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VOL. 45 | NO. 32 | Friday, August 6, 2021

Nashville’s future is up in the air

Downtown developers bet on vertical growth

By Hollie Deese

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Developer Tony Giarratana could be considered a visionary when it comes to Nashville’s growth and development potential, seeing the possibility of what could be built downtown and building it.

But as he looks across the street from his sales office at the 18-acre Nashville Yards development, even Giarratana is a little surprised at how quickly and how much development has come to or is planned for The Gulch neighborhood.

“When we started investing in developing in downtown Nashville in the 80s, we envisioned something great,” Giarratana says. “I can tell you, it’s exceeded my wildest expectations.”

And even though he couldn’t see it then, he couldn’t be happier now.

“All we need now is a Trader Joe’s,” Giarratana jokes.

The developer’s sales office across from the Nashville Yards development is for his two new high-rise apartment buildings at 801 and 900 Church Street. He expects Gulch workers to find homes on Church Street.

When complete, Nashville Yards is projected to have 3.5 million square feet of class A and creative office space, 400,000 square feet of retail and entertainment space, 1,100 hotel rooms and, ultimately, 24,000 employees. Giarratana will be ready to house as many of those workers as needed at his new rental high-rises, to be complete in 2023 and 2024.

In fact, Nashville Yards and other commercial development in The Gulch is what spurred Giarratana’s desire to develop high-rise residential there.

“I would not have been pursuing developmental at Ninth and Church if not for Nashville Yards, Amazon and what Highwoods is doing with Asurion and their 750,000-square-foot tower,” Giarratana acknowledges.

A rendering of 1222 Demonbreun at Gulch Union, a mixed-use project.

“Contrary to popular belief, we don’t wake up one day and say, ‘Let’s do a really beautiful architecturally stimulating tower and hope somebody comes.’ We look at where the demand is being created, either now or in the future, and we design buildings that are appropriate for that demand.”

“We’re not building office buildings,” Giarratana adds. “We’re building the apartments that these highly paid workers and professionals in these buildings will want to live.

Local entrepreneur Moni Advani is the founding investor of Morph Hospitality Group (Chaatable, Mockingbird) and president of Eighth and Division Investments. He was part of an early wave of Gulch redevelopment almost 15 years ago and has been credited with bringing celebrity chef Maneet Chauhan to town.

Advani was part of the group that opened the nightclub Mai at 125 12th Avenue South in 2009, then Anthem in 2012, in what had previously been a string of other venues over the previous 10 years: Pub of Love, Jody Faison’s Café 123 and Lot 7, all of which could have used the kind of foot traffic 12th and Grundy sees now.

That group’s first LLC was named Evolving The Gulch. Still, even Advani is surprised at what it has all become – even on the “wrong” side of Broadway where they are.

“I don’t think anyone could have anticipated what’s going on in this city in general,” he says. “But we were on a popular street. We just happened to be on the wrong side of that street. So it was just a matter of time. We were slowly over time losing all of our parking lots that we were renting from the Tennessean to the point now where we don’t have any parking lots.”

A rendering of the completed southeastern portion of the Nashville Yards project.

Advani mentions Steve Armistead, one of the original forces behind The Gulch revitalization, developing the 1101 McGavock Street building (home to Whiskey Kitchen, Kayne Prime), the Terrazzo condo/mixed-use building in The Gulch and the former Braid Electric building on 12 Avenue S., now home to the Bohan advertising agency.

“He was my landlord at Terrazzo. I remember having lunch with him once a month or so, and to hear his take on his vision of what the culture was going to be in the coming years, I think even then we all underestimated it, to an extent, on how crazy it ended up,” Advani adds.

“I feel like everything has been gobbled up.”

Lately Advani has been more focused on investing in commercial real estate for uses such as hotel, office and multi-family, assembling parcels around town for the last five years or so to either develop with his partners, or put together for another developer.

“That’s where all of the money’s being made in Nashville right now.”

Advani just sold a 16-parcel assemblage on Eighth Avenue just past Frugal MacDoogal, 3.2 continuous acres total to developer Meg Epstein of CA South for a multifamily development after Advani decided not to go forward with his initial plan to develop Class A office space, post-COVID.

“We had never done office space before, and didn’t want to start now,” he says.

A Murfreesboro native, Advani moved to Nashville in 2003 and can understand longtime locals’ disbelief at the cost land is going for now, but it isn’t locals setting the price anymore.

Work continues on the 18-acre Nashville Yards development between Broadway and Church, which will be home to Amazon, Pinnacle and more.

-- Photo By Michelle Morrow |The Ledger

“What happening in commercial real estate over the last 10 years is we’ve had people from out of town come in and tell us what the land is worth,” Advani points out. “We’re kind of blinded by being local. But it took someone from Chicago or California to come in and say, ‘I’ll pay that price.’ And as a matter of fact, that’s a discount for them.”

And now there is even a Whole Foods on his side of Broadway.

Transit follows density

Of course, another thing those workers will want is public transportation, especially if they don’t choose to live across the street at one of Giarratana’s developments, or even on-site in the 1,000 residential units being planned for Nashville Yards. Unfortunately, those workers will already almost all be here before real change can be made on actually being able to move them around the city.

“Even if we pass the referendum tomorrow to spend $10 billion on public transportation, which would be a great start, we couldn’t start riding those conveyances for nearly 10 years,” Giarratana says. “So for the near-term, traffic is going to be of concern – and these buildings aren’t even occupied yet.”

Live, work, play is not just a goal to be achieved in The Gulch someday. It’s here. But transit is something that can’t be put off anymore. And once the buildings under construction are all occupied, the gateway intersections like Broadway, Church Street and Charlotte are going to be highly congested.

“Our creative class residents will refuse to spend a day a week commuting,” Giarratana adds, noting that’s what will make living within walking distance so appealing. “It’s a day of your life. Every single week. Think about the Amazon employees walking one block to get to this building. They will have those two hours a day to do things to enhance their quality of life.”

Giarratana says changing height requirements in the urban core would unleash the true potential of the city, increasing tax collections and making a more walkable environment.

“Nashville must embrace density,” he continues. “We cannot build buildings that don’t maximize our scarce resource, which is land. We must build taller. Building taller is green. We don’t need more roads. We don’t need more sewers. We don’t need more sidewalks. We don’t need more highway lanes if you build taller.

“It’s not evil. It’s a good thing.”

Office space still coming

If all this development sounds like a lot of office space when there is so much talk about working from home, it might be. With most of these developments in the works before the pandemic hit, demand for office space is there, but certainly not where it was before COVID. But the potential remains as long as growth continues and COVID remains somewhat in check.

Jenna Muller is the senior director of office leasing and transaction advisory at Cushman Wakefield for Gulch Union, a three-phase mixed use project at 1222 Demonbreun that includes 330,000 square feet of Class AA office space, luxury residential, and retail with the potential for a boutique hotel.

“Demand for office space pre-COVID was very strong and we continued to have leasing success at Gulch Union throughout COVID,” Muller says. “We expect demand to return to pre-COVID levels once a greater number of employees return to their offices after Labor Day.”

Muller says the office tower is 40% leased.

“We’ve seen a lot of interest from employers that are new to Nashville,” she says. “They view our location as a huge differentiator in the war for talent and have experienced great success in their recruiting efforts.”

Muller cites the walkability of the neighborhood and its accessibility to I-65/I-40, as well as its dining and entertainment amenities, as big draws to moving a business to The Gulch and 1222 Demonbreun, specifically.

“Gulch Union sits at one of the highest elevations downtown so the views of the central business district and surrounding neighborhoods are outstanding,” she adds.

Muller says Nashville has the ability to keep up with the demand from new companies and residents as long as local leaders are thoughtful about planning for that growth, particularly when it comes to transportation.

Cushman handles the office leasing at 1200 Broadway as well. Also developed by Endeavor Real Estate, the 26-story luxury residential building is anchored by Whole Foods and has two floors of creative office space with lots of natural light and 17’ tall ceilings.

That building is home to iHeart Media’s second headquarters and has two new spec office suites with up to 26,000 square feet of office space available. Muller anticipates no problem finding tenants happy to make The Gulch their home.

“There’s a true sense of community in the Gulch,” Muller says. “They’re at the center of the city’s business community with amazing energy, yet away from the traffic, noise, crowds and other distractions of downtown.

“The Gulch is home to Nashville’s best retailers, business and hotels – it’s truly a sought-after destination within Nashville.”

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