The U.S. economy is still struggling to gain traction, but don't tell that to the Middle Tennessee real estate market. The Music City Center takes the cake in terms of size, but many other projects — mostly apartments and hotels — are adding to Nashville's skyline and streetscapes. Post Editor Geert De Lombaerde and reporter J.R. Lind say down in mid-August with Wood Caldwell of Southeast Venture, Ashlyn Hines Meneguzzi of Bristol Development, Thomas McDaniel of Boyle Investment and Michael Rankin of Crain Construction to talk about those projects and take a big-picture look at the region's growth prospects. The first part of our conversation is available here.
DE LOMBAERDE: So, about Nashville versus Atlanta…
CALDWELL: Don’t ask that question.
DE LOMBAERDE: Well, the ULI is bringing in folks from Atlanta to talk about their growth back in the day.
CALDWELL: Yeah, but when I got into the development business, everybody said, “We don’t ever want to become another Atlanta.” Don’t worry. We’re never going to get there. They’re still exponentially larger. We’re two different cities and I don’t know why people try to compare us to Atlanta because it’s not the same kind of place.
HINES: And all their developers are coming here.
DE LOMBAERDE: OK then, a question about Bellevue: We’ve talked about this at times in the office. Why aren’t companies like you looking at the old mall site as a mixed-use redevelopment opportunity that would close that donut hole in that part of the city? Does it not quite fit the criteria that you see closer to the city?
CALDWELL: I don’t think it’s urban enough.
CALDWELL: You’ve got too many people who are wanting to move back to these urban environments or they want to be in a more affluent area like Williamson County. Even in 12South, you’ve got people who are moving from Williamson County who said, “I’m getting rid of the one-acre lot and the 4,000-, 5,000-square-foot home. My kids have all moved out.” Although, now Brentwood is taking some really good strides to finally start closing that gap with Bristol’s project. You guys just don’t realize how significant that was for them to do an apartment project in Brentwood. Although it’s not apartments, it’s condo.
DE LOMBAERDE: That and then you have the Hill GBT site, the former Murray building.
CALDWELL: Yeah, which is another great opportunity to redevelop that whole area.
HINES: It’s interesting, that Brentwood project. We’ve had tremendous interest in that project and we’re still nine, 10, 11 months away from delivering the first unit. Our phone rings off the hook from people who live in Brentwood who are going to sell their house.
MCDANIEL: They just went to seven commissioners just like two or three years ago, which was a big deal. Now they’ve got a much more progressive group.
HINES: We brought the commissioners down to see everything going on in the urban areas down here and I think it really starts to open your eyes about how you put something like that where that is and then try to get that town center. You get people there and then all of a sudden other things start to happen.
DE LOMBAERDE: We’ve talked a bit now about this movement back to the cities, this kind of reawakening of the core. It seems like it’s a long-term trend, that it’s not something that’s cyclical because the economy stinks and people want to get closer to town so they don’t have to worry about cars much or whatever. So two questions: Is it a long-term trend? And then what does that mean for a Berry Farms or Murfreesboro, Hendersonville or Gallatin in terms of maybe needing to stand more on their own two feet? Of not being a suburb but being more of a smaller market that works?
CALDWELL: I definitely think it’s a trend in Nashville that is going to go through forever. They’re going to keep getting more urban, much more cosmopolitan.
Now I think you’re still going to have people go, “I don’t like that kind of lifestyle so I’m going to out more out into the suburbs.” And the No. 1 factor in my opinion is the school systems. I’m real involved with one of the charter schools and we made our first year. It just did fantastic. Hopefully the administration after Karl Dean’s — because he that’s been his No. 1 priority — will just continue to see the schools grow. I think the biggest fear of all those younger folks who are moving to East Nashville, Sylvan Park and 12South is what happens when my kid is ready to go to the seventh grade.
HINES: You have all of our urban areas attracting young people without kids and a lot of it empty-nesters. It’s that middle gap of people with kids that are in school that, while they may want to live in an urban area, they don’t want to pay for a private school. Those people move to the suburbs for 10 or 15 years and then move back. You’re seeing that everywhere.
MCDANIEL: Well I’d also make the distinction between the “urban” that implies that the foot of Broadway is the center of the universe and that everybody is going to get magnetized back to that. I think we’re going to see clusters around economic engines or places that have a sense of place.
People are going to want to be in the 12South neighborhood. Vanderbilt is an economic engine. If Vanderbilt were in Bellevue, we would see a lot more density in Bellevue. Downtown is an engine, but so is [Bristol] doing the development in Brentwood. That was a big plus to us in buying Synergy Park next door. That reinforces our desire to redevelop that park along with what GBT and Hill are doing across the street because we think that will be a cluster.
DE LOMBAERDE: Makes sense.
MCDANIEL: We’re developing Berry Farms in a manner that that will be a cluster. It’s an urban within the suburban. At Meridian in Cool Springs, that’s what we intended to build there as well. To me, that is what has happened and is happening. There will be multiple places that are economic engines for people.
HINES: And I think that this isn’t just Nashville. It’s everywhere. You go to Greenville, South Carolina, you go to small towns, big towns, it doesn’t matter. They’re looking for places where they have walkability, where it’s easier to get to know your neighbors. I don’t think that’s a trend that’s going anywhere. I think it’s got long, long legs.
DE LOMBAERDE: That lets me transition into the transit debate. Transit-oriented development fit into that mode of self-contained units that connect to each other. But with Metro Council deferring the rezoning of Midtown and maybe jeopardizing some of the federal funding for the BRT, this question occurred to me: Are we thinking about transit the right way? If you would, share some of your thoughts about how transit works and then about how you incorporate it into your thinking on projects.
MCDANIEL: I’m not trying to say what is the right mass transit and what is wrong and where should it go, but we are all for connectivity. I don’t think we believe there is one destination and I’m referring back to that example of Lower Broad. I think the more we can connect different economic zones in a manner that makes it easier and less expensive and less difficult for people to get around, sign us up. We’re all for it. Hopefully somebody smarter than us can figure out how to do it.
HINES: We’re in a suburb of Orlando, Lake Mary, which is a lot like Cool Springs on steroid. Well, they are opening a transit station right by a development. That is a huge positive for us. It connects people to downtown.
We’re taking such baby steps. I wish we were taking bigger steps because I do think that’s so good for growth.
MCDANIEL: Market forces speak for themselves.
MCDANIEL: If you go to one of these towns, look at the land values by the stop and look at the values over here away from the stop…
HINES: It’s unbelievable. Right by a transit stop, it’s a great location. But it’s the same even a block or two away, where you’re able to get there and not have to get in your car. But you see just little baby steps here, like the green [Music City Circuit] bus so many people at ICON ride. That bus comes by there all the time. People embrace that as long as it’s a reliable and safe method of transportation.
DE LOMBAERDE: Growing up in Europe, I come at it from a different angle when I see everything needing to come back to downtown. We should be thinking about connecting the clusters as opposed to this hub-and-spoke approach.
DE LOMBAERDE: And then we talk about regionalism. That’s a way to create that regionalist thinking: It’s about wanting to get from Berry Farms to Maryland Farms or from Maryland Farms over to Nolensville. It seems like we’re not necessarily thinking about it the right way.
MCDANIEL: Trying to get somebody out to the Green Hills Mall without using a car would be nice.
HINES: That would be that should be priority one. A stop at Nordstrom’s.
CALDWELL: But Nashville is a long way from having any kind of rapid transit. People just don’t understand the numbers. I thought that’s what was so essential with BRT and what they were trying to do in creating a density that justifies us even doing this BRT.
It’s just hard to go through that transition. It’s not going to be in my lifetime where we’re going to see any type of transit network.
MCDANIEL: We do have to start now.
MCDANIEL: It could take 40 years.
MCDANIEL: But wait 10 years and it’s going to take 50.
DE LOMBAERDE: That’s what struck me about the Council deferral the other night. Some folks were saying, “Oh, we don’t know about this zoning thing.” It seems like there are a lot of people who aren’t ready for truly dense development.
MCDANIEL: But what’s the alternative is the question. Everybody wants there to be a pasture right in front of their house.
MCDANIEL: But you know they wanted their own house built there. The alternative is gridlock because Nashville is going to keep growing. So we can either plan it effectively or not.
DE LOMBAERDE: Michael, let me switch gears on you. Construction costs were a big issue when they were climbing in ’06, ’07, ’08. You heard all about cement prices going up and up.
RANKIN: It was the contractor’s fault, too.
DE LOMBAERDE: Right. How much of an issue is that today?
RANKIN: Everything is fairly stable. Your three biggies would be the metals — the copper and the iron — and petroleum and they’re fairly stable right now. Cement can get a little crazy here and there but everything has been fairly stable the past 12 months. Looking ahead 12 months, who knows. But I think we’re okay.
DE LOMBAERDE: You don’t expect it to be an issue if we see the development floodgates opening a little bit?
RANKIN: I don’t foresee anyone being able to say that cost are going to go down. So why wait?
MCDANIEL: They’re only going up and interest rates can only go up, too.
RANKIN: The cost of labor right now is low. Productivity is really high. Materials are stable. So it now is the time to build.
DE LOMBAERDE: We’ve seen some reports about a shortage in some of the skilled workers, the roofers and some other folks. Are you seeing that in your work?
RANKIN: Absolutely. The construction industry as a whole the next decade is really going to suffer. They were hit the hardest economically during the recession. At the valley, it was 24 percent unemployment for them. Currently, it’s between 12 and 13 percent on a national basis, but the only reason it’s that low is because a lot of people left the market. They went to different sectors to go to do something else.
DE LOMBAERDE: Right.
RANKIN: So there’s that and the lack of desire to really work hard, get dirty, sweat.
HINES: And freeze.
RANKIN: Yeah, we’re in a real dilemma 10 years out. There are not enough people.
LIND: Is it a problem that builds on itself because of the nature of that work? That you have to learn from someone that you know? The more people you lose, the fewer people you’re going to have on the back end as well?
RANKIN: Exactly. In respect to that work ethic and the generational thing. We were talking earlier about one of our employees who retired after 44 years. I can’t think of many people that would have that same ethic coming into the industry today.
HINES: Costs are obviously a huge issue in everything we’re doing. Seven or eight years ago, we might talk to two or three contractors, bid the job and we’d be about ready to start. Now we don’t do that all. In everything we do, we choose a contractor as early in the project as we can. They’re part of the team from the beginning and we really rely on them to help us maintain costs from a design perspective and those kind of things.
RANKIN: All of the smart developers do that.
DE LOMBAERDE: Which projects that are in the pipeline now — and it could be your own or someone else’s — are you most excited about as you look for Nashville in the near future?
RANKIN: Well, the convention center finishing. That’s a big deal for Nashville.
HINES: It’s a driver and it’s also something that creates an intangible sense of optimism in a city. If you look at it — especially if you’re up at Icon and you’re looking down at it — and you see all that activity and how beautiful it is, it’s transformational for that part of downtown.
MCDANIEL: And it will be very interesting to see what happens with the south of Broadway area.
CALDWELL: The one I’m really curious about is the Boyle/Northwestern project for North Charlotte. I’m not going to throw out all I’ve heard but I’ve heard some great, exciting things.
DE LOMBAERDE: Well, I’ll throw them out: Target, the baseball stadium, Ikea…
MCDANIEL: It’s actually all of those things — and the Target is down the left field line. We must have more land than we think. [Laughter]
LIND: Right. It’s also going to be 600 stories.
DE LOMBAERDE: That is a site that many people say in the next 10, 15 years will be so important because of what it connects.
MCDANIEL: Yeah, we’re excited about that. And as a Nashville citizen, I’m excited about the Charlotte corridor — not necessarily specific to that one site, but I think that is a great canvas for improvement for the city.
We’ve got so many great projects going on in the city, so it’s hard to speak on all of them. But for Boyle, I’m excited about what we’re going to do with Synergy Park, making something shiny and new out of what is there now. Then I’m really excited about our Berry Farms development, which is just getting going and is going to be probably our best effort to date. It’s the greatest, most comprehensive, biggest piece of land we’ve worked with. That’s going to be right in our strike zone like no project has been.
DE LOMBAERDE: What do you anticipate your build-out time?
MCDANIEL: From beginning to end, it’ll probably be 25 years. I would hope that the largest part of that is 15 years.
CALDWELL: We were the original developer of Cool Springs and we had all these great forecasts and everything. Everything said 20 years and if you look at it, it took about 20 years. Unfortunately, the first three or four were like nothing.
RANKIN: That was ’88 to ’91?
MCDANIEL: That’s how Berry Farms has been.
CALDWELL: I know it.
MCDANIEL: It’s taken eight years to get started.
CALDWELL: People just don’t realize that kind of stuff how long it took how long things take to get started. They think when they see it coming out of the ground oh it’s started. They just don’t realize all the hard work that was done before that. Eighty percent of the work was done before it starts. Then you turn it over to the contractors and you kind of take your hands off the wheel to a certain extent.
DE LOMBAERDE: That legwork is going on now with Vanderbilt and others in the Carothers Parkway area south of McEwen.
DE LOMBAERDE: Let me change gears to things like the E|Spaces venture that Phil Gibbs is building. More people talking about the changing way that we work with flexible space and home offices. Is that important enough of a trend to where it influences how you design and build things?
CALDWELL: We see that because we have interior design services but we also have corporate. It’s definitely going that way. We designed the two E|Spaces buildings — or spaces, I guess — and those guys want to replicate that all over the place.
We definitely see much more open areas and then if you want to have a meeting, you have a little space where everybody can go. The ability of what we have with technology allows you to do those kinds of things. We’re designing other office spaces that do the same thing. They’re downsizing with more people but they like it more because they’re working at home and doing a lot of different things.
RANKIN: They’re really driving down the square footage per employee. They take that and then they’ll put it in common areas where they can have more small meetings.
CALDWELL: I’ll tell you where it’s really hit. If you really want to look at where it’s hit, go look at Bass Berry’s offices compared to where they were 30 years ago.
MCDANIEL: The two themes that you hear kicked around in office space are openness and the work-from-home workforce.
MCDANIEL: I think the first one is true. As for the second one: The office is not going to go away. We’re not going to take an entire company and have no one ever see each other and have everybody working from home.
DE LOMBAERDE: No.
MCDANIEL: There’s some value to be had in having that shared environment. Now maybe people are hoteling and space becomes more efficient, but I think the second trend is true to a limited point. The trend more to openness is clearly occurring. When it’s occurring with law firms…
DE LOMBAERDE: That’s the last barrier?
MCDANIEL: Yeah, the last barrier.
HINES: In apartments, we see a real trend with our renter — especially in an urban area —sacrificing space. They’ll sacrifice space but it’s got to have great style and it has to be very efficient. Of course, that generally means open and if you look at any project we’ve done in the last six years, they’re all very open. We spend a lot of time and effort on community spaces.
DE LOMBAERDE: Right.
HINES: But today the front page of the Personal Journal was about how the whole open trend is starting to change because people are realizing it’s loud, it’s noisy and they are wanting separate spaces. I don’t think it’s ever going to go back to a box for a kitchen, a box for a bedroom, a box for a living room. But I think we might be on the beginning of a little bit of a morph there.
CALDWELL: We’re trying to find a balance a little bit.
MCDANIEL: It’s just the architects manipulating us. You know how can we keep recycling ideas?
DE LOMBAERDE: The only other topic I had on my agenda was about the redevelopment of some of the big buildings in town that were built in the ’50s, ’60s and ’70s. Inevitably, they are going to start looking very dated. Will we be able to update them appropriately? Do we need to look at completely overhauling them or do we need to take a look at taking them down?
CALDWELL: No, I don’t see that happening. I mean, look at the Voorhees Building on Eighth. Look at that thing — and at Cummins Station. I just think all of those are opportunities. It’s just timing: When is the right time to do them and when does it really become cool?
We looked at the Voorhees building. It’s been sitting there for years. We made a run after that and got outbid but, man, we were excited about it. We just thought this could be the coolest thing ever.
DE LOMBAERDE: Taking those old bones and dressing ’em up new.
CALDWELL: Yeah, I think that’s what you’re looking for. Because you can go in and do so much with the interiors. Maybe you don’t look at the exteriors much.
MCDANIEL: But the reality is a building like that won’t be torn down.
HINES: You’ve just got to try to reuse them.
MCDANIEL: They’re not going anywhere so the question is how long does it take.
CALDWELL: Somebody has got to sell it cheap enough for somebody to come in and fix it up. It’ll happen.
RANKIN: Price matters.