The company that controls the leases on the residential and commercial space in the historic Grove Arcade building downtown recently let residents living in the 42 apartments know that they are seeking to secure their right to convert the living space to a 35-room hotel.
“I can confirm that the ownership group of the Grove Arcade is evaluating the submittal for as-of-right use under the small hotel classification, and held a meeting with residents to inform them of this consideration,” Wes Reinhardt, president of Altamus, a regional property management firm located in the arcade building, told Asheville Watchdog via email. “There are no immediate plans for conversion to a hotel. Ownership simply feels it is their fiduciary responsibility to ensure the preservation of their existing use by right for being a hotel.”
A centerpiece of downtown since its opening in 1929, the 269,000-square-foot Grove Arcade dominates a city block. It is home to retail and restaurants on the first floor, offices on the second floor, and apartments above that.
Originally developed by E.W. Grove, the malaria medicine magnate who also built the Grove Park Inn in north Asheville, the Grove Arcade originally opened as a sort of mall. During World War II the federal government took over the building, and it became the longtime home of the federal government’s weather agency, National Weather Records Center, which vacated in 1995, according to the building’s historical website and timeline.
In 1997, the website notes, “the City of Asheville acquired title to the building under the National Monument Act and signed a 198-year lease with the Grove Arcade Public Market Foundation.” The building reopened in 2002 after years of construction and renovation, with the idea that it would remain a hub of local businesses and residents.
Any transition to a hotel or short-term rentals would be a complex process, according to City of Asheville attorney Brad Branham. The building has “a complex ownership and management structure,” he said.
“However, it’s important to specify that the city remains the owner of the building,” Branham said via email. “In order to convert all or part of the property to a hotel or short-term rental use, a rezoning would be required. As owner of the property, the city would need to approve of the application as a party, and as the legislative body.”
Branham noted that multiple leases are in place at the Arcade, “which allow for the operation and management of both the commercial and residential portion of the building, and the city takes no direct role in that.”
Residents Express Concerns
Two building residents reached out to Asheville Watchdog to express concerns about any possible transition to a hotel.
“What is so strange to me is why Altamus would have called this meeting with the Grove Arcade residents, presumably with no other purpose than to alert them to the fact that their position was that they could turn it into a short-term rental or a hotel?” one resident said. “Why would you call a meeting like that and disturb people, if you weren’t planning to do something?”
Hotel building in and around downtown has been controversial in Asheville over the past decade, after the city imposed a 17-month hotel moratorium in September 2019 amid concerns about growth, as Asheville Watchdog previously reported. During the moratorium, the city revised the zoning code and created “overlay” districts that directed new hotel development to certain areas.
That, in part, is where the Arcade’s “use by right” for the hotel rooms stems from, according to Derek Allen, the attorney who represents Altamus and Dewey Property Management, which handles the commercial leasing of the Arcade. Allen said the plan is to submit an application to the city aimed at securing its rights to convert to hotel rooms.
“It’d be a permit to convert those to hotel rooms, but the timing of it will be up to the applicant,” Allen said. “This isn’t something where we have to go build it, because it’s already there. And so the timing will be up to them. But it’s one of the things that you go ahead and get the entitlement, and they need to sit on it until you’re ready to use it, if ever.”
Dewey Property Advisors handles leasing of the commercial property in the Arcade, while Altamus handles residential leasing. Dewey Property Advisors founder Eddie Dewey said they and Altamus met with residents as a courtesy — and to further the understanding of the property rights status.
“We went to the residents a couple of weeks ago,” Dewey said. “With the city in the mood to change the ordinance at the city level we went to the residents and said, ‘Hey, You know, we want to tell you guys first that we’re going to be submitting an application at some point to preserve the 35-unit hotel use by right.’”
Dewey stressed that the lease-holders have not taken any steps toward a hotel or short-term rental shift, but they simply want to preserve that right, and they have a fiduciary obligation to do so for their investors.
“We felt like the tenants who’ve been there the longest they deserve to know — we did not want to do anything under a cloud,” Dewey said. “And so we sat down with them to say, ‘Hey guys, this is what we plan on doing — no big deal. Nothing’s changing. Your world’s not gonna change. It’s a use by right that we’ve had, and it’s now getting ready to get taken away. So we’re gonna step in and make an application to preserve that right.’”
Dewey said they did tell residents, “We’re making an application for a 35-room or less hotel, because that’s what we have a use by right for.”
Building has historic preservation protections
To complicate matters even more, protection under the Grove Arcade also falls under the purview of the National Park Service, as the building was named to the National Register of Historic Places in 1976. Additionally, Preservation North Carolina, private nonprofit statewide historic preservation organization, was involved in preservation requirements and a protective easement in the building’s deed.
Jack Thompson, western regional director for Preservation North Carolina, said their easements speak specifically to the prohibition of adding an addition above the building or developing the building’s so-called “air space,” the area above the building’s footprint. The easements are in place in perpetuity, Thompson noted.
The easement is “relatively silent on use,” Thompson said, although it does say the entire property can’t be divided or subdivided.
Also, the language from the easement attached to the deed states:
“It is the purpose of this easement is to assure that architectural, historic and cultural features of the property will be retained and maintained substantially in their current condition for conservation and preservation purposes, and to prevent any use or change of the property that will significantly impair or interfere with the property’s conservation and preservation values.”
Thompson said that is a reference to use, but it’s also one that could open the door “for an argument about what types of use may impair or interfere with preservation values that potentially could be part of the conversation.”
Thompson mentioned buildings in Asheville that were designed for one use that have been converted to another use, commonly called “adaptive reuse.” In Asheville that could include the Radical Hotel in the River Arts District, a former warehouse building, and the Flatiron building downtown, an historic office building. Both were converted to hotels.
Ultimately, Thompson said, the city owns the Arcade building, and the easement relies on the federal, state and local laws to guide use, “with the most impactful of those being local zoning ordinances.” The easement relies on the direction of the local ordinances relating to use, he said.
Thompson said he’s not coming down on one side or the other, but Asheville does have numerous examples of adaptive reuse. That, he said, “could open the door for at least an argument that a hospitality use, or more specifically an overnight-type use of the Grove Arcade, would not necessarily adversely affect the historic nature of it.”
Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. John Boyle has been covering Asheville and surrounding communities since the 20th century. You can reach him at (828) 337-0941, or via email at jboyle@avlwatchdog.org. The Watchdog’s reporting is made possible by donations from the community. To show your support for this vital public service please visit avlwatchdog.org/donate.
Great informative and timely article Asheville Watchdog! Thank you! But, sorry – not sorry, if I’m not overly impressed with some of the City’s choices of late. As a full-time downtown resident since 2007, along with the Grove Arcade residents, we make up the living, breathing definition of Downtown Neighbors in an ‘Urban Neighborhood’ setting. With STR’s and hotel rooms, which by the way, practically every other building in this area has become a hotel or Airbnb/STR, where do the real people go? This is fair warning of what is to come if we don’t jump on this and say “Hey, I welcome tourists, but first and foremost, this is my home!” Please City of Asheville, don’t bite the hand that feeds you unless you want to see another Stepford City made up of chains and tourists.
Asheville has always cared about the almighty tourist dollar. They could care less about the local residents that support this town when all the Floridiots have fled the city.
The City needs to stop so much hotel growth and take a page from Greenville SC and invest in parks, Greenways downtown and restoring an arts center the the orchestra has a home.
Totally agree. Greenville development has been thoughtful and well planned. Look at what has happened to Asyover the last 20 years and then compare Greenvilles growth. Both have grown one has had a well thought out and managed game plan and Asheville’s has been less planned and more reactive and some would say not very well
Managed for the future
Greenville’s Green space is absolutely beautiful
When we’ve built so many luxury apartments that no native can afford and built so many hotels that one has to hire a helicopter to see the mountains, the tourist will go somewhere else.
Seriously? I’d be interested in hearing what the established business and residents are thinking about this.
Downtown Asheville has ample hotel rooms and STRs. We need to maintain, and add more residential units to our Downtown. The character of the Grove Arcade would change dramatically were it a hotel. I hope there is a way to deny this request from the lease-holders.
Watchout, Asheville!
Not sure what all the fuss is about, sounds like they are giving tenants plenty of advanced warning about what could happen with their apartment rentals.
The fuss is apparent to anyone who lives here full time, but not under a rock. Tourism has a major negative impact on our housing and community…lowering quality of life and making the place unaffordable for teachers, police and other essential humans who are leaving in droves…the Grove Arcade is just one more community hub that will go the way of the Flatiron and many neighborhoods being destroyed by STRs.
Completely missed the point there
Maybe think about it for 3 minutes
Is there nothing sacred anymore, John? Sad, but grateful to read your article. And all of them. Hope all is well with you and yours.
Beyond frustrating. We already deal with a slow season downtown (winter/spring) and restaurants that mainly cater to tourists. The more local life we can add downtown the more buzz and business and late night fun eateries we can have year round. So lame!
I’m curious about the current occupants of the Grove Arcade. Are they mostly full-time or part-time residents? Retired? Employed locally? How many people per unit?
They are full time residents and some have been here for decades. This is a disgusting proposal
Are you sure? A full time lessee is not necessarily a full time resident. At least half of the 18 Bourne Lane (Biltmore Forest) owners are less than 1/2 time residents.
Yes, as a resident for 12 years I can confirm that the vast majority of residents at the Grove Arcade are full time. The few who are not tend not to remain very long, and there is relatively little turnover in residents. Despite being rental units, I doubt there is a residential building anywhere in downtown that has a higher percentage of 12 month residents, a higher proportion of long term residents (10 or more years), a stronger sense of community among residents, or a more significant level of civic engagement in city affairs. It is a quite special and unique place.
Thanks for that information and it’s wonderful to know…I’ll be a vocal supporter of the current residents. Hopefully, Asheville City Council will stand up.
Why don’t we just turn every building in downtown Asheville into a hotel? Who needs residents? Then when all the tourists leave we will have ample rooms for the homeless population and anyone left who works in the dying tourist trade. When will enough be enough?!
It is time for another Hotel Moratorium, especially in the newly defined BID, Business Improvement District. We have enough hotels in the pipeline as it is. The 35 or 43 Grove Arcade units should remain rental units or converted into condominiums. As a downtown homeowner, I want more neighbors ( full time residents ) living downtown, not tourists. We should be striving to make our downtown a real living neighborhood where people can walk or ride bikes to grocery stores and other essential shopping without owning a vehicle. By increasing downtown home ownership we also increase Property Tax Revenue that supports our infrastructure needs, rather than the hotel tax which goes to TDA advertising, not the city.
If you are opposed to this, like I was to the Flat Iron hotel conversion that booted out 80 local tenants:
Good news here is that the City actually OWNS the property, and must agree to the rezoning if it is to proceed, which offers them more latitude than in other hotel use applications.
Bad news is that we have a city council who will probably approve this unless there is tremendous public outcry during this election year.
What is a city? Is tourism an economic driver created and promoted to enhance a city, or is it the other way around? Who’s milking this cow?
“There are no immediate plans for conversion to a hotel. Ownership simply feels it is their fiduciary responsibility to ensure the preservation of their existing use by right for being a hotel.” —- Yeah, right — I lived in Milwaukee in 1963 when the Braves claimed that they had no plans to move.
One glance at their legal team tells you all you need to know about their future plans…
To answer some comments about the residents at the Grove Arcade. They are all full time residents except perhaps one who does at time travel back and forth to another residence elsewhere. That resident is moving out soon. A few residents travel frequently around the country and the world, but their homebase is the Grove Arcade. Many residents are actively engaged in the community and volunteers at various local charitable organizations. Some work. Some are retired.
A very timely article. Since Northpond Investments out of Chicago has taken over the leasehold interest at the Grove Arcade in July 2018, there has been a substantial uptick in deferred maintenance. The Arcade’s overworked and undermanned maintenance staff appears to have been effectively tasked with holding it together with “duct tape”, “bailing wire” and “bubble gum.” [Yes, there is duct tape on and in some appliances holding parts together from falling down]. Broken-down 23 year old energy inefficient appliances have not been replaced. Rather, they are “recycled.” One resident was concerned that management would recycle a broken down refrigerator back to that resident. So, that enterprising resident marked it with a red “X” on the back so that management would not attempt to bring it back.
It took some serious water damage to several of the apartments before management replaced the aging hot water heaters that were breaking apart and leaking and causing the water damage.
The third floor has the dirtiest windows in Asheville. Management has refused to wash those dirty windows. Apartment 319 and perhaps others have been used as illegal AirB&Bs/STRs. The City needs to investigate.
Mountain Express recently published an article about how Asheville’s police officers were priced out of living in Asheville [April 10-16, 2024 edition, pp. 8-10]. I have a simple partial solution. The City’s ownership gurus should require that 25% of the Grove Arcade’s residential apartments be classified as affordable housing with those eleven apartments specifically designated for police, fire and teachers only. The resident’s would embrace the police and fire presence in their own building. Teachers would be welcome.
There are many problematic parallels between the leasehold sale of the Grove Arcade and the Mission Hospital/HCA sell out fiasco. It is beyond the scope of this commentary to address all of them. However, fortunately, the City owns the Grove Arcade and is in a position to stop its crown jewel from deteriorating into the poorly managed and maintained, shabby housing complex that it has become.
Yes, the city should immediately investigate that illegal activity. I also agree that housing should be earmarked for police and other essential workers, such as teachers. Servers at upscale tourist restaurants are way down the list, imo…
To answer some of the comments above, virtually all of the Arcade’s residents are full time residents here in Asheville. Some work. Some are retired. Some travel. Many contribute to the Asheville community by donations to local charities, volunteering at charitable organizations like Manna Food Bank and the Veterans Relief Quarters [among others] and by civic engagement. It does not appear that any resident has been using his/her apartment as an illegal AirB&B or STR, which would violate their leases and probably Asheville’s ordinances.
City Council and Planning etc. approve hotel construction permits from businesses and property owners. Now they have a proposal to consider a leasee’s request for city-owned property to be converted into another hotel.
Is the city officially getting into the hotel business too? Or will they use tax dollars to hire another six-figure consultant to tell them what is already so abundantly clear?
As if often the case: profit over community? Sad truths, hopefully voices are heard
Oh My! To my horror, I just learned that the Grove Arcade has a tatoo parlor on the second floor called the Hidden Palm Tatoo. What is happening to this gem of a building owned by Asheville?