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nvestors buy two downtown Asheville buildings, including historic S&W



2/9/2012 - Investors buy two downtown Asheville buildings, including historic S&W
by Mark Barrett - Asheville Citizen Times

ASHEVILLE -- Florida-based investors have bought the S&W Cafeteria building -- one of downtown's best-known art deco structures -- and hope to bring activity back to the mostly empty building.

A related company has purchased the Windsor Hotel building at the corner of Broadway and Walnut streets and plans to put retail space on the first floor and about 12 apartments above.

Negotiations are under way to lease first-floor space in the S&W to an unidentified "major restaurant owner," said Michael Krieger, who is a principal in the companies along with his brother, Richard.

The two will complete seven unfinished condominiums in the upper floors of the building at 56 Patton Ave. and then either sell or lease them, he said.

"We just believe in the Asheville market. We think it's a good market," said Michael Krieger, who is based in Miami Beach, Fla. "We see no reason that it's not going to continue to grow."

Plans are still coming together, but he hopes new occupants will be in both buildings by the end of the year, Michael Krieger said. The buildings will retain their historic character, he said.

Bargain bin

Banks acquired both buildings by foreclosure after developers were unable to repay loans they had used to buy them.

Jack Thomson, executive director of the Preservation Society of Asheville and Buncombe County, said he is particularly happy to see the S&W get new ownership that plans to put empty parts of the building to use.

The 1929 building's fanciful tile facade is one of the city's most recognizable, and it has touches inside like porcelain tiles on the walls, terrazzo floors and sculpted plaster ceilings.

"It's obviously a flagship for the art deco movement for Asheville," Thomson said. "We're excited that private enterprise is making another run at this special building."

Developers have been increasingly interested downtown buildings, said Alan Glines, a planner for the city of Asheville whose responsibilities include downtown.

The Kriegers' MRK Patton LLC bought most of the S&W from First South Bank on Jan. 31 for a little less than $2 million, according to property records. The purchase does not include three residential condominiums on the building's upper floors.

 The Spartanburg, S.C., bank acquired the building in February 2011 as the result of foreclosure of a loan to a company headed by developer Steve Moberg.

 Moberg's S&W Condominium Corp. bought the building for $2.45 million in August 2007.

Moberg added a floor to the building and began work on 10 residential condominiums in the building's two upper stories. In May 2008, he opened an upscale steak restaurant in the main cafeteria space and a casual restaurant next door.

But the main restaurant, which started with entrees priced at $18-$34, filed for bankruptcy in January 2011. Upscale restaurants were particularly hard hit during the Great Recession.

The building has about 29,000 square feet in four stories and a basement, according to property records.

A piece of history

Before it closed in 1974, the cafeteria was once part of a small chain of Southern cafeterias and was both a popular spot for a meal and a community gathering space.

"It was the heart of the downtown," Thomson said. "When you sat down and ate lunch in that space, you felt like you were somebody."

Subsequent businesses have had more trouble making money in the space, which sat empty for years at a stretch.

Those problems are "a bit of an enigma to me," Thomson said. "You don't have to be an architectural historian to look at the space and see that it's fabulous. ... There are people out there who are smarter than me who can really make it work."

The Kriegers may benefit from paying less for the building than Moberg's company did, getting more building for their money and starting out in a rising economy instead of a falling one.

Michael Krieger said the former cafeteria space is in excellent condition, and if plans to put a restaurant there pan out, "Our intention is not to make any changes" to that part of the building.

Another Krieger company, MRK Broadway LLC, bought the empty Windsor Hotel building for $885,000 in December.

Built in 1917, the Windsor Hotel was a cheap res idential hotel when a California developer bought it for $2.3 million in October 2007 with plans to turn it into an upscale hotel.

The hotel had been sold twice before in the same decade, for $960,000 in December 2003 and $1.6 million in February 2005.

Workers gutted much of the hotel and its first-floor retail space, but plans did not proceed any further. Asheville Savings Bank foreclosed on the building and took ownership in April 2010.

Michael Krieger and Tim Bramley, a broker with Dewey Property Advisors, said plans for the building, listed at 27,440 square feet, are still at a preliminary stage, but retail space could be available in spring.

The first floor is likely to have three retail storefronts on Broadway and Walnut and a small lobby for the one-bedroom apartments to be upstairs, they said.

There is a fair amount of vacant retail space downtown, but Bramely said there is already interest in space in the Windsor.

"I believe that right now there is quite a bit of demand," Bramley said. "We've received quite a few calls just after putting the (for lease) sign up."

Preservationists will be glad to see someone return the building to use and keep it in good repair, Thomson said. "While that building is certainly not as evocative or as flamboyant as the S&W, it does contribute to the fabric of downtown," he said.

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