To read the first part of our broad conversation with Kim Hawkins and Aaron White of Hawkins Partners and Evergreen Real Estate, respectively, click here. The full menu of Boom magazine content is available here.
DE LOMBAERDE: Let’s have both of you talk a little bit about the development that we’ve seen and what has excited you the most. And then maybe talk, too, about the flipside. What are you a little nervous about in terms of how we’re growing or where we’re growing and what we’re building? Who wants to go first?
HAWKINS: I’ve been here for 26 years, so I really felt like around 1999, 2000, everything changed. It was really a pivotal time, and I think it was a couple of things. One, we’d had some great energy around downtown through Mayor [Phil] Bredesen. But in 2000, the Nashville Civic Design Center launched, Cumberland Region Tomorrow launched — those actually were announced on the same day — and we got a new planning director. Rick Bernhardt started looking at the difference from zoning as black and white words on a piece of paper to looking at what the form was.
And all of a sudden, around 2000, it’s like the whole community started talking about things like urban form and public realm. It just had a dramatic impact on developmentand the way that developers responded to that. And it became the community conversation. It wasn’t just design professionals or just developers or just people at planning. It really became the community conversation.
DE LOMBAERDE: So the quality of thinking as a whole became better?
HAWKINS: Yes, and that then transferred itself into the quality of development.
WHITE: Our company has been building in Nashville for about 10 years, and when we started Werthan Mills — that was our first project — the idea of urban condos was very young. Looking around, you had the West End Lofts, downtown had the Bennie Dillon. So Post came to Nashville and they did the Bennie Dillon, they did a couple of properties on Hillsboro Road and Woodmont and Stokes.
But you could really count on one hand the number of for-sale infill properties and the number of recently built infill rentals. I think you had Market Street Apartments, Bennie Dillon. Very, very little had been built for about 10 years. Construction costs were too high relative to rent levels, and it was 2003-04 before we really had any kind of a housing boom.
And so when the housing boom started, basically that combined with Nashville’s own growth and led to a lot of new development. I mean, right out of the gates, the Viridian was the first project of significant size that had been done in years.
WILLIAMS: Since The Cumberland really.
HAWKINS: Well, and Row 8.9 was the other one. That was a big new thing in infill development at the time. What year was [The Lofts at Werthan Mills]?
WHITE: Werthan was being conceived in 2003-04, so Row 8.9 was probably late in 2002.
HAWKINS: Yes, Row 8.9 was right before that. So many things have happened since, and Werthan was awesome adaptive reuse. There have been so many other great examples in Germantown since then.
WHITE: It’s interesting you mentioned 8.9, because without 8.9, I don’t think we would have had the fortitude to do Werthan. We started with 8.9 and we said, “OK, if they can sell their units for about $130 a foot, we’ll do $130 a foot on the first floor, $140 on the second floor, $150 on the third floor and $160, because there, we had the views.
And so 8.9 had proved out that walkup price point. That was the comp we took to our lenders. We had 8.9, West End Lofts and was it City View Lofts that Lynn Ellsworth did in East Nashville.
WHITE: Those were some of our key comps. And then we were using The Jacksonian. We had one loft sale in Printers Alley we kept pointing to — a $500,000, 4,000-square-foot loft, one of the few downtown. And literally, we were putting that in front of the bank, trying to extrapolate, “OK, what can we sell these for?”
HAWKINS: But what you’re getting to is that out of all of this kind of community conversation and attention came this whole energy for urban infill that I don’t think was really there before.
WHITE: And it was important when Tony [Giarratana] stepped forward and said, “I’m going to do the Viridian.” And he set out at a $250-a-foot price point. Then right behind him, Bristol converted Bristol on Broadway to condos and that sellout was very successful.
Those two [projects] convinced people. When Viridian came out at 300 units and Bristol on Broadway converted at about 250 units, capital lenders said, “This is a legitimate marketplace; we can put our capital into this.” And that sort of opened the floodgates.
DE LOMBAERDE: It seems to me like one of the best things about the growth that we have had in the last three or four years is the fact that the opening of those floodgates has produced a number of healthy pockets of growth as opposed to us putting all our eggs in one basket.
HAWKINS: It was because you could afford to kind of take a little bit more of a risk there because of the land cost.
DE LOMBAERDE: When you say “there,” you mean the less recognized places?
HAWKINS: Yes. Germantown, Hope Gardens, East Nashville.
WHITE: It’s interesting that you said that. It has become a strength because Nashville has continued to grow, continued to create jobs, continued to draw people back to its urban center. I think in the early days, it was questionable whether we were perhaps spreading our redevelopment over too large of an area and so we weren’t connecting these neighborhoods.
HAWKINS: There are still people who think we’re spreading out too far and not concentrating our development.
WHITE: Well, the other cities that were most active then, Knoxville and Chattanooga, are much smaller cities. But in those places, it’s sort of downtown and everything else. There’s not a Hillsboro Village, an East Nashville, a Germantown.
HAWKINS: And part of that is that we didn’t lose those first-ring, second-ring neighborhoods like so many cities did. Our first-ring and second-ring neighborhoods stayed healthy.
WHITE: I think you’ve got to look back and appreciate the strength of MDHA’s redevelopment neighborhoods. I mean, they created [redevelopment districts for] Five Points and the East Bank and the Capitol Mall. They did a good job of investing in those early projects and then pulling back as the market started to take hold and develop things on a market-rate basis.
DE LOMBAERDE: And Kim, when you say there are people who still think we’re too spread out, it sounds like you have a response to that, that you think it’s a good thing to have the pockets.
HAWKINS: I think it’s excellent that we have pockets. We’re unusual in some ways that we do, but I think it’s just the strength of the market that our development is not just one area. The fact that we have developmenthappening in Rolling Mill Hill and developmenthappening in The Gulch and I’m sure we’ll get [more infill in] 12South, Hillsboro Village, Midtown.
Midtown [offers] a tremendous opportunity. There’s an awful lot of surface parking. We have strong neighborhoods. Some of that is also a result of a long-term Metro Historic Commission vision, identifying those as historic neighborhoods. That’s one of the things that I think makes Nashville so strong — maintaining the integrity and authenticity of this city’s built environment.
DE LOMBAERDE: Aaron, it sounds like you were saying MDHA made it a lot easier for you to be able to take that step to say, “I know there’s a baseline, that there is some support for what goes around my project.” Has that made a big difference over the last decade?
WHITE: Well, most of our early projects could not have happened outside of the redevelopment districts. Our first five projects were all adaptive reuse for downtown: Lofts at the Exchange, Church Street Lofts, Art Avenue Lofts, The Kress and then Werthan, which has been developed in phases.
In hindsight, the margin was so tight on those, we were the perfect developer — eager, ambitious and a little naïve. That’s what MDHA needed.
And there was a lot of support in the mayor’s office, the Nashville Civic Design Center. It was really Mark Schimmenti [of the NCDC] who took us downtown and said, “Somebody needs to develop the Exchange Building [because] it’s going to be torn down.” And he called Mark Deutschmann [of Village Real Estate Services] to market it. He said, “Help me find someone to buy this.” And Mark brought me in and we said, “How about we buy it?” Then Judy Steel [of the NCDC] calls Mark Schimmenti, calls Mark Deutschmann and me. We go walk through it and we buy it.
The Civic Design Center is backed by some fantastic Nashville families, Vanderbilt University, and those pieces have been critical. Because [Lofts at the Exchange] would be a parking lot now had they not stepped in.
DE LOMBAERDE: Has that story been undertold over the years? The story of the public and private support that has undergirded some what we see now?
HAWKINS: I don’t know. I think if you hear the story told, you hear pieces of it that always come out.
POSTDATA: WARRANTY DEEDS