Real estate roundup: Update on former Johnson City hospital, Kmart building and more

Zach Vance • Updated Jan 6, 2018 at 11:34 PM

Once bustling epicenters of economic activity, four prominent Johnson City commercial properties now sit vacant.

But for how long?

Here’s the latest on what will happen to the former Johnson City Memorial Hospital, the former Kmart location on Peoples Street, the former Food City at the corner of Market Street and State of Franklin Road and the South Roan Shopping Center.

Former Johnson City Memorial Hospital

Most recently, the old hospital operated as The Lexington, a 40-bed senior living center that closed in October 2016.

Sold for $1.85 million in October 2017 to CityView, LLC, the new owner is also planning to operate a senior living center there, but it will be called TownView.

Company representative Scott Word told the Johnson City Press Friday that he plans to open the center in the spring.

In December, Dillard Construction filed two building permits with the city, one for demolition work and the other for interior renovations.

Dave McClellan, plans examiner for the city, said the first permit was just for demolition of a single free-standing wall on the fifth floor. He also called the renovations “primarily cosmetic.”

“They do plan, not in what they’re currently permitted, but in the future to make a very small addition to cap off the exposed portion of the structure in the rear where (previous) demolition happened,” McClellan said.

“If you look at it that building, you can kind of see in the building from the rear, where the old building used to connect. They’re basically going to finish that off and make a small addition there to add a few more rooms.”

Peoples Street Kmart 

Despite being one of the most coveted commercial properties in the region, the future of the former Johnson City Kmart is hazy, at best.

In September, Johnson City’s development services director said Atlanta-based real estate firm Caliber Capital bought the 172,000-square-foot building, but representatives from the firm have since denied the deal.

Sears-Roebuck is still listed as the owner of the property along Peoples Street, according to property records, but Caliber appears to still be interested.

“As far as we know, nothing’s been dropped and it’s not going to stay vacant long. Or at least, plans are for it to not stay vacant very long,” Wesley Vaughn, a portfolio director for Retail Strategies, said.

Retail Strategies is contracted by Johnson City to market local retail properties to prospects.

According to Vaughn, Caliber Capital officials signed a sales contract but they remain in the negotiation phase. He said Caliber Capital has at least one other Kmart under contract, and could be negotiating the bundled sale of several closed Kmarts, including the one in Johnson City.

“As far as all the markets I work in Tennessee and North Carolina for our clients, the Johnson City Kmart is probably the best property that people are looking at, or the top kind of property,” Vaughn said. “We still get a lot of calls about it, even though it is under contract.”


In April, Publix Super Markets confirmed it would open a 45,000 square-foot grocery story at the intersection of West Market Street and North State of Franklin Road, the site of the old Food City.

Company spokeswoman Kimberly Reynolds said an opening date is not yet been established, but the company has began filing permits for construction and renovation work.

McClellan said the company has filed applications for at least four permits, including one for a free-standing building separate from the actual grocery store.

“There is an application for reconstruction of one suite near the Little Caesars, in addition to the construction of a new free-standing building over on the side of the lot closer to (the shopping center with Sun Tan City),” McClellan said.

McClellan said proposal includes several independent suites, which the company may look to lease out. While various permits are in different stages, he expects construction will begin in the spring. 

South Roan Street Shopping Center

The most dormant of the four properties, the shopping center behind Arby’s in Johnson City, has seen little movement in recent months.

Although the listing agent could not be reached for comment, Vaughn said it’s in a “holding pattern.”

“There has been some interest in it, for sure. We’ve had a few different people make offers on both buying it and trying to rent a space or sign a lease, but just nothing has worked out,” Vaughn said.

“The city has kind of told us that one of their target areas is that South Roan area. So that corridor, as a whole, is what we’ve targeted.”

Eds. Note: A previous version of this story incorrectly stated Dillard Construction purchased the old Johnson City Memorial Hospital in October. The buyer of the property was actually CityView, LLC, based out of Chattanooga. 

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