Full steam ahead

In July 2008 Volkswagen announced that it would launch its return to auto manufacturing in the US after a 20-year hiatus. The company chose to build in Chattanooga, Tennessee. Not since Glenn Miller’s second world war-era swing hit “Chattanooga Choo Choo” sold 1m copies had this small city received such favourable international publicity.

VW was heavily courted by many cities all hoping for new jobs with one of the world’s biggest automakers. The new $1bn facility is scheduled to open next year and is expected to produce about 150,000 cars a year for the US market.

Winning the VW bid was seen locally as vindication of one of the nation’s longest sustained efforts at municipal rehabilitation, an initiative that has transformed a formerly grimy industrial city into a regular contender in rankings of the country’s best places to live.

Its nadir came in 1969 when Chattanooga was labelled the dirtiest city in the US. Its position on the banks of the Tennessee River, surrounded by mountains, is a natural smog trap and the foundries that were the main manufacturing base pumped coal soot and other pollutants into the basin. Men who travelled through the murk to downtown offices routinely carried a second white shirt to work and, on occasion, the sulphuric acid in the smog ate holes in women’s hosiery.

In reaction to the stinging national publicity, the city began to clean up its act and the tough air quality standards adopted by Chattanooga became a model for efforts to clean up the air across the US.

Just making the atmosphere breathable was not enough; though Chattanooga lies on the both banks of a beautiful river, it had turned its back to its most desirable feature. Starting in 1992 with the opening of the Tennessee Aquarium, just south of the riverfront, the city built walks, museums and other amenities, and in the process turned the city centre into an entertainment and residential destination.

The vanguard of VW executives and experts has already arrived in the city, among them Günther Scherelis, who moved to Chattanooga from an assignment in Barcelona with his wife and children. He expects his posting to the city to last about three years, so he decided to rent.

In Barcelona he lived in a 70 sq metre apartment with thin walls that was valued at €700,000. In Chattanooga, the family lives in a large four-bedroom detached house. Scherelis says he has been pleasantly surprised by the city, mentioning the riverfront, the environmental consciousness and good dining “except for a German restaurant and bakery”.

And it’s not just VW executives who now find Chattanooga to their liking. Pat and John Starke, who lived in Asia, Africa, Latin America and Europe during John’s career as a petroleum geologist, moved to Chattanooga about four years ago after taking early retirement and first settling on the west coast of Florida. They moved in part because of nearby winding country roads where John can drive his sports car.

The Starkes live in a 3,400 sq ft condominium on the fourth floor of a former department store that they bought for about $700,000. A huge terrace, complete with trees and a barbecue, is the centrepiece of the open-plan, two-bedroom flat.

The couple previously lived in London, just off Sloane Square, and Pat enjoyed living in a walking neighbourhood. She says their downtown Chattanooga location offers similar convenience: two blocks to their church and the local library and a block to the restored Tivoli Theater, where the Chattanooga Symphony makes its home. “I walk to my dentist, too,” she says.

Not too long ago there were no condos downtown. One of the pioneers of central living is Darlene Brown, an estate agent whose company, Real Estate Partners Chattanooga, is a leading marketer of the condo developments in the city centre. While the torrid pace of sales earlier in the decade is history (her group once sold all the units in a development in 48 hours), properties continue to sell steadily. Brown is listing a two-bedroom unit that overlooks the riverfront at $1.59m. Other downtown condos, further from the river, are less expensive. A one-bedroom apartment in the renovated Southern Railway Building lists for $164,900.

If those prices seem high for a smaller city, they are. “We have to educate people when they come in from other cities,” says Gina Sakich, Brown’s partner. “They want to lowball.” Though some house prices have fallen, the decline is relative and Chattanooga’s residential foreclosure rate is considerably lower than the national average.

Buyers looking for lower prices without heading for the suburbs have several choices. The Highland Park area, south-east of the river, lies at the foot of Missionary Ridge, site of one of a series of battles around Chattanooga during the US civil war. Residential construction started in Highland Park after a series of disastrous floods in the late 1800s.

Alice O’Dea and her husband Greg bought their 100-year-old American foursquare house in Highland Park in 2006, “right at the peak of the market”. They are, however, not newcomers to Chattanooga. They arrived in 1990 when Greg landed an English teaching job at the University of Tennessee Chattanooga. The Highland Park house is their fifth home in the city and they plan to stay put. “My husband said he’s never moving again ... He wants to be buried in the backyard,” says O’Dea.

The couple has seen the city transformed in the years since they arrived. In 1990 they were told downtown was too dangerous to visit after nightfall and the city centre was full of shuttered buildings. Now, she says, “Downtown looks like a beehive after dark, with a lot of interesting places to eat and a growing cultural life.”

House prices in Highland Park range from less than $100,000 to $275,000 and higher for large, fully restored Victorian homes. A three-bedroom, two-bathroom, 1,376 sq ft, one-storey house built in 1910 is listed at $84,900. At the higher end, a 1920 two-storey renovated house with four bedrooms and three bathrooms is on the market for just under $275,000.

Even less expensive, and still a little funky, is the St Elmo neighbourhood, south-west of the city centre. The area (named after a novel written by Augusta Jane Evans after the civil war) sits on the slope of Lookout Mountain. Many of the houses are more modest than those in Highland Park but there are signs of increasing gentrification.

“In St Elmo you can still get a good deal,” says Mary Barnett, a photographer and filmmaker specialising in documentaries and oral history who lives in the neighbourhood.

Barnett, a member of the Chattanooga Historic Zoning Commission, is working on a project to document the demise of the city’s last foundry. She says she “can’t imagine being optimistic and wanting to live here” during the city’s sooty industrial past but today “it’s a sweet spot.”

Property prices in St Elmo are more than reasonable. A portfolio of offerings assembled by estate agent Paula Palmer, also of Real Estate Partners Chattanooga, topped out at $295,000 for a 2,300 sq ft, completely restored prairie foursquare house with three bedrooms, two bathrooms, a formal dining room, study and sun room, all on a well-landscaped lot.

Palmer notes, however, that this house, pre-renovation, sold for $85,000 eight years ago. A one-bedroom, one-bathroom residence large enough for significant additions is undistinguished but ready for occupancy. It lists at $44,900. At the extreme low end, she selected a 1946 bungalow-style house with a stonework front porch set on a large lot at a listing price of $25,900.

St Elmo is “the best value you’re going to find if you want to be close to downtown,” says Palmer. Prices in other comparable areas of the city on the north shore of the river are three times as high as St Elmo’s. “It’s almost a no brainer,” she says.

Real Estate Partners Chattanooga, tel: +1 423 265 0088, www.realestatepartnershomes.com

Henry Hamman is an FT contributor based in Sewanee, Tennessee

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