Geographically, Airport South is one of Nashville’s largest real estate submarkets — and that may be the problem.
Bordered by Interstate 40 West on the north and Interstate 65 South on the west, with the county line, Percy Priest Lake and the downtown loop circumscribing its perimeter, the submarket is massive.
In reality, few consider Southeast Nashville/Antioch a cohesive neighborhood as its includes parts of Berry Hill and Crieve Hall, Radnor and Woodbine, Tusculum and Glencliff. Interstate 24 cuts it in half, but its Main Street — if it has one — is Murfreesboro Road.
In Nashville commercial real estate parlance, Airport South means something else, a largely inert outlier in a booming and fluid office and industrial leasing market.
“The product there — it is what it is,” says Stan Snipes, senior advisor with the Nashville office of Sperry Van Ness. “There are not any strong Class A buildings in Airport South. But the submarket has value.”
In the other submarkets, when major tenants leave, others move in. Vacancy rates are low, which can drive rents ever higher. Single-digit vacancy is the norm.
Not so in Airport South, where the vacancy rate, according to Cassidy Turley, was a whopping 22.1 percent in the second quarter of 2013, nearly double the rate of the submarket with the second-greatest vacancy.
In a year when the overall commercial real estate market has absorbed more than 106,000 square feet, Airport South has seen an anemic gain of 4,654 square feet.
While that number alone is low enough to raise eyebrows, a broader view gives even gloomier news.
In 2012, the Airport South submarket had a negative net absorption of 101,266 square feet, according to Cassidy Turley research director Carrie Robinson. The vast majority of that — 88,000 square feet — was due to Internal Revenue Service moving to a new building in Cool Springs.
But in a submarket so barren, one major move can be the story. So slow are things in Airport South and so dramatically can one lease impact the numbers, the average asking rents bounce around drastically.
It's nearly impossible to establish a pattern from that level of randomness. Indeed, the randomness is the pattern. There's a difficulty in marketing Airport South. It has no cachet and, as such, clearly is not to be confused with, for example, "Music Row" or "the health care corridor" in Midtown. Even the almost-generic-by-design MetroCenter can offer proximity to downtown.
Murfreesboro Road is, to be gentle, not one of Nashville's glitziest corridors.
Terri Patton, the landlord at Airport Executive Plaza on Murfreesboro Road, said the key to being successful in Airport South — and her building is, typically, leased between 85 and 90 percent — is luring prospective tenants to a site.
"We have challenges,” Patton says. “When you mention Murfreesboro Road, people say 'I don't want to be there.' But if you get them to the building, they think they are at Cool Springs."
And there's a secret to that process, too.
"We try to bring people on 440," she says. "We tell brokers to avoid bringing tenants down Murfreesboro Road from downtown."
What seems a little devious actually hints at one of the advantages of Airport South — its high connectivity. The submarket offers access to Briley Parkway, I-440 and all three interstates. Patton, who lives in Belle Meade, says she can drive to her building in 15 minutes.
"In our building, we've got international, national and local tenants,” she says. “Some of our local tenants live in this area and they can get so much more bang for their buck, as opposed to being in Green Hills and West End type rents.
"And some of the West Nashville company presidents find it's a great location for drawing employees from all over Nashville," Patton adds.
Patton says Airport South is a "sleeper market" with an "image problem" whose numbers are often dragged down by oversized office parks located west of Briley Parkway.
But, she says, there are opportunities.
"Typically, Airport South is the last place to recover after a downturn, but the brokers have learned if they have someone who is a little price-sensitive, it's a great place to be," she says.
Patton's building is losing the Tennessee Department of Revenue as part of the state's plan to consolidate all state offices into state-owned buildings. Airport Executive Plaza will lose a 14,000-square-foot tenant, but "we have people waiting to get the space."
And though the recovery may come late to Airport South, it may arrive sooner than it would have otherwise. During the Great Recession, tenants found great sublease rates in Brentwood and Cool Springs. Now that the overall market is regaining health, those favorable rates will disappear, thus improving the attractiveness of Airport South.
"We [are hopeful] we are going to get those people back," she says.
The key, as always, is simply getting them to the building.