THRIVE Co-Working Lease and Build-Out in the Grove Arcade
DPA leased almost the entire 2nd floor of the Grove Arcade to Thrive Co-Working in 2022. This was the largest office lease signed in the Asheville market in 2022 by more than double the next largest deal. Thrive is a co-working concept that is speculative in nature and it comes at a time when post pandemic leases are rolling over and office vacancy is increasing. Couple these headwinds with an office market that is historically lethargic, and the Thrive lease is a bet by both tenant and landlord that there is demand for flexible, small office executive space in Downtown Asheville. The addition of a regional co-working space is both attractive to traveling business people and vacation travelers that spend long periods of time in the market and need an office away from home. This lease represents significant growth (net absorption) and/or tenant (industry) diversification in this market. It is net absorption and new to the market, and represents 15k sf of office absorption when the downtown submarket experienced a net negative absorption of 25k in 2022.
Unique challenges were overcome by the tenant and landlord. Difficult-to-lease 2nd floor office space was filled, a time-constrained tenant found space quickly, unusual amenities were requested/provided, parking challenges were resolved, innovative financing and lease terms were agreed to, permitting challenges were overcome, and more. The office lease was signed in a historic building thats on the national monument registry and requires improvement approvals. We had to overcome all of the constraints of working on a high-profile, fully-leased, open to the public, historic property — overcoming noise, keeping it tidy, keeping neighboring tenants happy, many of which were residential tenants, and jumping through all of the approval hoops. The end result was a great success — a beautiful build-out and successful tenant who is serving a great fit in our market!
Ramada Inn Conversion for the City of Asheville: Winner of the CoStar Impact Award
In 2021-2022, Austin Tyler shepherded a public-private partnership on behalf of the City of Asheville that resulted in the acquisition of a hotel property in East Asheville that will be redeveloped into permanent supportive housing units for Asheville’s homeless population.
In the beginning the goal (for the City) was the acquisition of a property for a low-barrier homeless shelter. After identifying multiple off-market opportunities, it was decided that the Ramada Inn was the best fit for the City’s needs. Once the property was under-contract and the low barrier shelter became operational in a portion of the hotel. The idea of what a low barrier shelter should look like programmatically and where it should be located continued to be debated in the community, thus resulting in a lack of consensus as time approached for the City of Asheville to close on the purchase of the hotel property.
Around this same time, the California based development group Shangri-La Industries visited Asheville for a tour of the market as a potential location of one of their permanent supportive housing projects. Shangri-La Industries had delivered more than 2,000 affordable housing units throughout California and was looking to extend their development activities to other areas of the country. The timing of this for-profit private sector developer’s interest in the Asheville was the perfect opportunity to pivot the project from a low-barrier shelter to permanent supportive housing. Permanent supportive housing is a concept that provides permanent housing solutions to those homeless in need of housing and onsite service support to ensure success for the resident of the property.
Austin helped the City of Asheville and the hotel property owners negotiate a deal for Shangri-La Industries to purchase the hotel property and to renovate it into 113 HUD housing voucher supported unit without any public funds being used for the actual construction and their operating partner, Step Up on Second Street, to manage the property while also providing intensive on-site supportive services to residents once the renovations are complete in late 2023. Step Up on Second Street received $1.5 million in public funds towards the cost of providing the first 3 years of supportive services. Half of the units will be dedicated to unhoused veterans and the other half to the unhoused individuals in the community.
Through Austin and Eddie’s strong relationships in the community, their experience in navigating public-private partnerships, and their hand-holding with all parties throughout the process is what made the difference with getting this deal over the finish line. The transaction dealt with political challenges, timing issues with delivery of the required HUD’s National Environmental Policy Act study, strong concerns of neighboring property owners, and all of the other normal issues that any redevelopment project encounters.
The project is a testament to the difference the right brokers can make by pairing innovative problem solving with strong relationships and market knowledge along with the endurance of refusing to give up easily. Shangri-La Industries closed on the real estate on September 15th, 2022 for a total of $9.75 million.