insights (2006-38)

Keep the Five Points Dream Alive

The grand opening of Five Points Village Plaza last spring culminated several years and more than $5 million worth of effort to bring commercial vitality to this blighted stretch of Martin Luther King Avenue in East Knoxville.

A poster of the Rev. King with the message “Keep the dream alive” hung prominently near the entrance of this iconic shopping center in which the city of Knoxville and Knox County had invested $3.6 million of public funds to support the efforts of developer LeRoy Thompson, who put in $1.75 million of his own. The centerpiece of the development, a 20,000 square foot Metro Village Market, was expected to draw grocery shoppers from the environs to a site that had once housed a Cas Walker store.

But now the uplifting King poster is gone, and the most prominent sign overhanging the entrance to the Metro Village Market sadly proclaims a “Store Liquidation Sale.”

Unless a major food store chain can be induced to take over operation of the market in two months it will be closed—except for a convenience store and deli component associated with a gasoline station that have fared well. “We just didn’t get the numbers we projected and therefore we are incurring some very significant losses that are not sustainable,” Thompson says. While he acknowledges the losses “may just be growing pains” and suggests the store “may be a viable option for a chain” with deeper pockets and more staying power, Thompson says that by the time he and his partner in the independent operation of the store “could have done that we could be a million dollars more in debt than we are and that’s just not a good practical decision.”

Without engaging in a post mortem of what went wrong, I believe it’s imperative that Mayor Bill Haslam and his administration, along with Thompson find a way to right the situation. And Haslam’s deputy Margie Nichols says the mayor is committed to doing so. “He’s talking with other grocers about moving in there, and given all the money and political capital that have gone into it, he believes it’s very important for the city to find a way to make it work,” Nichols says.

Along with seeking a new operator for the grocery store, both Haslam and Thompson are pursuing other options for filling the vacant space if the store closes. “I have some ideas for things that are succeeding in other center city areas… [and] I’m frankly focusing on them because I don’t foresee another food chain moving as aggressively as we have to move,” Thompson says. Other types of retailers, office tenants and distribution centers are all on his prospect list. And he spurns the notion that loss of the grocery store would represent a failure of his Five Points development effort as a whole.

“Our primary objective was to turn a blighted, drug infested area into a beautiful development that’s creating jobs, generating tax revenues and providing a source of community pride. And from that standpoint, we’ve gotten off to a phenomenal start,” he asserts.

Five Points Village Plaza also includes a men’s clothing store, a Wells Fargo mortgage loan office and a County Clerk’s satellite office, and all of them are doing well, Thompson reports.  So are the convenience store and deli components of the grocery store which will continue to occupy 7,500 of he grocery store’s 20,000 square feet.

“We’re going to continue focus on creating jobs that people in the immediate community can take advantage of, and bringing viable business to this area should attract housing initiatives and other infrastructure initiatives for Five Points out to Burlington,” Thompson continues.

At the same, though, he admonishes himself and others for not having done a sufficient job of educating the surrounding communities to the importance of supporting economic development in the area. “Whether it’s a grocery or a Goody’s Family Clothing, it’s going to have to be supported overwhelmingly by the surrounding communities. Otherwise, over time the area will revert back to the very blighted conditions we’ve worked so hard to remove.

“I’ve come to realize that we’ve still got a lot of work to do to reach out to the broader community that may not have felt a connect with what is going on in the city core. We just didn’t educate people to the significance of this project’s being successful so that they valued it enough to break existing buying habits that may have been in place for 30 years.”

As true as all of this may be, one also has to wonder whether sufficient market research, merchandising savvy and financial backing went into the Five Points Village Market to maximize its chances for succeeding. Thompson and his partner Norman Wright, who came out of retirement, only stepped in to run the grocery store when a previous ownership/management team pulled out shortly before the store was due to open.

Haslam came up with an additional $300,000 in city backing to facilitate that transition, but the improvisations involved contrast sharply with the ways in which the city went about inducing an established grocery chain, Food City, to locate a new store in Mechanicsville. Nichols sounds more optimistic than Thompson about the prospects for getting a chain to take over the Five Points store as well. And Haslam will deserve great credit if he can keep the dream alive by doing so.