Supermarket Row. David Grace photo.
KINGSPORT — The Kingsport Economic Development Board (KEDB) on Tuesday entered into a letter of intent with a Knoxville developer who wants to build an upscale downtown housing complex on the old Supermarket Row property.
Jason Perry, president of the Perry Management Group, said he wants to put together a three-to-four story “urban development property” on the site with parking and multi-family housing with a stone or stucco exterior.
“We’ve done these developments throughout the Southeast,” Perry told the KEDB. “... Our real idea is to build something aesthetically pleasing to the community around it. ... That’s our goal. We’d like to build as many units as possible. ... It could have retail, a senior component or a hotel if possible. ... We’re going to make sure we do what’s best for Kingsport in the long run.”
Perry indicated he is working on a market analysis with real estate consultant Stuart Patz to see what the unit rents should be.
Patz, of Potomac Falls, Va., told the KEDB in spring 2013 that the old Supermarket Row property is “ideally located” for a new apartment complex tailored for young professionals and singles who want an urban lifestyle.
Still, a number of key details will have to be worked out for the site to be redeveloped.
KEDB paid $1.7 million for the 7.3-acre site in October 2012 by using a bank loan.
A closed IGA supermarket resides on the property, with the existing lease term expiring in June 2015, according to an information document drafted by Jeff Fleming, Kingsport’s assistant city manager for development. The lease had two five-year renewal options. IGA would owe KEDB $1.1 million in lease payments, Fleming stressed.
The project developer, Fleming added, is prepared to “provide their expertise and/or take the lead” in negotiating a lease settlement before a land transfer happens.
There is also a matter of what negotiated incentives would be offered to the developer. The property is within a downtown redevelopment district managed by the Kingsport Housing and Redevelopment Authority, so the developer would be eligible for any tax increment financing, Fleming said.
Fleming also pointed out there are four other tracts in that downtown Sullivan Street area, and the KEDB has no plans to buy them.
Regarding the site’s potential, Patz’s previous analysis noted Kingsport has 3,000 renters with annual incomes of more than $35,000 but only 700 “mature, moderate-rent” apartment units with a low combined 95 percent occupancy rate.
At the $35,000 or more income level, Patz stressed renters would be able to afford net rents of $875 per month and above.
Patz’s prior analysis of the Supermarket Row project supported a two-phased development of 125 units per phase.
The units, he said, could be a mix of one-bedroom, one-bedroom with a den and two-bedroom units with in-unit washer/dryer, stainless steel appliances, granite countertops and hardwood cabinets.
“The apartment building should have an on-site leasing office, a state-of-the-art fitness center, state-of-the-art security for building entrance, and TV/party room with kitchen,” Patz’s analysis said. “Outdoor amenities are not needed other than an attractively landscaped site.”