building. He and his brother have requested $425,000 from CBID to help with the project which will cost roughly eight or nine million dollars depending on what is included in the cost.

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The building dates to 1930 and is on the National Register of Historic Places, a fact which could potentially offer an avenue for some funding for the project. If they receive those credits the building will have to remain rental for a minimum of five years. A number of other buildings downtown have used this source of funding and then converted their units to condos at the end of the five years. Mr. Grace indicated he and his brother do not necessarily intend to do that with this building, though should the market swing back from the current large demand for rental space to stronger demand for purchased condos downtown, the shift could be made.

Michael Grace, Medical Arts Building, Main Street, Knoxville, February 2013

Michael Grace, Medical Arts Building, Main Street, Knoxville, February 2013

The building measures ten stories and sits atop one of the highest points downtown, giving it a prominent profile. More than just a simple box building, it features an L shape with two sides covered in beautiful Terra Cotta which is deteriorating rapidly. Three corners of the building feature a Gothic Revival design. Exterior issues include peeling paint, some leaks in the roof, the aforementioned deterioration of the architectural enhancements and a sidewalk leak that is flooding the basement. As extensive as the interior renovations will be, the facade will consume a large percentage of the money given its problems and its enormity.

Lobby of the Medical Arts Building, Main Street, Knoxville, February 2013

Lobby of the Medical Arts Building, Main Street, Knoxville, February 2013

 

Mail System, Medical Arts Building, Main Street, Knoxville, February 2013

Mail System, Medical Arts Building, Main Street, Knoxville, February 2013

 

Lobby of the Medical Arts Building, Main Street, Knoxville, February 2013

Lobby of the Medical Arts Building, Main Street, Knoxville, February 2013

The interior of the building has some unique features, starting with the beautiful lobby. Original terrazzo flooring, decorative elevators and one of the oldest functional interior mail systems in the city highlight this very attractive space. Some additional remnants from the past have also been retained, included a window labeled “prescriptions,” indicating a pharmacy must have once been located in that space. The terrazzo floors extend throughout the building and seven of the ten floors have original curved-ceiling hallways.

Offices, Medical Arts Building, Main Street, Knoxville, February 2013

Offices, Medical Arts Building, Main Street, Knoxville, February 2013

 

Current Interior Space, Medical Arts Building, Main Street, Knoxville, February 2013

Current Interior Space, Medical Arts Building, Main Street, Knoxville, February 2013

 

Garage at the Medical Arts Building, Main Street, Knoxville, February 2013

Garage at the Medical Arts Building, Main Street, Knoxville, February 2013

The building has been devoted to office space from its inception, so much of the interior remains as it was initially envisioned, including interior doors with inlaid wood. These will be retained, though some will be for appearance only as the residential units will consume multiple offices. After conversion, current plans call for one studio apartment, twenty-one one bedroom, one bath units, twenty-six two bedroom, two bath units and one three bedroom, three bath unit. One hundred six parking spaces sit beneath the building offering plenty of parking with interior access for residents and customers for the retail space. No other downtown rental property that I know of can offer this luxury.

Southwestern View from the Medical Arts Building, Main Street, Knoxville, February 2013

Southwestern View from the Medical Arts Building, Main Street, Knoxville, February 2013

 

Northern View from the Medical Arts Building, Main Street, Knoxville, February 2013

Northern View from the Medical Arts Building, Main Street, Knoxville, February 2013

 

Northeastern View from the Medical Arts Building, Main Street, Knoxville, February 2013

Northeastern View from the Medical Arts Building, Main Street, Knoxville, February 2013

The upper floors offer spectacular views of the mountains, the river, UT and the city skyline. While prices will obviously vary by size of the unit and, probably, views offered, the average should fall around $1100. The single bedroom units will be less, and seem perfectly suited for students or professors walking to UT, as well as any of a number of people who work in the City County building or any of the federal facilities in that area of town. The space, if filled should easily house a hundred people up to as many as a hundred-fifty.

As I’ve mentioned before, I love this move because it stretches the residential distribution of downtown which is heavily weighted to the northern part of the center city. I also hope that the foot traffic generated between that building and Market Square or Gay Street will encourage new businesses to open along the corridors traveled by the new residents.

So, what do you think? Between the JC Penney Building and this building, CBID would essentially commit all anticipated funds for the next two years with nothing for smaller projects and certainly nothing for additional large projects. I love this building and think this project is very important for what it does in our overall development. Still, there’s no denying that the JC Penney building sits in a prominent spot on Gay Street and desperately needs repair. This is not an easy decision for the CBID board.

Comments

  1. Thanks for the tour. I like all those peaked arches. I agree it’s a tough decision for the CBID, although it wouldn’t be if they’d created real rules for the use of the money. I’d rather they had a cap of $100,000 or $150,000 for a single project, but these are good projects so whatever they do is okay.

  2. I think we need people downtown. A critical mass will bring the business interest. It’s really just a numbers game. This is a unique and beautiful building and well worth restoring. Perhaps, as Greg suggested, the local money could be split between the two proposals and federal funds obtained for the Medical Arts project. My question is, has demand for condo ownership dropped to such a low level that most future developments will be rental? My wife and I want to buy. Should we reconsider?

    • Art Wagner says:

      If I may chime in–you and your wife should buy if you want to buy and can find a space you want and can afford. It is not that the demand for condos has fallen, per se, but that the current availability of moderately priced ones (i.e. great bargains) is relatively small. On the other hand, the revitalization of downtown and the social scene has made the area very enticing for those who either don’t want to buy or cannot currently do so. That segment of the market wants to rent; hence the demand for rentals is very high, exceeding the supply.

      • Thanks, Art. We would consider renting for awhile as well. The current supply of condos for sale seems very limited right now. So renting may be a good option. Still, rates may never be lower…

    • Melinda Grimac says:

      Randy…depending on your price range and size requirements, there are wonderful spaces for sale downtown. If you’re interested in viewing a few, contact me at 356-4178. I’m associated with Alliance Sotheby’s International Realty and am a downtown property owner as well. Come join us downtown!

      • Melinda, thanks for the offer. My wife and I will be visiting Knoxville next weekend and have already scheduled showings with a Coldwell Banker realtor. We are looking forward to seeing what is available.

  3. John in Knoxville says:

    What an awesome opportunity! I need to make some connections so I can get a tour there (do some history or whatever it is that I do and haven’t done in over two months).

  4. Great article UrbanGuy! Tough call, and one I’m certainly glad I don’t have to make. Ultimately I believe residential presence will drive the success and growth of downtown businesses. I guess while I’m on the fence I’m leaning towards the apartments the most, but I’m not sure exhausting the funds for both projects for two years is wrong, especially considering these buildings. There are so many other possible projects downtown that are likely to come up in those two years, and it’s that part of me fears it may stall development with 24 months of no funding assistance.

  5. I continue to find it curious that the Central Business Improvement District is being expected to subsidize a private developer evicting a dozen business tenants from a downtown building. All the talk of how further residential development will encourage further commercial development ignores the fact that the building was already commercial, and that several of the evicted tenants have left downtown entirely.

    • Art Wagner says:

      I don’t exactly agree with your tone, but your point is valid: which is more valuable to the downtown economy? — 10 commercial tenants offering various services unknown to me or 75 new residents? It’s sort of comparing apples to oranges, but most other businesses downtown would rather have the additional residents for the very reason that the higher the residential density, the more possibilities that new commercial opportunities will arise.

      The CBID has to arrive at their own criteria–a choice that will be difficult, no doubt.

      • Sorry — I didn’t think I had any particular tone.

        I contend that it’s an unfair comparison — other businesses *might* benefit from the additional residents, but it’s not as obvious as that. I don’t know enough to guess at what a full economic analysis of the direct economic benefit of 75 residents versus 75 office workers would show, but if you consider fully-occupied buildings, it’s not even that equal of a trade-off. What’s a reasonable load calculation? — maybe 1 resident per 600 s.f., or 1 office worker per 200 s.f. (generously). If the building were fully occupied, the comparison should be more along the lines of 75 residents versus 225 office workers. Calling them “10 commercial tenants” for comparison purposes is intuitively misleading.

        So you get indeterminate benefit/detriment to other businesses, and inarguable detriment to the businesses being displaced. You do get some benefit to other downtown residents in that it helps build the necessary critical mass to encourage more resident-oriented business development. In that sense, being a downtown resident myself, it’s certainly to my benefit — hence, I really am not trying to imply any sort of negative tone. My point is just that simplifying things to the extent that one should conclude that 75 residents always beats 10 commercial tenants is *over* simplifying.

        The building owners certainly have a right to do what they want with their building, but they’re turning it residential because it’s in their direct economic interest, not for some fuzzy idea about the overall betterment of downtown. CBID has to judge whether it accomplishes that, and then quantify that somehow. I certainly don’t envy them having to make that analysis; I’d just be much more comfortable with the whole thing if I was sure they were actually attempting to make it.

    • I’ve worked downtown for twelve years now, and today compared to then makes downtown seem like the phoenix. I’m certainly no economic genius, but since I’ve been downtown there seems to be no shortage on business space, but high demand for residential space. It would seem that a higher density of residents would go a long way to supporting consumer based business that seems to be flourishing downtown currently, much more so than those that eat lunch and leave at five everyday, and are not there at all over the weekend. A full featured grocer would be nice, but there must be consumers to support it right? We’ve all read here about the struggles the Market has had with their offerings. This must be directly related to demand, right?

      • A grocery store is a must. To be a truly livable urban space all the basic necessities such as groceries, medicines, medical and dental care, clothing should be accessible without driving. Most places, including Charlotte, are not there yet, although Charlotte is close. I am excited about the potential and the trend in downtown Knoxville. A critical mass of residents is the key.

  6. Were talking about residential tenants.

  7. KnoxvilleUrbanGuy says:

    Hey Everybody, Great comments. I’ll chime in a little to address a few things. First, to Randy, buy if you want to buy, rent if you want to think about it. Condos are selling, but not as quickly and the prices aren’t skyrocketing. Nationally people have move to renting because they are gun shy after the housing collapse. There is a demand for downtown condos, but there is crazy demand for rentals. We bought 3 1/2 years ago and are delighted with everything that has happened since.

    Aaron, just a clarification. What we are balancing here is exactly what you said at first – 10 small businesses vs. (I would guess) a hundred or so new residents. Office space is simply not being filled downtown. The Medical Arts Building could not continue as a viable economic entity as an office building. There wasn’t really a choice between business or residential, there was more a choice between insolvency and residential. Unless something goes dramatically south with our economy before these units are finished, they will be instantly filled. There are virtually no available rental units downtown and people are waiting to pounce on any that become available. It’s just the economic reality at this point.

  8. Thanks for the tour and the generation of lively discussion. Now, I’ll watch the paper’s report of any developments from CBID more closely! Should be interesting! http://ohtheplaceswesee.com

  9. Randy, if your Coldwell rep doesn’t work out, call Melinda. She’s good people and makes an awesome hors d’oeuvre.

    • Thanks for the recommendation. I am not sure that our guy knows much about downtown.

      • KnoxvilleUrbanGuy says:

        Hey Randy, You are really getting the downtown welcome! :-) Throw my name into the ring. Email me if you’d like and I’ll shoot you my phone number in case you have any questions while you are here. I’ll add to the discussion below that we have three small groceries downtown which, while not full-service, can keep a household going most of the time. Additionally, there are big grocery stores just about a mile out of the downtown area. A small pharmacy we do not have. Dental care has arrived. So, we are getting close. I had no idea Charlotte wasn’t there, yet. Let me know if there is any way I can help with the possible move.

        • Yes, I can’t wait to meet some of the great Urban people who read this blog. Thanks to everyone for the welcome. Charlotte has one grocery store downtown but three pharmacies. Very little in the way of clothing stores. It does have some great restaurants though, and pro sports of course, if you can call the Bobcats an NBA team!

  10. That’s a really cool building! Thanks for sharing the tour. Lots of cool things that could be done with that building conversion.

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