Market Square's Landmark Peter Kern Building Slated For Major Renovations

Amid the seemingly recession-resistant tide of urban development, one recent downtown anxiety was the fate of one unusual building that had once been at the front of the wave. The St. Oliver Hotel, known to historians as the Peter Kern Building, was for sale. One of the oldest buildings on Market Square—its address has been since the day it was completed in 1876, 1 Market Square—was for sale. Its longtime owner, maverick preservationist developer Kristopher Kendrick, who was responsible for much of the hotel's eccentric personality and who liked it so much he moved into it, died last year.

Last week, a group led by two young investors, New York developer Ethan Orley and Tennessee real-estate man Philip Welker, closed on their purchase of the St. Oliver Hotel Building. The purchase price was $1.5 million. After a major renovation, they intend to reopen it as an upscale hotel. They're working with local architect Josh Wright on the project, which will commence soon.

"The building is one of the prettiest buildings in the city," says Orley, "and it's an A-plus location. Our idea is that we bring it up to a higher-end use as an upper-end boutique hotel, which doesn't exist in the marketplace right now."

This is Orley's first Knoxville project, but his partner, Nashville-based Welker, has been involved in downtown Knoxville preservationist development for several years. A University of Tennessee grad, Welker was one of the early developers of Minvilla Flats—he started the process toward getting the building on the National Register of Historic Places. He also developed McMillan Flats nearby, and at one time also invested in townhouses Sterchi Oaks and the Lucerne, which had also been Kendrick properties. He left Knoxville in 2005 to study real estate at New York University graduate school.

"I always thought that was Kristopher's best building," he says of Kendrick's beloved St. Oliver. They're keeping details under wraps, but he says, "We want to give it a nice, clean, modern, boutique-hotel look. Not like a chain, something very local to Knoxville."

Boutique hotels are usually smaller and more distinctive than the big chains, sometimes in quaint or whimsical ways. Currently, all of downtown's hotels other than the St. Oliver are larger chain hotels. A long-running bed-and-breakfast in Maplehurst appears to be in transition.

Contrary to some rumors, the St. Oliver has been open for business while it was for sale, and remains open today. But if all goes according to plan, the hotel will close in early January, to reopen sometime in the spring of 2011.

According to a prepared statement, "The new interiors will have a sophisticated style inspired by boutique hotels in larger cities, yet keep a local flavor very unique to Knoxville."

Built by German immigrant Peter Kern in 1876, and designed by Joseph Baumann, perhaps Knoxville's first professional architect, the building was originally home to Kern's Bakery. That's interesting enough to Knoxvillians who grew up with that locally well-known brand, but Peter Kern's original business boasted a wonderland of delights. On its street level was Kern's candy counter—Kern at one time claimed to be the South's most prolific manufacturer of candy—and an elaborate soda fountain which probably introduced many East Tennesseans to the weird new taste of Coca-Cola. The erstwhile baker also sold toys and even fireworks. A second-floor "ice-cream saloon" with chandeliers and marble-top tables was open until midnight. Above it was the Oddfellows Hall, which sometimes hosted concerts and balls.

Kern, a wounded Confederate soldier who settled in Knoxville almost accidentally during the Civil War when he was arrested by federal authorities here, was also a civic leader during the Victorian era, becoming Knoxville's last foreign-born mayor in 1890. As an entrepreneur, he was a great advocate of Old World traditions, like the Christmas holiday, which had been a barely noticeable, sober affair in Knoxville before he opened his Market Square store, as well as other holidays, including patriotic ones. His building was often dressed up in red, white, and blue bunting, and at one time bore on its roof a large metal American flag decorated with electric lights.

The building's functions took a turn toward the prosaic after Kern's death in 1907, eventually dropping much of the fun stuff to serve as Kern's main bakery, under corporate ownership. The company left the building in the early 1930s when Kern's built its Chapman Highway bakery.

Hosting a variety of other tenants, including a drugstore, a beer joint, a dancing studio, and a "Metaphysical Library," the building went by various other names over the years, including the Mall Building.

It was reconfigured as a 28-room hotel about 30 years ago first called the Blakley House, and developed an eccentric reputation, a "European-style" hotel with no two rooms alike. It became Patricia Neal's favorite place to stay in her hometown, and it was recently revealed that Elizabeth Gilbert finished writing her global bestseller Eat, Pray, Love while staying there in 2005. She suspected the hotel's library—and how many modern hotels have a library?—was haunted.

The building hosts two restaurant spaces on the ground floor: Market Square Kitchen, known for its big breakfasts and cafeteria-style lunches, and Shonos in City, which serves sushi and stir fry at lunch and dinner hours. There are no immediate plans to bother them, and Shonos at least has another year on its lease, and no plans to move.

The two young developers seem especially interested in the building's history, and in finding some appropriate way to celebrate it. Though Orley lives in New York, he and Welker are concentrating their efforts on Tennessee projects. They're currently at work on the Greenwood Place Apartments in Clarksville—Welker's childhood home. It's a residential redo of a historic high school. "We have a penchant for historic properties," says Orley. "We want to see them used to their highest potential."

(Correction: An earlier version of this story said that Philip Welker had gotten Minvilla Flats on the National Register of Historic Places. He began the process, but it has not yet been completed.)