Located at the South end of Gay Street the Andrew Jackson building has served Knoxville in many ways, from the current home of the Knox County Schools to a luxury hotel. The building has one of the best views in downtown Knoxville.
There has been a $6 million offer on the building since October of 2017 and the county commissioners will soon vote on the deal. The question some are asking, is whether or not the offer is good enough. The initial offer has been stalled since 2017 due to the Knox County Schools offices. They have recently approved a move into the East tower of the TVA building. With that major hurtle out of the way, the county can once again consider the offer from NA Associates LLC, a Nashville company.
The BNA Associates (Nashville, TN) proposal includes investing $43 million to convert the property info a 94-room boutique hotel complete with apartments and a rooftop bar.
The big question is what is the value of the building today? In 2015 it was appraised for 8 million as a mixed-used office/residential property. The building is not designed as a hotel, and to be used that way would require significant investment. A similar property, the 130,000 square foot Farragut Hotel (also a boutique hotel) was purchased for 3.67 million. The AJ building offers 150,000 square feet. Times have changed, so the appraisal of the building might have increased, however cost of construction has also increased. It would be unlikely that developers would agree to a higher sale price.
The original deal was approved by the commissioners. With the School Board move nearly complete we would hope to see a final decision on the building soon. The County Mayor’s office wants the sale completed as soon as possible.
Downtown Knoxville is beginning to hit critical mass with hotel properties. We’ve been involved in several of these projects, such as the recently opened Embassy Suites. Most of these properties have come online since the original 2017 offer from BNA. The landscape has changed. That said, I think we need a catalyst on that end, and (a boutique hotel) is good. I think it would be nice to see that happen. I like the fact that if something goes in then some chemistry goes in on that end (of Gay Street and goes back towards Market Square.