Work Force: More Downtown Workers Are Needed

I’m delighted that Mayor Madeline Rogero has invited the Urban Land Institute back to Knoxville to advise on downtown development strategies, especially for the two major sites that are now vacant: namely, those of the former McClung Warehouses on Jackson and the former State Supreme Court on Locust.

The expertise of the panel that ULI brought to Knoxville at the city’s request back in 1998 led to a conclusion that still resonates for me: “The strategy is simple. Knoxville needs more residents, office workers, and visitors walking around the downtown.”

The downtown renaissance that’s ensued has gone further than I could have imagined in terms of residential growth. Scores of mostly dormant older buildings have been restored as apartments and condominiums. While not even the Census Bureau has a count of how many people now live downtown, it’s a safe bet that the residential population has grown by at least 1,000 over the past 15 years.

Accompanying commercial development, especially on Market Square and Gay Street, have also contributed to making downtown a lively place to visit. While the good folks at Visit Knoxville haven’t yet had much success in attracting more tourists for overnight stays, the throngs that frequent once moribund Market Square on many evenings and weekends attest to its vitality as the city’s dining, event, and entertainment hub.

What hasn’t happened, though, is any growth in downtown’s work force. To the contrary, big drops in the number of office workers during the 1990s have been followed by further, albeit more gradual, erosion ever since. TVA’s headquarters employment has been cut in half to about 1,000 since 1993. The News Sentinel and its 500-plus full-timers moved out in 2002, about the same time that a predecessor to Regents Bank (AmSouth) relocated its Knoxville headquarters from Gay Street to Bearden. Kimberly-Clark followed suit last year, moving a staff of 350 from the building that bore its name even further west. Meanwhile, the demise of ImagePoint in 2009 cost 270 jobs in the Miller’s Building.

Over the same time, a steady stream of accounting, financial services, and law firms have been migrating from downtown to the free parking and easier commuting of the western suburbs. To be sure, these losses have been offset in part by a lot of small newcomers, many of them new millennial start-ups. And last year, an old-line firm—Barber McMurry Architects—moved its mostly professional staff of 30 to downtown’s Arnstein Building from just off Kingston Pike.

Strangely, the Census Bureau that can’t tabulate how many people live downtown purports to be able to count the number of people who work there. In 2011 (the most recent year for which data are available) it shows 23,687 downtown workers, down from 26,122 in 2008.

However, this total is preposterously overstated by the inclusion of 9,982 “educational services” workers. It’s believed that this includes all 7,500 employees of Knox County Schools even though only about 250 of them work downtown. Backing out the 7,250 school personnel who work elsewhere leaves 16,437 downtown workers, which may be a more realistic figure.

So what are the prospects for reversing the decline and beginning to fulfill ULI’s 1998 evocation?

For starters, the city is partnering with the new owner of the Kimberly-Clark building, Fred Langley, on a new 1,000-space garage in close proximity to that 260,000 square-foot building and the largely vacant TVA East Tower, which has 120,000 square feet of office space for rent.

The city has invested $3.5 million in acquiring and preparing the site for the garage, which is intended to accommodate tenant parking for both the Langley Building, as it’s now known, and TVA, which has contracted for 700 spaces in the garage. Already, commercial Realtor Joe Petre has succeeded in leasing 90,000 square feet in the Langley Building, including a relocated headquarters for Clayton Bank + Trust and from a state office building on Henley that was emptied to make way for its renovation as a hotel. But these largely represent a rearrangement of deck chairs, so to speak, within downtown rather than additional office occupants.

The nearest thing to a major downtown boost was when Cellular Sales came close to leasing 60,000 square feet in the TVA East Tower to relocate its 300 headquarters employees from the western suburbs. “I love Market Square and was a proponent of the move for a time,” says Cellular Sales president Dane Scism. “But we got a proposal we couldn’t refuse to buy a building in the Cedar Bluff area.”

Between them, the remaining vacant space in the Langley Building and the TVA East Tower could accommodate on the order of 600 office workers. But in contrast with Petre, a TVA spokesperson sounds surprisingly passive about its recruitment efforts.

Barber McMurry’s move to the Arnstein Building is hopefully the harbinger of more attractions to downtown on the part of what its boosters like to refer to as the “Creative Class.” The architecture firm’s president, Chuck Griffin, reports that after losing a recruit to a downtown firm, “We quickly realized that it has a great deal of synergy, and we felt we needed to be there in order to attract the best and brightest of the Creative Class.”

While other large existing buildings have had some successes in filling vacancies, it’s going to take construction of new ones to grow the downtown work force more than incrementally. Unfortunately, the present market climate is anything but conducive to such construction. Prevailing rental rates of around $17 a square foot are far below rates well in excess of $20 that are needed to make a new office building viable.

However, developer Nick Cazana insists he can make 100,000 square feet of new office space work as part of his proposed redevelopment plan for the State Supreme Court site. Cazana’s proposal was spurned by the city in favor of an ill-conceived student housing and hotel complex that has since been scrapped.

Hopefully, ULI’s return to Knoxville can pick up where its 1998 assessment left off in terms of pointing the way toward growing downtown’s work force to complement residential growth.

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