The Music Row “hood” has grown to become an odd shaped circle loosely formed by the Roundabout, the Gulch, Belmont University, Hillsboro Village and Vanderbilt University. Today the number of cranes and new construction in the area proves that the Music Row dirt under the houses is fast becoming almost as valuable as the music made in the buildings that sit upon it.
In recent weeks we’ve seen SESAC announce its purchase and intent to build on Music Sq. East, the Edgehill Village sold for $9.2 million, the Roundabout lot will soon break ground with a high-rise, mixed-use tower and much more.
Last August we spoke with Colliers International Real Estate Specialist Chad Poff to discuss the monopoly board furor taking the Row residential. Now six months later, we called Poff for updates and perspective on the ongoing goldrush, (Poff publishes a quarterly update, Music Row & The Gulch Snapshot, which shows sales, development and leasing activity in the area. To be on his list, email him (firstname.lastname@example.org).)
A recent Tennessean article quoted data from the Greater Nashville Apartment Association citing about 3,000 units were completed last year and an additional 7,777 were under construction at year-end. The Association says another 6,000 are planned but not necessarily underway. “We normally absorb about 4,000 a year,” says Poff, “so you have to think that we are getting to a tipping point. When all this stuff is delivered, what will the market look like?”
And that’s where we started our discussion…
NEKST: What’s top of mind right now in the hood?
Chad Poff: The big $64,000 question in the Row/Gulch area is, condos or apartments? The multi-family housing market is white hot. Condo prices are up to the $300 sq. ft. range which is driving a lot of these decisions. The great thing about developing a condo building is that it is off your books. You build it, sell it and you’re out. You don’t have that holding period risk like you do with other investments.
NEKST: What other projects are being developed in our area?
Chad Poff: The 1212 mixed unit high rise on Demonbreun in the Gulch is well out of the ground and beautiful product. It will have about 900,000 sq. feet in 23 stories. If I were a betting man I’d guess it will switch to condos although I haven’t heard anything officially. The East side of the Roundabout, what I call the Barbara Mandrell site, was purchased a few weeks ago and they are talking about 430 units or so and 14-16 stories. None of these projects are small scale and that is because of the price you have to pay for the dirt. In our last interview we discussed how prices went from $25 to $50 a sq. ft. But now the norm is around $100. The Roundabout deal paid about $91 per sq. ft. and probably would have gotten more if the space was more rectangular. Next door down the hill is the 1505 7-story apartment building on Demonbreun, well underway. Inside the Row area is the Artisan on 18th Ave. It’s going to be an 153-unit apartments developed by the same folks that did the Note 16 on 16th Ave.
NEKST: What can you tell us about the SESAC, Sony, Broken Bow musical chairs game we recently watched?
Chad Poff: Broken Bow moved into the EMI properties at 35, 37, 39 and 41 Music Sq East about a year ago, and then moved out and into the Acuff Rose building on 16th which had been vacated by Sony Music Publishing. SESAC, who I represented, had been looking for a site large enough to build a class A multi-tenant office building and purchased the EMI properties after they became available from Broken Bow. The dominos all fell into place.
NEKST: How big will the SESAC building be?
Chad Poff: The site allows for 113,000 sq. ft. of office space. I expect it will be a classic mid-rise type building. It will be nice to finally have some new office space available on the Row.
NEKST: What are the For Sale and lease properties like on the Row?
Chad Poff: Actually there is little or no space for an office manager who wants to open up something. The spaces are limited and go very fast from a leasing standpoint. The available purchase opportunities are priced at the top end of the market so they are not getting absorbed quickly. These owners are sophisticated and comfortable holding to their price. I believe we are still in the $200+ per sq. ft. range for the bungalow type houses. If you look at them from an owner/occupant standpoint—buy the asset, grow my business and eventually have something tangible—it can make a lot of sense. For example, last December hit songwriter Luke Laird bought a 4,000 sq. ft. property on 16th Ave. from former Titan Kerry Collins to house his publishing company.
NEKST: Will we see some mid-rize building go up on the Southern end of the Row? And what about Sony Records.
Chad Poff: I believe the Sony record compound is in negotiations to sell. I hear they are open to stay on the Row if there is product, or go downtown or to the Gulch. Don’t know if we’ll see as much mid-rise construction that close to Belmont because the zoning is not as favorable. Of course on the Hillsboro Village boundary to the Row there’s a large, mixed use development underway and a fascinating site in the parking lot across from Sunset Grille. People want to live in Nashville and they want to be part of this Urban core.