UPDATED NEWS RELEASE: This morning, the Downtown Memphis Commission’s Center City Revenue Finance Corporation approved a 20-year payment-in-lieu-of-taxes incentive and $6 million parking garage loan to support Development Services Group’s planned $73 million investment in the Edge district of Memphis.
Additional approvals for the parking garage are required from the Downtown Parking Authority, the City of Memphis, and Shelby County Government. Assuming these approvals are granted, demolition and initial construction on the project will begin this fall.
(ORIGINAL NEWS RELEASE)
MEMPHIS, TN — Development Services Group (DSG) today announced that they will move forward with the development of a 10-acre set of historic properties and parcels in the heart of Memphis’ thriving Medical District. The total project, which involves numerous high-profile properties along Monroe and Madison Avenues, will include an investment of more than $70 million, resulting in a variety of new residential, office, and retail spaces, as well as new public greenspace in the core of the city.
“Our office is in downtown Memphis, and we’ve been driving through the Edge District for years,” says Gary Prosterman, DSG President and CEO. “While many of the buildings here have been neglected, we see it’s amazing potential — beautiful, historic properties and a location that’s close to midtown and downtown amenities. If you look at an aerial map, it is obvious that the Edge is the ‘hole in the donut’ that can be filled to connect downtown and the Memphis Medical District. The major institutions in the Medical District have really stepped up in the past few years with their own projects. When the Downtown Memphis Commission made it clear that this area was a priority for them, we decided to make a substantial investment and do what we could to catalyze the revitalization of the Edge district. This is a transformational project and a once-in-a-lifetime opportunity to create something exceptional in this area that combines and utilizes a variety of residential, retail, commercial, and greenspace uses,”
For the project to be financially feasible, DSG is seeking a 20-year payment-in-lieu-of-taxes incentive from the Downtown Memphis Commission (DMC) for the project. They will make a presentation to the DMC’s Center City Revenue Finance Corporation (CCRFC) Board of Directors at their regular meeting on August 8. If the incentive is granted, the development will pay $7,300,000 in property taxes over the 20-year term. DSG will also seek a loan from the DMC’s Downtown Parking Authority (DPA) to construct a district parking garage to serve the high-density neighborhood.
DSG’s proposed redevelopment in the Edge District will include the adaptive reuse of more than 150,000 square feet of existing structures, some of which are over 100 years old as well as ground up construction. The total development budget of the master plan will exceed $70 million.
Specific properties in the first phase of DSG’s plan include:
● 400 Monroe Avenue (eastern portion), a section of the former Wonder Bread bakery, will make way for 286 new construction market-rate, class-A apartments and a 480-space parking garage. The total development budget for this component is $55 million; DSG has partnered with SWH Partners, nationally acclaimed apartment developers from Atlanta, GA, to co-develop the multifamily project. Looney Ricks Kiss is the architect and Montgomery Martin Contractors will be the general contractor.
● 400 Monroe Avenue (western portion), a section of the former Wonder Bread bakery still in excellent condition, will be converted to 75,000 square feet of new class-A office space and retail with a development budget of approximately $9.5 million. If the incentives are approved, this property will become the headquarters for a financial services firm — currently located outside the city of Memphis – that has 120 employees.
● 411 Monroe Avenue will be restored into 17,000 square feet of class-A office space at an estimated cost of approximately $2 million.
● 421 Monroe Avenue, also known as “the Cycle Shop”, will receive an extensive mixed-use renovation that will include a new location for City & State and the offices of the Memphis Medical District Collaborative, among others. This 27,000 sq. ft. project has a $3 million development budget. A2H is the architect and engineer and ViktorHall Construction will be contractor.
● 435 Madison Avenue, a former glass factory, is a 35,000 square foot property that will be adapted into office and recreational space at a cost of approximately $2.5 million.
A second phase of the project (not considered in the August 8 incentive application to CCRFC) will include the redevelopment of an abandoned rail spur, known commonly as “The Ravine,” into new public greenspace, adaptive reuse conversions of 484 Union Avenue, 571 Marshall Avenue, 603 Monroe Avenue (formerly Kudzus) and 620 Monroe Avenue into new mixed-use properties, and new construction on the surface parking lot next to 603 Monroe Avenue.
PGK Properties owns all of the parcels under redevelopment. DSG will serve as the master developer with SWH Partners co-developing the apartments at 400 Monroe Avenue. Worthington Hyde is the project’s investment partner. Looney Ricks Kiss assisted DSG with master planning for the project.
The project is contingent on the approval of the CCRFC incentives and public support for some additional structured parking.
“A project of this scale and scope will be catalytic for downtown,” says Brett Roler, Vice President of Planning & Development for the DMC. “This is a perfect example of a project that wouldn’t be possible without DMC incentives or a public-private partnership. We applaud DSG’s level of investment in the district, as well as their commitment to maintaining the character of the neighborhood through adaptive use of existing buildings. We look forward to partnering with DSG for the betterment of our entire downtown.”
Within the Medical District, The Edge has been the site of several developments and new projects over the last few years. The success of small businesses including High Cotton Brewing Company, Edge Alley, Blues City Tours, Evelyn and Olive, Sabor Caribe, and Trolley Stop Market have all demonstrated the area’s potential, while several forthcoming developments will add to its vibrancy.
“DSG’s commitment to the Edge is crucial to the continued growth of the district,” says Tommy Pacello, President of Memphis Medical District Collaborative (MMDC), a nonprofit community development organization working to revitalize the area. “Market studies show that strong demand exists for additional residential and retail developments here. MMDC is thrilled about DSG’s efforts to create additional density, increase economic vitality, and strengthen the connections within downtown.”
Development Services Group is renowned nationally as a developer of high-quality urban infill and adaptive reuse projects, primarily in the multi-family and hospitality sectors. Locally, they are best known for their involvement in the redevelopments of One Commerce Square in 2010 and the historic Chisca Hotel in 2015. Other recent achievements include major hospitality projects in urban centers of Tampa, Houston, Philadelphia, and Atlanta.
“DSG is a homegrown Memphis business,” says Prosterman. “I’m a native Memphian and everyone on our team appreciates the need to make our hometown as successful and strong as it can possibly be. Ethan Knight, our Vice President of Development, has done a phenomenal job assembling the parcels and developing our master plan. For us, this project allows us to do something meaningful in the heart of our city that will generate more value and unlock more potential for years to come.”
Pending approval of the Downtown Memphis Commission’s CCRFC and DPA assistance, construction on the project’s first phase at 400 Monroe Avenue and 421 Monroe Avenue will begin in September.
For more information on Development Services Group, please visit DSGinc.net.
