The South Carolina-based developer who was expected to transform Knoxville's vacant Standard Knitting Mill has dropped the project after a surprise discovery beneath the building, two fires and pandemic-related delays.
The city and its redevelopment arm, Knoxville's Community Development Corporation, are now back to square one and searching for someone to develop the Magnolia Warehouse District property about a mile northeast of Covenant Health Park.
WRS Inc. Real Estate Investments acquired the historic mill in 2019 for nearly $4.1 million, with plans for a mixed-use development that would include restaurants, shops, apartments and office space at 1400 Washington Ave. An online listing shows the property is back on the market for $8.5 million.
The city agreed to a tentative 25-year PILOT, or payment-in-lieu-of-taxes, that would freeze property taxes to make the project financially feasible for the developer, Knox News reported in 2019.
But WRS later faced millions in added costs from an unmarked KUB water line and the absence of textile mill tax credits in Tennessee like the ones in South Carolina, KCDC CEO Ben Bentley told the Knoxville City Council at an Aug. 27 meeting.
The city is "willing and ready to talk to interested investors to bring something to life here," Rebekah Jane Justice, the city's chief of urban design and development, said at the meeting. Property records still list WRS as the owner.
Vice Mayor Lynne Fugate questioned Justice and Bentley about why the project has stalled, saying it can be "upsetting to neighbors and constituents to see stuff sit there for forever." Justice acknowledged the frustration and said setbacks are a "natural art of real estate development."
The next developer, Bentley and Justice agree, would need a creative vision and be willing to take on a fair amount of risk. A thoughtful redevelopment is possible with help from KCDC and city tax incentives, they said.
"Now we know a lot more facts about this," Bentley said. "And maybe the next developer, because of that information that can be shared with them, will have better success."
WRS also had to contend with pandemic-related challenges and extensive environmental remediation required to clean up the property. In early 2022, two separate fires less than eight hours apart caused substantial damage to the site.
Standard Knitting Mill fueled Knoxville's identity as a textiles hub
The Standard Knitting Mill opened on the property in 1901 and had around 800 employees by 1921, according to newspaper archives.
As of 1936, textiles were the city's dominant industry, according to the Knoxville News Sentinel. An article from that year claimed Knoxville was the "greatest underwear producing city in the United States and probably in the world."
The mill was purchased in the 1980s by Delta Apparel, part of Delta Woodside Industries. In June 1989, less than a year after the acquisition, employees learned the plant would close. Since 2000, the property has changed hands four times.
Hayden Dunbar Evans contributed background on Standard Knitting Mill's history to this report.
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: Standard Knitting Mill back to square one after developer drops out | Exclusive
