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'Cool area' remark sparks massive investment in Edge District

By Published: June 10, 2019 4:43 PM CT

First, Leo Events renovated and moved into the old A.S. Martin & Sons body shop building at 411 Monroe in early April.

This week, Orion Federal Credit Union unveiled the swanky, finished spaces of the 60,000 square feet it has been renovating for its new headquarters in the century-old Wonder Bread bakery at 400 Monroe.

This summer, construction is to start on the $1 million first phase of The Ravine, a sunken old rail spur that will be transformed into a linear park cutting through the heart of the Edge District.

The old dam – disinvestment, vacancy, falling property values – that has held back redevelopment in the Edge District has been breached. More developments are underway, others are to start later this summer and more will continue to churn for years to come.

And that’s just the $50 million Phase 1 of Gary Prosterman’s plan.

‘This could be a cool area’

He’s the head of Development Services Group headquartered in Downtown’s One Commerce Square. The company develops around the nation; Prosterman estimates just 20% of its projects are in Memphis.

His commute to work takes him past the Edge District, the old commercial/industrial neighborhood sandwiched between Downtown and the Medical District.

Prosterman recalls noticing the tourists who walk from Downtown to Sun Studio, cringing at seeing them slogging through the distressed Edge District, and thinking to himself, “I know we can do better.”

But a lot of people say that, he said, adding, “I didn’t really do anything about it.”

And then one of the “young guys” in his office, a then-28-year-old named Ethan Knight, said something about the Edge District that stuck with Prosterman.

“He said, ‘This could be a cool area.’ It took me a few years to see his vision,” Prosterman said.

Early on, Prosterman had developed medical buildings. So he was keenly aware that medical centers like the one next to the Edge District can be powerful engines for development. About 27,000 workers and students populate the Medical District.

The tourists, his colleague’s remark and the experience with medical districts were all factors in what Prosterman would eventually do. But, “what really tipped it was when the Wonder Bread property itself came up for sale,” he said. “It presented an opportunity to buy a big parcel, and at that time on a very reasonable basis.”

Prosterman is the “P,” Mike Goforth, Development Services Group vice president of construction, is the “G” and Knight, vice president of development, is the “K” in PGK Properties, the partnership they formed to start acquiring Edge District property in December 2014.

PGK Properties partnered with Worthington Hyde Partners, a Georgia-based real estate investment firm, to redevelop much of the Edge. Development Services Group is the master developer.

The partnership has acquired nearly 11 acres worth of big and small buildings and vacant land scattered across the neighborhood. The Edge District is bounded by Union on the south, Madison on the north, Danny Thomas on the west and the Memphis Medical District on the east.

The Rise

Orion purchased both the Wonder Bread bakery and the adjacent old Cadillac dealership building from PGK Properties. Orion will restore what it calls the “Cadillac Building” and lease it to another business.

“I think there’s the potential for a restaurant or other retail use in at least a portion of the Cadillac Building,” Prosterman said.

Meanwhile, Development Services Group has just completed building a 486-space parking garage behind Orion’s new headquarters.

And the developer is 10 or 11 months away from completing the 199-unit, $34 million apartment community that envelopes the east side of Orion and north side of the garage.

The apartments are called The Rise, a play on the baking that once took place there. The first Rise building should open in February, with pre-leasing starting shortly before.

Atlanta-based SWH Partners is a partner in The Rise project.

The Ravine

Construction is to start this summer on the first, $1 million phase of The Ravine. That’s the sunken, linear urban park that will start at Union – across from the old Commercial Appeal building – cross under Monroe and dead-end at the Madison overpass.

Eventually, the public-private development of the park is estimated to cost $5.73 million.

The Ravine is designed to have various outdoor “rooms,” including a pop-up/food truck retail plaza at Union, restrooms, seating areas, activity areas, gardens, play spaces and an event plaza near Madison.

Cycle Shop

Development Services Group hopes to start renovation of the vacant, 102-year-old Cycle Shop Building, 421 Monroe at Lauderdale, as early as this summer.

“It will be a multitenant building,” said Prosterman, who envisions a retail or restaurant user on the ground floor and offices on the second floor.

The Cycle Shop Building totals 29,000 square feet. The renovation is estimated to cost $3.5 million.

Glass Factory

The 103-year-old building fronts 435 Madison, but extends south along the old rail spur that will become the linear park.

Prosterman estimates that Development Services Group will spend $3.5 million renovating the 30,000-plus-square-foot building. An announcement revealing the tenant could come within a few weeks, he said.

The business is to be a brewery, according to documents filed with the Downtown Memphis Commission. Plans for The Ravine show the Glass Factory’s brewery having a substantial presence on the north end of the linear park.

Phase 2:  Kudzus and more

It’s unclear when Development Services Group will start work on Phase 2 of its Edge District master plan.

“I can’t tell you the timing of Phase 2,” Prosterman said. “The remaining components of Phase 1 are big tasks for us:  Complete the apartments; get the Cycle Shop going; get the Glass Factory going. And from a civic perspective, get Phase 1 of the Ravine Park done.”

Phase 2 will involve the redevelopment of a parking lot on Union next to another building PGK Properties acquired, 484 Union.

That 99-year-old, 9,864-square-foot building most recently housed the Jay Etkin art gallery.

Last year, it was announced that a craft cidery and taproom called Cidery Tree Cider Co. would open in the building. But that deal fell through, Prosterman said.

“It has the Union frontage and is a very cool building,” he said. “The backdoor will be the front door of The Ravine park. It makes sense for it to be a hospitality use, like a restaurant, bar or retail.”

Just up the hill from the Union Avenue parking lot is the 103-year-old building that housed the now-closed Kudzu’s Bar & Grill, 603 Monroe. PGK Properties purchased that building, too.

“What will be cool there is, it has a back porch,” Prosterman said. “The lower level of that porch will spill out on the park.” Patrons will be able to access the future business in the Kudzu’s building either from Monroe or from the park.

Profit and civic motives

Prosterman said Development Services Group is “very fortunate” to have a partner in Worthington Hyde Partners that is both patient and civic-minded.

“It makes a huge difference. … We certainly intend to make a profit, but also intend to lift up an area that needed to be lifted up,” he said.

Topics

Edge District Commercial Real Estate Parks
Tom Bailey

Tom Bailey

Tom Bailey covers business news for The Daily Memphian. A Tupelo, Mississippi, native, he graduated from Mississippi State University. He's worked in journalism for 40 years and has lived in Midtown for 36 years.


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