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Farragut leadership weighs in on the Town’s vacant tenant spaces

Town officials and economic development spokesmen overwhelmingly say they see Farragut’s vacancy rate as a potential opportunity.

“This is a real significant issue for the Town. Obviously, there’s some opportunities for us to do things differently here to ameliorate that problem,” Bob Markli, Alderman and Economic Development Committee member, said.

At a farragutpress count last week, the Town has 126 vacant commercial and office tenant spaces in Town limits.

“There is nothing about the conditions in America today that is anything like anything we’ve been through before,” Mayor Ralph McGill said.

“And so anything you might think about in terms of conventional wisdom built up over the centuries about retail business, or whatever else, may not apply in this case anymore,” he added.

There may be empty stores and there may even be interested occupants, he said, but banks aren’t lending money.

“You keep hearing that over and over and over again,” McGill said.

“What we’re seeing is largely a function more of circumstances … it’s not the Town running off people. I’m tired of that story. If anything, we’re trying to get them back, and trying as hard as we can,” he added.

Economic Development Committee Chair Jim Holladay agreed: “It’s interesting to note that Farragut is no worse than any of the other area communities,” Holladay said, a sentiment several realtors expressed to farragutpress last week.

He wondered if the number of vacancies might be tied to how realtors or developers market those spots; the EDC has previously discussed that some realtors advise clients not to locate in Farragut.

“Some of the property owners are not being very aggressive in trying to market their property. So the question is, why is that?” Holladay said.

He queried if there were economic advantages for building owners who didn’t rent their vacant spaces.

McGill pointed out the empty Kroger building is leased, even though it’s vacant.

“Everybody keeps pointing out the empty Kroger. But they’re collecting lease money on that building for another year or so.

“The owner has no incentive to recruit anybody because they’re getting money anyway,” he added.

Holladay said some buildings have multiple owners or businesses involved in lease agreements, which only complicates the process, and could lead to an empty building still making money.

Town Administrator David Smoak said other buildings, such as the 3,000 square foot millworks building mentioned in last week’s story, have issues that could bar easy sells.

The millworks building, for example, is located entirely in a 100-year floodplain.

Smoak and McGill pointed out that the vacancies along Kingston Pike also could be due to the Town’s evolution.

The Town first developed along Kingston Pike, then retail development shifted to Parkside Drive. Sooner or later, both said, it will shift back.

“Turkey Creek has just sucked everything out of everywhere, and of course it’s just about to be completely covered with stores,” McGill said.

“Any growth beyond that is not going to happen in Turkey Creek because it can’t. And that will open up some doors for these places that are unoccupied, I think,” he added.

But Markli said the Town should still examine its own policies to ensure it’s not putting up roadblocks for businesses.

“[Vacancies are] definitely not a positive thing, but it’s definitely an opportunity for the Town to look at what we’re doing that may be adding to that problem, or things we might do to remove roadblocks to fill those spaces,” he said.

One such item to look at may be the grandfather clause, he added, which states a building that is vacated must comply with current Town codes before it is occupied again.

“That’s just not economically feasible for most of those older buildings,” Markli said, particularly if a building is “working fine” and has no problems.

“[That building] is basically no longer viable for that tenant. I think we’ve got a problem there, but I’m not sure what the problem is.

“Maybe that’s not a bad policy. Maybe we need to look at other ways the Town can incentivize buildings to fill those spaces,” he added.

More traditional incentives such as tax abatements are out because the Town doesn’t impose a property tax.

“I’m not sure what the answer is … but we’re working on some things,” Markli said.

The EDC has discussed the vacancies at length at some of its meetings; talking through “fixes” such as marketing the spots, recruiting businesses or including a map of vacant spots on the Town’s Web site.

McGill said that whatever the Town decides to do, it should work in partnership with others in the business field.

“I don’t think we should do anything that would be separate from what realtors and developers are doing. We should do it as a team.

“And we’re certainly motivated to help in whatever way we can,” he said.

Smoak said, “Developers develop your community; the Town doesn’t.

“The Board just says where they’d like to see things in the future and developers come in and build that vision. The builders have done a really great job in Farragut.

“If a real estate agent or developer or anybody came to us and had an idea for a vacant space, then we’d be more than willing to work with them. That’s what we’re here to do,” he added.

Markli said he had dreams for what Farragut could be.

“My goal in my four years of office is to make Farragut the address of choice for people looking to locate a business — that we can create an environment where people feel they have a better chance of success than anywhere else.

“That’s going to take a lot of work to do that, but I think having the availability of a lot of space; if we can create an environment where that space is extremely desirable for start-up businesses or businesses looking to relocate, then we’ve done a good thing,” he added.

The vacancies may be an opportunity, McGill said, but the time to explore that opportunity might not be now. Many business owners and developers are “waiting to see what’s going to happen.”


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