Long known for country music, Nashville is fast gaining a reputation as a first-class business city.
There is a profound sense of excitement in Nashville, Tenn., these days. True, some of it may be due to the winning ways of the Tennessee Titans, the city's new National Football League (NFL) team that reached the Super Bowl last season, and to the continued presence of the highly successful country music industry. But much of it also is due to the booming success of the city's real estate markets.
Tennessee's capital city, home to more than 500,000 residents and centrally located in the United States, has become a hot spot for Class-A corporate office space and processing distribution facilities. Add to the mix a highly popular theme park-turned-mall, and Nashville is humming a happy tune.
Suburban office market soars An influx of well-educated and motivated workers has resulted in a surge in the need for office space in the city's suburban markets. Instead of relocating or expanding in Nashville's central business district (CBD), which supports only one-third of the city's total office space, many industries are opting for locations in Nashville's bedroom communities.
The Brentwood district to the south of Nashville and the airport district to the east are the fastest-growing suburban office markets, according to Coleman Aycock, a senior leasing representative with Indianapolis-based Duke-Weeks Corp.
"In the last 12 to 24 months, there's been more office space provided in the suburban markets because it's been the most absorbed," explains Aycock. "Probably, it's a function of demand. Nashville's got some very experienced developers who are picking and choosing their markets where they can fill their buildings up. Plus, it's very expensive to buy and build something of the same size in the central business district."
According to the Nashville Chamber of Commerce, the inventory of office space in the CBD in fourth-quarter 1999 was 5.7 million sq. ft., compared with 16.3 million sq. ft. in the suburban market. Also, in the fourth quarter, the suburban market enjoyed a lower vacancy rate than the CBD, 11.06% compared with 12.19%.
"We're watching all sectors grow," says Aycock. "We're seeing a demand for light industrial buildings by logistics and distribution companies such as Dell Computers and Hewlett-Packard. Plus, there are companies wanting to locate in Nashville due to the airport's close proximity."
In September, Sprint announced it will occupy a 150,000 sq. ft. facility in Nashville's midtown market. "To Nashville's advantage, as the city grows and the real estate requirements grow, all sectors grow," says Aycock.
Catering to different needs The activity of Duke-Weeks demonstrates some of the types of office development activity prevalent in Nashville. For example, the first phase of Duke-Weeks' Class-A, 80,000 sq. ft. Aspen Grove Office Center is under way. The adjacent Aspen Grove Business Center will consist of three buildings totaling 250,000 sq. ft. of distribution space, while the Aspen Grove Flex Center, also adjacent to the office center, will provide additional back office space.
"Within one development, we can accommodate the high-end, Class-A corporate headquarters as well as any warehouse or distribution center, and tenants for back-room office space," says Aycock. "Yet, it has the appearance of all being separate."
Duke-Weeks also recently completed the first two phases of its four-phase Creekside Crossing, a four-story, Class-A office building totaling 450,000 sq. ft. To the east, the company's Airport Lake View will cater to a variety of office users with three multi-story, high-end office buildings in the vicinity of the Nashville International Airport.
Country music meets retail There's no place in the country besides Nashville where shoppers can dine in a rainforest cafe, experience the thrill of a simulated NASCAR event, and shake the hand of Grand Ole Opry and country music legend Little Jimmy Dickens. Once the site of the Opryland country-music theme park, Opry Mills, which opened in May, is now a $200 million retail and entertainment center that is expected to generate $350 million a year in retail sales. In addition, Opry Mills is expected to collect more than $7 million annually in tax revenue for the Nashville, Davidson County and Tennessee governments.
The Mills Corp. of Arlington, Va., the mall's managing general partner, teamed with local Gaylord Entertainment Co. to create the 1.2 million sq. ft. facility, which was designed to incorporate characteristics of Nashville's heritage. To date, the mall has welcomed more than 4.5 million visitors.
"Naturally, we were very intrigued and interested in the address of the property," says Opry Mills vice president and manager Joe Szymaszek. Snuggled next to the Opryland Hotel, Tennessee's largest hotel and convention center, and the Grand Ole Opry, a virtual Holy Mecca for country music fans, Opry Mills has a built-in audience, says Szymaszek.
"Every guest who checks into the hotel receives an Opry Mills V.I.P. card, free coupon book and shopping bag," says Szymaszek, adding that guests also receive free transportation from the hotel to the mall. "We also cross-promote the Grand Ole Opry by selling tickets for weekend events at the mall. Shoppers can also meet and greet their favorite Grand Ole Opry entertainers."
Instead of a three-hour shopping event, the efforts result in at least a day-long retail and entertainment experience for visitors. The typical Opry Mills shopper visits the facility at least 11 times per year, spends $167 on non-food expenditures during each visit and boasts an annual income between $50,000 and $100,000. Shopper surveys also indicate 45% of mall visitors traveled at least 50 miles, while 27% traveled at least 150 miles.
"We've got traditional retail plus some others that you can't find [elsewhere] in the state of Tennessee," says Szymaszek of his 120 retailers.
Among some of the Opry Mills retailers making their first appearance in the Volunteer State include Bass Pro Shops Outdoor World, billed as a sportsman's paradise and featuring aquariums, taxidermy and adventure travel services; the Build-A-Bear Workshop, an interactive retailer that allows visitors to build their own stuffed animal; and Sun & Ski Sports, which offers shoppers a 20 ft. natural rock-climbing wall and a ski deck for ski and snowboard instruction.
With an occupancy rate of 92% and room for expansion, Opry Mills will add several new restaurants next year as well as an additional anchor, says Szymaszek.
Music and manufacturing According to chamber officials, the Nashville region continues to be one of the nation's most dynamic manufacturing centers, with employment increasing by 12%, or 10,000 workers, since 1985. In July, Nissan Motor Manufacturing U.S.A. announced a $500 million investment to expand its Smyrna plant in Rutherford County, which will add 1,000 new jobs to the local work force. Also, Wilmington, Del.-based Shiloh Industries will build a $47.9 million plant in nearby Dickson County, while B/V Chassis Systems will locate in Maury County to supply suspension systems to Saturn.
Nashville's music and entertainment industry contributes $3.2 billion annually to the local economy. The city is home to 200 recording studios, 27 entertainment publications and 5,250 working union musicians. In addition, thousands of other people in the Nashville area receive paychecks from music-related jobs.
A number of entertainment industry-related businesses have spun off from Nashville's country music success. For example, four national cable television channels are headquartered in the city, creating hundreds of jobs for stagehands, camera operators, producers and writers. Tapes and compact discs also are manufactured in the Nashville area.
During the past decade, the music video production business has been the fastest-growing segment of Nashville's entertainment industry. More than 80 production companies, equipment houses and film/video service businesses are now headquartered in the Music City. Visual Bible Inc. a film production, distribution and e-commerce company, recently announced plans to relocate its headquarters to Nashville.
"In the `80s, the place to be was Memphis," says Aycock. "Now, it's Nashville."