Article by: Sharon Caskey Hayes
October 5, 2008
John & Angela
John Vachon and Angela Rutherford grew up in Kingsport but didn't know each other in those early years. John graduated from Sullivan South High School and Angela went to Dobyns-Bennett. They met in Knoxville, when both started working at St. Mary's Medical Center. John had graduated from the University of Tennessee and was applying for medical school and Angela had just transferred from East Tennessee State University yo UT, and was applying to dental school.
Then John got a job in Johnson City and Angela followed, transferring back to ETSU to finish her degree in pre-dentistry.
"I had worked in a dental office since I was 17 and that's what I decided I wanted to do. But my real passion was fixing up things. I would look at things and say "How could I make this better?" My favorite place to shop is Lowe's," Angela said.
The two entered the world of real estate investing by "flipping" houses, or buying old houses, renovating them and selling them at a profit.
Seven years ago they bought their first commercial build in in Johnson City and started developing residential lofts. They never planned on returning to Kingsport until they started searching here for a house for Angela's mother.
That's when they met real estate agent Jeff Lane, who suggested they flip homes in Kingsport. The Vachons rejected the idea, but suggested they'd be open to look at commercial buildings in the downtown area.
"Jeff e-mailed us a picture of one in Five Points. We looked at it that day, made an offer and bought it the next day," Angela said.
Soon after, they purchased another building nearby, and then asked Lane about the old First National Bank building at the corner of Broad and Center streets. Lane contacted the owner, who agreed to sell the property - a 20,000-square-foot, three-story historical building - for $200,00. The Vachons jumped at the chance, recognizing the potential opportunities in the downtown district. They started contacting investment partners in Philadelphia and California to consider properties here.
Lane joined in as well, and called his friend Doug Beatty, another real estate investor in Asheville.
Eventually, Beatty acquired the old State Theater on Broad Street, which he's restoring to its original look; the investor friend from Philadelphia bought a building on Broad Street; the investor from Southern California purchased another building on Broad Street; and the Vachons bought more property on Market Street for residential lofts.
Angela's sister, Lisa Allen, joined in and purchased a building from long-time Kingsport businessman Sam Anderson to establish Kaffe Blue, a popular dining destination on Broad Street.
And John's brother, Paul, and sister-in-law, Amber, who were renting a business location in Asheville, sold their house there and used the profits to but a building in downtown Kingsport.
Meanwhile, John and Angela continued to invest in downtown, renovating and restoring old properties for new uses and using the proceeds to acquire more buildings and start the process over again.
"Our goal is usually to come in, tear it out and redo it. And we don't forgo the historical features - we expose them. Anything we can highlight that's part of the original building. We highlight what's beautiful and minimize what's not," Angela said.
One example of their work can be found at the Progress Building on Broad Street. After buying and renovating the building, they opened an office for their development business - Urban Synergy.
Several other business tenants are located here as well. And renovations in at least on area of the building are continuing - the Vachons are retrofitting a first floor space fronting Broad Street to make way for a small branch of Eastman Credit Union, complete with an ATM.
Angela said she renovates to fit the needs of tenants - whether they be commercial or residential. And with the overall beauty of the downtown in mine, the Vachons recently stared a downtown signage program in which merchants can have a sign created for them from a prototype offered by Urban Synergy. The program will give consistency in signage in the downtown district, Angela said.
The Vachons credit the city of Kingsport for its willingness to help in redevelopment efforts. The city has a facade grant program that reimburses property owners for a portion of the costs to renovate their business fronts. And most recently, the city established a new redevelopment incentive grant to encourage property owners to fix up their buildings. The grant reimburses an owner 10 percent of the cost to redevelop his property, up to $20,000.
The Vachons are applying for the new grant for their own properties and they're applying for it on behalf of other building owners whose properties they're restoring. Angela pointed out they not only renovate their own buildings, but are contracted by others to redevelop their properties.
Angela never went to dentistry school, and John never attended medical school - he's now an orthopedic surgical sales representative. Angela handles the day-to-day redevelopment work, often meeting with construction crews on projects throughout the downtown area.
"We love what we do," Angela said. "It's one of those things you have to have a passion for because it's not easy and you can't give up. if you get frustrated you know you've got to come back with a better attitude the next day."
The Bigger Picture
The Vachons know they're in a long-term process, and they have plenty of property to renovate. Kingsport's downtown district encompasses 44 blocks, and redevelopment could continue for years. But the Vachons say they see a bigger picture - with the downtown ultimately linked to Kingsport's other unique features, including the city's river-front, Bays Mountain Park, and the Meadowview Conference Resort & Convention Center.
"Plus the fact that you're surrounded by 18,000 employees within a mile of downtown. All those components together are a recipe for success," John Said.
But for all of its strengths, the downtown is lacking in one big area - green space, the Vachons said. They suggested sectioning off a downtown block and creating a park, which would encourage more families to visit downtown.
The Vachons are also advocates of public transportation, which they say could connect people from downtown to Bays Mountain, to MeadowView, and to the riverfront.
And they're strong believers in bringing more people to live downtown. They have and will continue to build loft spaces, and say the demand for lofts is on the rise.
"If we built 200 (lofts) today, 200 would be occupied. That's what kind of demand we've had," Angela said. "And we haven't even seen the student impact yet."
They predict lofts will be even more popular with the construction of Kingsport's new Academic Village, a campus featuring various colleges and universities from throughout the region. The Academic Village is expected to draw thousands of students to downtown Kingsport. And many of them may be looking to live nearby.
To encourage more property owners to develop loft spaces, John has developed a residential incentive package which the city is now considering. The package would offer help to property owners for some of the most costly endeavors in loft development, such as bringing old buildings up to current fire codes with sprinkler and fire escapes.
The Vachons advocate "green" building by ensuring buildings - whether residential or commercial - are energy efficient. Such measures pay off over the long haul.
For instance, Angela said, one of her tenants recently reported having a $30 electric bill, "and that's for a 1,200-square-foot loft with 14-foot ceilings," she said. "So it's cost effective in the long run to go green."
The Vachons are incorporating energy efficient measures into their own home. They now live in Gray, but are converting the third floor of a building on Commerce Street into 6,500-square-foot loft with modern touches, such as concrete floors and metal beams. They hope to move in next spring.
One of the Vachons' largest projects is the First National Bank building. The first floor is now occupied by the Ross & Arthur law firm. The second floor, which features huge arching windows, is being converted into a banquet reception hall. The third floor is being renovated for offices for Bennett & Edwards, which was previously located in another building on Broad Street. That building was acquired by the Vachons in July.
We'll rip the metal facade off and redo that building," said Angela, noting some sort of retail or restaurant will be recruited to locate there. Urban Synergy recently hired a marketing professional - Chad Churchman - to handle its marketing and recruiting efforts.
Angela said she knows that some downtown business owners may never see the value of renovating their buildings or removing their old facades.
"But our goal is to have every last metal facade off of every single building," she said.
She added that she and John don't wish to offend any of the downtown's long-time business owners.
"We don't want them to feel like we don't appreciate what they've done and what they've contributed. But is we can somehow enhance their business to bring in more traffic, then we want to make it worth their time to improve their buildings,"Angela said.
"If downtown is a beautiful place to be - the streetscapes, the beautiful historical facades - your net revenues will increase because now everybody wants to shop down here. That's the ultimate goal," she said.
She and John ascribe to the 10-10-10 rule, which identifies a downtown critical mass as 10 restaurants, 10 specialty retailers, and 10 businesses or restaurants that stay open after 5 p.m.
Angela said downtown Kingsport is on target for restaurant development, and today, restaurants are approaching her about locating downtown.
That's not always been the case. It look more than a year for the Vachons to convince the owner of Stir Fry Cafe in Johnson City to locate in downtown Kingsport. The restaurant recently opened on Broad Street, representing Stir Fry's first downtown concept.
"They hadn't done a downtown concept before, and now they've just chosen their second downtown location in Maryville, Tenn.," Angela said. "That says a lot."
She said specialty retailers are being sought to join the mix of businesses in the downtown district. Most recently a specialty shop called Finer Things for Her opened on Broad Street.
"She's been blown away by the response," Angela said of the shop's owner. "We want the retailers to realize were very serious about what we've got here."
As for the recent financial crisis in the national news, John and Angela said they're not concerned. The crisis stems from the mortgage meltdown that mainly impacted cities where housing prices were overly inflated. John pointed out that the housing prices in this area have remained on a slow steady climb, while companies here continue to invest and expand.
"That's going to take care of itself. All this will pass," John said on the financial crisis. "We've been through worse in U.S. History and we choose to ignore."
He predicted that folks from other parts of the country will see the value of living in the Southeast and many will eventually migrate this way.
"This is the perfect setting up for that type of growth," he said.