Written by John Boyle, Asheville Watchdog.
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 [email protected]. 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.