Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 12, 1995 TAG: 9503130012
SECTION: BUSINESS PAGE: D-1 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
R. Matthew Kennell, president of Downtown Roanoke Inc., said the city needs a new study, perhaps like Design 79, a study of downtown issues compiled 16 years ago. Today's issues, he said, range from the best use of vacant properties to the building and fire codes that hinder attempts to develop upper floors of older structures.
The City Market is "successful beyond imagination," Kennell said, and the confidence gained from its sucess is beginning to push out, as witnessed by the opening this month of the Star City Diner. But Kennell said it is necessary to look at the factors that might make it move out faster and farther.
Although Roanoke has a stronger retail and office base than most downtowns, Kennell said a study is needed to strengthen that base further.
Despite what appears to be a strong demand for office space, the annual survey by the Society of Industrial and Office Realtors reported a 17 percent office vacancy rate in the central business district. The survey, released last month, said 270,900 of downtown's 1.4 million leasable square feet were empty.
And downtown's other key element, retailing, is changing sharply in nature, with the influx of small speciality shops geared largely to tourism and the CIty Market are replacing traditional core city merchants. Along some streets, stores are disappearing with the space being converted to offices.
On one hand, certain areas of downtown are doing very well.
A long-gaping hole on Campbell Avenue, the vacant Woolworth store, soon may be filled. Spanky Macher, owner of the Star City Diner, confirmed last week that he has placed a bid to buy the building to convert it into a movie theater. "I have an interest in doing more things downtown," he said.
The Roanoke City Market, meanwhile, is thriving. The southern end of Market Street at Church Avenue soon will be anchored by a $700,000 building renovation being undertaken by the new owner, Philip Trompeter.
Hampton officials have invited Roanoke officials there to explain Roanoke's success with the special downtown service district. In Roanoke, downtown property owners pay an extra dime per $100 of assessed value for long-range development projects. This raises about $200,000 a year which is spent through Downtown Roanoke Inc. under contract with the city.
Perhaps the best news for downtown Roanoke is the conclusion of a long-term study by Trigon Blue Cross Blue Shield on how to accommodate its growing Roanoke work force. It recently finished studying the possibility of moving to a suburban location to place its nearly 1,000 employees under one roof, and John Berry, Trigon's executive vice president in Roanoke, said the company has "pretty much settled on downtown."
Trigon may shuffle some of its staff among its headquarters building on South Jefferson Street and space it leases in three other downtown office buildings - Signet Bank, Franklin Plaza and the First Union Building, Berry said. It's possible, he said, that Trigon will need still more space downtown "if we sell more insurance."
On the other hand, downtown officials face the possible loss of the Heironimus store at Jefferson and Church Avenue - historically the chain's flagship store. Company spokesman Larry Drombetta confirmed that the contract with the building owner, the Edgar A. Thurman Foundation for Children adminstered by Crestar Bank, will run out in December, but said, "I don't have any comment as to the lease."
Crestar Bank, which administers the foundation's affairs, also had no comment.
Kennell said he's heard the rumors about a closing that would leave a huge vacancy on one of downtown Roanoke's primary business corners. The company tells him that no decisions have been made. However, in recent months Heironimus moved some of its downtown offices to its store at the Towers Shopping Center, and it now occupies two of the downtown building's five floors.
To his knowledge, Kennell said, Heironimus is the last downtown department store in Virginia. A proposal for a downtown Norfolk development that would include outlets for national chains Macy's and Nordstrom has been delayed, he said, and is rumored that it may be in jeopardy. Construction of the proposed MacArthur Center has slowed while Federated Department Stores, Macy's new owner, reportedly reviews the chain's expansion plans.
Kennell said the Heironimus closing, if it comes, would be "a business decision" based on what is best for the company's future.
The Heironimus building is best suited to be a department store, he said, but retail business outside the City Market has come to center on Kirk, Church and Campbell avenues.
Outside of a few long-time speciality merchants such as Fink's, Lazarus and Davidson's, Kennell said, the downtown blocks of South Jefferson Street are changing from a retail strip to an office district. He cited the renovation of a former restaurant at 505 S. Jefferson St. into offices for an accounting firm, Budd, Ammen & Co., and the planned remodeling of the former Sydney's store into space for offices for several lawyers.
Even so, Kennell said, the Heironimus store "is a critical building" for downtown because of its size and location. He noted, however, that two other former downtown department stores - Miller & Rhoads (now First Campbell Square) and Leggett (extending from First Street Southwest in an L shape through to Campbell Avenue) - have both been converted into office buildings.
Outside of that potential problem, Kennell said the downtown office vacancy rate, which was 17 percent last year, is "going very well." Conversion of retail into office space, he said, is part of a national trend not limited to Roanoke.
|n n| A major problem, Kennell said, is use of the upper floors of downtown buildings for apartments and other uses. The fire code restricts conversions.
This is unlikely to change. Roanoke city building official Ronald Miller said upper levels have long been used primarily for storage; most were not designed to be living quarters. Conversion of those spaces is tough, he said, because of the expense of adding fire escapes and sprinkler systems.
Gov. George Allen recently appointed Miller to an ad hoc committee to study the state fire code and its application to inner-city areas in localities such as Roanoke, Norfolk and Richmond.
State building and fire laws require two exits from upper stories if people are going to occupy the space, especially for apartments.. People could die, Miller said, if flames blocked the single exit from an upper floor.
The Roanoke Valley Chamber of Commerce encountered this problem last month when it purchased the Charter Federal Savings Bank building. It cannot lease out the fourth and fifth floors of the building at Jefferson and Kirk Avenue unless it builds an expensive outside fire escape. And that's for office use, not for apartments.
Millie Moore, a specialist in retail real estate for Boone & Co. Commercial, also is having a problem as she markets the former Mish Mish Inc. building at 14 E. Campbell Ave. The Blacksburg-based art supply retailer closed the Roanoke store at the end of January.
That building is in fine shape, Moore said. It has fire-rated stairs and a water standpipe to the third floor. But the code demands either a second exit from the third floor or, in the alternative, a sprinkler system on the third floor. "Nobody's going to do that," Moore said.
The Trompeter building at the south end of the City Market will be brought up to code. Moore, who is handling the leasing of that structure as well, said, "We have plenty of prospects, lots of interest."
The problem there is that the project is being partially financed with community development grant money. That means the remodeling must proceed in phases because the grant money phase cannot overlap other phases, Moore said.
The project thus will proceed at a relatively slow place. Trompeter plans at least one apartment on the third floor, offices on the second floor and four retail spaces at street level. Steam cleaning of the exterior will begin this spring, and plans call for the facilities to be completed by the end of 1996.
|n n| Macher also is interested in building downtown apartments. Those he already has on the market stay leased, he said.
There are 30 apartments downtown, Kennell said, nine of them built in the last two to three years with incentive loans through Downtown Roanoke Inc. They are scattered among eight to 10 buildings in the central business district.
Two luxury apartments over Southern Title Co. on Church Avenue rent for $650 a month, Kennell said, while the others range from $350 to $400 a month.
Seven banks are participating in a new loan pool for downtown housing. Kennell said developers can borrow up to $100,000 from the fund, compared with a ceiling of $50,000 in prior rounds.
Kennell cited a rising interest in living downtown, especially if the "key issue" of parking problems can be worked out. People want to be able to see their cars from their apartments, he said, and downtown residents may need to get used to paying for garage parking and walking to work instead of paying for daytime parking.
He believes that upper-end apartments will be the wave of the future. Executives whose primary homes are in the country are looking for luxury apartments downtown as second homes, he said.
The fire code is complex, Kennell said, because it varies with the height of the building and the proposed uses on the upper floors. That is why the Chamber of Commerce ran into trouble on the fourth and fifth floors while the Mish Mish building faces restrictions on the third level.
Second floors generally are not a problem for apartment or office use, Kennell said.
Other than the fire code, he said, building regulations for downtown are relatively flexible in Roanoke.
Moore, the realty agent, is less sanguine about building downtown rules. "A couple of things have to be changed," she said.
As an example, Moore cited the flap over the Star City Diner's rooftop Big Boy statue, which the city first decreed must come down because of a ban on rooftop advertising. The issue was not whether the statue was liked, she said, but that Macher thought it was important to his concept for the 1950s-style restaurant.
If downtown were "pristine, if we didn't have anything here," the ban might have been justified, Moore said. But it already has a motley collection of such things as the H&C Coffee sign, she said.
Because of the dispute, she said, people interested in development "think you run into a lot of trouble downtown."
Moore said many people believe that developing downtown is different from leasing a shopping center. It's somewhat different, she said, "but not very."
The goal is to get the right mix of tenants to attract a variety of patrons so that all stores have some support both day and night. Right now at Towers Shopping Center, she said, space is being held vacant for just the right restaurant because the owners believe a restaurant is desirable.
Downtown, she said, is "heavy on restaurants." The need now is more night-time activity and entertainment, she said, mentioning the proposed cinema as a good example of what's needed.
Roanoke lost the opportunity for another coffee-tea shop in the former Lock, Stock and Barrel store downtown, she said, because the fire code was applied in what she believes was an irrational manner.
Moore said the proposed owners were told that they would have to have a second exit on the first floor and equipment in the kitchen to protect against fire from frying. However, the proposed shop wasn't going to be doing any frying.
Building inspectors, she contended, should be "a little more lenient with clean users. ... We're beating ourselves in the head."
Some downtown owners are looking for discount outlets and national chains as tenants, Moore said, but that isn't going to happen "in today's arena."
Off-price malls are not successful, as Celebration Station proved, she said. That former discount mall is now Valley Court, an office complex. Discount malls at Staunton and Wytheville are not doing well either, Moore said.
"It's tough to market downtown, period," she said.
People concentrate on the success of the Roanoke City Market, she said, but national prospects take a wider look when they come downtown.
Heading to the market with a prospect, Moore said, she would have to approach through Campbell Avenue with its vacant storefronts and empty offices.
"What would he think?" Moore asked of the developer's reaction.
by CNB