published Saturday, May 25th, 2013

Tennessee offices in Chattanooga to relocate

The state of Tennessee is seeking office space to relocate from the Chattanooga State Office Building on McCallie Avenue in downtown Chattanooga.
The state of Tennessee is seeking office space to relocate from the Chattanooga State Office Building on McCallie Avenue in downtown Chattanooga.
Photo by Staff File Photo.
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    The state of Tennessee is seeking to rent office space to move workers from the James R. Mapp Building.
    Photo by Staff File Photo.
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State office buildings

* Chattanooga State Office building at 540 McCallie Ave., erected in 1954 as the Interstate Life Insurance Co., was expanded in 1970 and acquired by the state in 1981 for $5.85 million. Consultants estimate it would cost $8.49 million to fix the seven-story, 195,100-square-foot building for future use.

* The Mapp Building at 311 M.L King Blvd., was built in 1992 and includes 83,000 square feet. Consultants estimate it needs $3.5 million in maintenance work.

Transition timeline

* May 29, 2013 - Proposals due for 129,000 square feet of office space in Hamilton County to house state agencies

* Aug. 21, 2013 - Leases to be signed for new state office space in Chattanooga

* Feb. 1, 2013 - State agencies move from James Mapp and former Interstate Life Insurance building into leased offices

Source: Tennessee Department of General Services

The state will move from landlord to tenant next February when the offices for nearly 400 Tennessee employees in Chattanooga are moved out of two state-owned buildings that consultants say are "functionally obsolete."

But while state offices will vacate the downtown structures, another branch of state government -- the University of Tennessee at Chattanooga -- is eager to acquire those buildings, or at least the land upon which they sit.

"UTC is extremely interested in the acquisition of those properties, which we have identified in our new master plan," UTC Vice Chancellor Richard Brown said. "We think land that close to the university is critical if we're going to grow and meet our goal of having more than 15,000 students."

Dr. Brown said UTC has approached the state about transferring the seven-story Chattanooga State Office building on McCallie Avenue and the James R. Mapp office building on M.L. King Boulevard to the university for future growth. In the near term, the properties could be used for their 600 parking spaces. If sufficient funding is available, the properties also could be converted into university housing, classes or offices, Brown said.

"We're challenged as a growing university that is landlocked, and this would be a tremendous asset for us," he said.

The two Chattanooga state office buildings are among a half dozen the state Department of General Services is disposing of because the projected costs of maintaining the structures is too much for state offices. Fixing problems in the aging state buildings in Chattanooga is projected to cost nearly $12 million.

The state will receive proposals on Wednesday from building owners interested in leasing up to 129,000 square feet in Hamilton County for state agencies now housed in the two buildings, including the departments of human services, revenue and environment and conservation.

The requests for lease space are less than half the square footage of what the state now occupies in its own buildings.

"The floor plans for our existing buildings are not necessarily the most efficient and there is a lot of square footage in those buildings that is not usable space," said Kelly Smith, assistant commissioner for the Department of General Services. "We've taken the number of employees in these offices and taken programming information based upon their roles and activities and determined the appropriate amount of space to complete their jobs. Our requests for proposals are based upon those numbers."

The state is seeking 10-year leases for offices with at least 51,000 square feet of contiguous, usable space.

Kim White, president of the downtown development agency, River City Co., worries that the parking and contiguous space requirements could be hard for many downtown buildings to meet. As a result, the offices could move out of downtown to the suburbs.

"The state has indicated a willingness to consider all alternatives and we think it's important for these offices to stay downtown in the heart of the city," she said.

The office reshuffling will move where hundreds of employees and thousands of visitors conduct state business in Chattanooga.

David DeVaney, president of NAI Charter Real Estate Corp., said the downtown office market has adequate space to accommodate the state offices. But not all of that space may be contiguous or have enough parking available.

DeVaney estimates about 7 percent of the Class A office space in downtown Chattanooga is vacant.

DeVaney and White both concurred that UTC is the natural user of the state offices being vacated next year.

"This is a once-in-a-decade opportunity to buy a property this large and close to UTC and I'd love to see the university get these sites to help it grow downtown," DeVaney said.

Tennessee House Majority Leader Gerald McCormick, R-Chattanooga, agrees that the property should be transferred to UTC.

"It's a natural extension of the university and I hope something can eventually be worked out so that can happen and UTC gets more room to grow," McCormick said.

Brown said UTC has talked with state officials about the properties, but he said UTC has made no assessment of what it would cost to renovate or demolish any of the structures to be vacated. The state Building Commission must ultimately decide upon any property transfer.

"At this point, there is no formal plan for those buildings after they are vacated," Smith said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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