A prominent Gay Street building and a vacant lot next door are drawing prospective buyers within two weeks of being put on the market, but the next developer will face a challenge that has stumped multiple owners over the past six years.
Jeffrey Dealejandro, senior advisor for PWA Properties, told Knox News on a tour 304 and 308 S. Gay St. that he expects the properties to sell soon. He's working to find a developer to get creative with the space − "somebody special" who is willing to break the mold.
Previous plans for the building at 304 S. Gay St., known as Friedman's Loft, included a boutique hotel. But as the properties have changed hands − three times over the past six years − plans to reimagine the building and develop the vacant lot have been
delayed.
Since 2000, the building and adjacent lot have attracted buyers, but none have been ready for a complete redevelopment, said Dealejandro, who spent years contributing to downtown growth as the chef and owner of the now-closed OliBea and HenHoc Butcher Shop in the Old City.
Just a decade ago, he said, there was a plethora of attractive downtown real estate to choose from that wouldn't require a developer building from the ground up. New construction requires additional resources that aren't needed when redeveloping an existing structure.
"In the last five, six years there's been so much going on," he said. "As Knoxville grows and things start to get developed, space gets taken and you slowly start to zone in on what is available."
While Gay Street has seen fresh momentum in recent months − with restaurant groups and retailers planning new concepts in empty buildings and storefronts − the lot at 308 S. Gay St. is one of the few remaining vacant properties in downtown Knoxville.
How the Gay Street properties have changed hands
Hotel developer HD Patel has operated an Airbnb on the second and third floors of Friedman's Loft since 2022. These levels, along with the rooftop and basement speakeasy, are the only parts of the building that could be repurposed, as the buyer will be required to enter into a lease agreement with the first-floor dentist's office.
Patel owned the properties from 2022 until Sevierville-based Compass Ventures acquired the building and the lot through a foreclosure sale July 31. Prior to that, Knoxville entrepreneur and philanthropist Josh Smith acquired the properties in 2020 for a combined $3.75 million, with plans for a mixed-use building on the vacant lot.
PWA is open to working out a deal for a developer to acquire both properties and is now vetting interested buyers. The lot is 0.217 acres and listed for $3.7 million on its own.
Whatever becomes of Gay Street property must match the neighborhood
A mixed-use development, Dealejandro said, would be the best option for the properties, which could accommodate a combination of residential, commercial and hospitality uses. Development on the vacant lot will need to abide by zoning regulations, requiring whatever is built to match the historic character of Gay Street.
Any alterations to Friedman's Loft also would have to preserve the historic character of the building, which was an auto parts shop before being purchased by Max Friedman in 1939. A fire destroyed the building shortly after the Friedman's jewelry store opened, according to PWA, requiring a complete renovation. There is still a garage on the ground floor, accessible from Summit Hill Drive.
Between the store closing in the 1990s and the property being purchased by Smith in 2020, the building was converted for a family to live on the second and third floors. But the property's more recent history has been defined less by what was built than by what never materialized.
Sophia Tiedge is the growth and transformation reporter for Knox News. Email: sophia.tiedge@knoxnews.com
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This article originally appeared on Knoxville News Sentinel: Sale could revive vacant Gay Street property after years of false starts
