Chattanooga's large projects move ahead despite coronavirus
August 8th, 2020
Photo by Robin Rudd.
The same reasons his firm liked Chattanooga before the coronavirus outbreak are still in place in the city today, says Alan McMahon of Charleston, South Carolina-based developer The Beach Co.
"We're locked and loaded," he says about ongoing work raising nearly $50 million in new apartments, townhomes and office and retail space downtown. "We still believe in Chattanooga."
Upwards of $1 billion in expansions and new projects are underway in the Scenic City in spite of the coronavirus pandemic.
Construction on Volkswagen's $800 million effort to grow its Chattanooga production plant to build a new electric SUV by 2022 has never stopped during the pandemic — even though assembly did pause at the factory for two months last spring.
Officials with the German automaker that employs about 3,800 people in Chattanooga say they're positioning the company to take advantage of a new opportunity when it comes to electric vehicles.
Scott Keogh, Volkswagen Group of America's chief executive, compares the growth of battery-powered vehicles to the SUV market.
"Do you want to come 20 years after SUVs become a trend? Or do you want to get right after it now? I think the math is aligning well now," he says. "On the battery front, we're seeing the market response getting stronger and better and better. So I think the timing now is quite right."
Construction is on schedule and more than 70% complete, according to VW. The company anticipates completion by December 2020 or January 2021, depending upon weather and COVID-19.
"The construction phase was not disrupted by the plant's production suspension for COVID-19," VW Chattanooga spokeswoman Amanda Plecas says. "All workers on-site followed the same guidelines Volkswagen employees and contractors are following today, including daily temperature checks."
McMahon says work on The Beach Co.'s sprawling project at Fourth and Walnut streets on former Unum Group surface parking lots is "moving full-speed ahead." A large parking garage in the middle of the development is going up with the apartments and townhouses moving ahead, as well, says the company's development director.
The 3.5-acre complex includes 151 apartments, a dozen townhouses and 15,000 square feet of commercial space built around the 300-space parking deck.
While work started before the pandemic, with groundbreaking occurring late last year, McMahon says he believes the country will bounce back after the coronavirus.
"This thing is going to run its course whenever it runs its course," he says. "Things will go on."
John Darby, the third generation CEO of The Beach Co., touted the city during the groundbreaking for the project, called River Rock.
"There's a lot about Chattanooga that reminds me of my hometown [Charleston], including that both cities are now in the top 10 list by Conde' Nast of the best small cities to visit," he said. "We've invested all across the Southeast, but not in Chattanooga until now, and we're really excited to be here."
Chattanooga-based builder EMJ Corp. is constructing the project, which is one of the biggest ever to go up in the city's waterfront area, and the contractor is taking precautions when it comes to the coronavirus, McMahon says.
"There's hand sanitizer throughout the site. There are signs reminding people to practice safety. They're taking all those necessary precautions," he says. "We're pretty pleased with the way they've handled it."
Still, like the rest of America, Chattanooga is grappling with fallout from the coronavirus pandemic.
For example, Arrive Logistics' proposed expansion in the city, one of the biggest announced in 2019 with plans to create 500 new jobs with a $3.6 million investment, hasn't happened yet and appears to face an unclear timeline.
Arrive CEO Matt Pyatt says the Austin, Texas-based company has plans to "continue to grow that [Chattanooga] office although our timeline for expansion has evolved due to the impact of COVID-19."
Meanwhile, the Chattanooga-based developer of the former Alstom site on the riverfront says his group is wooing new commercial projects for that historic manufacturing site, and it's seeing new interest in the city because of the pandemic.
Developer Jimmy White says companies from other markets are eyeing Chattanooga after losing interest in places hit hard by the coronavirus such as New York and California.
"COVID-19 exposed all their weaknesses," he says. "Tennessee looks like a good market for the future. Expedited decisions are already being made."
White, a partner in several other real estate ventures in the city, has said the proposed redevelopment of the property eventually could bring $2 billion to $3 billion in investments, add over $11 million in tax revenue annually for Chattanooga and Hamilton County, and spur more than 5,000 jobs.
A lengthy planning effort revealed a range of possibilities for the tract, including a potential 20-story building. Other uses include townhomes, workforce housing, a 10,000-square-foot food hall and music venue, a canal, brewpub, child care center and more.
White says recently approved medical offices are slated to bring about 70 jobs to the former Alstom site, which is now called The Bend. Those would add to the 340 workers who are already on the property, which currently holds business ventures such as Micronics Engineered Filtration Group and Team Title Services.
White says a planned eight-story office building for which he's leasing space is estimated to cost up to $50 million. It would be about 192,000 square feet and go up near a proposed extension of Main Street into the property, he says.
The developer, who with local hotel owner Hiren Desai is remaking the 112-acre Riverfront Parkway tract, says he's in discussions about bringing new manufacturing jobs back to a former turbomachinery plant which had been run by Alstom. That company had invested about $280 million in the factory to make turbines in 2010.
In addition, there are talks with developers about construction of new single-family homes and condominiums on the Cameron Harbor side of the site, says White, whose group purchased the tract just outside of downtown's core for $30 million in 2018 from GE Power.