After more than three decades on Chattanooga’s commercial real estate scene, David DeVaney is more than capable of taking the long view.
That’s been a handy skill in 2020 when uncertainty has lurked around every corner. For DeVaney, who is president of NAI Charter Real Estate Corp., the way forward relies on much of what has worked in the past: strengthen relationships, work with local officials and keep an eye on trends that will benefit both clients and the overall community.
The Hamilton County Herald asked for his thoughts on his business and industry as 2020 comes to a close.
How long have you been working in this field?
“I began as a business banker in Birmingham, right out of college. After three years of doing that I decided to come back and get in the family real estate business. Charter was founded by my father and his partner in 1972, and I came back in 1988. And it’s been an enjoyable 30-odd years, and certainly has come with some challenges.’’
What was the Chattanooga market like in the late 1980s and into the 1990s?
“It was a great time, actually. Now, in 1988 downtown got dark at 5 p.m. But by the early 1990s we had the Tennessee Aquarium in development, and a lot of work had begun on redeveloping the riverfront. That really supercharged the overall downtown area, and we saw change taking place right before our eyes during that entire decade.’’
Was it all at once, or did a single project, like the aquarium, serve as a catalyst?
“There was a lot of foresight and strategic planning by some key individuals in our city. Elected officials, nonprofits, foundations … they all put money and deals together so that we could all understand what we have in terms of the beautiful Tennessee River coming through downtown. There were several individuals, like (Lyndhurst Foundation chairman) Jack Lupton and his substantial donation to build the aquarium, and work with the River City Company, I would say that was the catalyst for all of the downtown redevelopment to get going.’’
Before the arrival of 2020 and the COVID-19 pandemic, what were you and other commercial real estate leaders focused on?
“The challenge has been trying to stabilize retail in the downtown corridor, especially from the aquarium outward. A lot of people are looking at the right strategy to improve downtown retail. We’ve certainly increased the residential component, and so the focus earlier this year was on doing the same with retail. Working with the tourism industry will be key to that, and we were looking at options there when the pandemic hit.’’
In a post-COVID world, will you pick up where you left off on those plans?
“Yes, and then we’ll also have to look at the office component. There is going to be a lot of office space available. Companies are going to continue with employees working from home, and certainly that is going to affect their square footage needs in the future.
“I believe companies are going to play it safe and allow employees to make the decision that’s best for them – for a while. But by the end of 2021 I believe we’ll see a hybrid of employees working three days a week in the office, and two days at home, and rotating shifts. There is a need for face-to-face meetings, working together and collaboration, and so in-office work is going to come back at some point.’’
What’s your take on how the region surrounding the urban core was doing before 2020, and how is that going to evolve?
“Chattanooga is very blessed in that we’ve never been overdeveloped. Our highs are not as high as Nashville and Atlanta, but our lows aren’t as severe, either. I believe we have a core commercial real estate market that continues to be healthy and is driven by the growth of regional companies and low interest rates. If we need a new office park, we don’t need to go too far to find or build it.
“We sit in the middle of a regional economy. We have activity from north Georgia and north Alabama, and to the east in Cleveland they’ve just announced a major auto supplier coming to the Spring Creek Business Park – all the auto development has been a positive for us as well as that area. We have Nashville up the road, and growth coming down as it expands.
“And suburban development is going to stay strong as we see redevelopment of Hamilton Place and Northgate malls. Those both have a lot of floor space available for retail use, or that can be repurposed for other people to come in and grow their operations.’’
Are all things in commercial real estate in a holding pattern, or are things going on here and there?
“We are seeing incredible activity on the leasing and sales side of commercial real estate right now. Some sectors are stronger than others, and as an example we are trying to lease Unum’s Home Office West space, which is up to 200,000 square feet of office space. They are going to maintain the cafeteria and some of their technology in that building but have compressed their footprint and so can fit their employees into the Home Office East building after a redesign. And they’re done all that without laying anyone off, so we have a premier listing into a busy area. That site has everything a large corporation would need to relocate to Chattanooga and gives us something to market on a national level.’’
How about industrial and warehouse space?
“Those are still extremely strong here. The problem we have is a low inventory of quality buildings, so if someone comes in needing 500,000 square feet of warehouse space, we don’t have a product to offer. We don’t have the industrially zoned land with the infrastructure in place so it’s rough graded and shovel ready. That’s a challenge our civic leaders are working to resolve, and I know they are looking at the McDonald Farms space up Highway 27 toward Soddy Daisy. That’s a 200,000-square-foot tract of land and would be natural and linear move for a business park development on that side of town.’’
What has COVID done to your day-to-day work process?
“Like everybody else, it’s made what I do kind of a hybrid of in-person and online. I had a client from New York City yesterday who elected to drive here versus fly, but we did meet. Everyone’s investing in technology, from Zoom tours to drones, to market property without giving physical tours. We’ve invested in a lot of technology so we can do those virtual tours, and I think that is helpful.
“People are always going to want to see a space, to touch and feel it, before closing, As an industry that’s always going to affect how we do business. But people are going to be smart about it, and so we have to be ready to take all the necessary precautions.’’
Thoughts on 2021?
“It’s going to be a rebound year. The first six months are going to be interesting, though. We were successful in closing the transactions we had in place before COVID, and our pipeline looks decent. Of course, we saw a slowdown, but that tends to happen during a major election year anyway – hard to say it’s just due to COVID.
“I believe we’ll see moderate activity in early 2021, and by summer business will be picking back up and gaining momentum. And my hope is that office space and retail space will really drive the commercial sector.’’