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VOL. 35 | NO. 23 | Friday, June 10, 2011

Southern Migration

Cool Springs ready to build as health care companies look to greener pastures

By Bill Lewis

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Nearly half of Nashville’s signature industry – health care – actually has a Cool Springs address, and that number keeps growing. So does Nissan, the highest-profile corporate headquarters ever to relocate to the Nashville area.

Now, while downtown struggles with 1.7 million square feet of empty office space – a vacancy rate of about 25 percent – the arrival of yet another former Nashville health care company is pushing Cool Springs’ vacancy rate below 10 percent and increasing speculation that the suburban office park will soon see construction of its first new, large office building since Crescent Resources’ One Greenway Centre opened last year.

Downtown’s newest office building, The Pinnacle at Symphony Place, opened almost a year and a-half ago.

Why has Cool Springs grown from a collection of farms and pastures in 1995 to a home for regional headquarters for some two dozen Fortune 500 companies?

“You come out here, you see green fields, great housing stock, great schools,” says Pat Emery, president of Spectrum Properties, which manages 1.4 million square feet of office space in the area, about a third of Cool Springs’ total.

Emery should know. When he managed the local office of Crescent Resources, he helped kick off the Cool Springs land rush and played a key role in luring Nissan’s headquarters from Los Angeles. That made Cool Springs the only location outside of the L.A., New York and New Jersey regions to be the North American headquarters location for a Pacific Rim automobile company. Nissan spent two years downtown before moving to its campus in Cool Springs.

The latest headquarters to travel the 15 or so miles from the downtown area to Cool Springs is Healthcare Management Systems. As it plans for growth, the health care information technology company is leaving Two American Center on West End near I-440 and moving into 100,000 square feet in Crescent’s Nine Corporate Centre off Carothers Parkway.

Healthcare Management Systems becomes just the latest health care company in Nashville – which advertises itself as America’ Health Care Capital – to actually have a Cool Springs address. Some, like Healthways, a manager of health and wellness programs for employers, moved from the city to Cool Springs. Others, such as BioMimetic Therapeutics, a biotech company undergoing a $20 million, 90,000-square-foot expansion at its Cool Springs Life Sciences Center, have always had a Williamson County address.

Another trend has boosted Cool Springs’ reputation as a destination for health care companies, Emery says. As they have grown and needed more space, a number of companies have moved there from Brentwood. The largest example is Community Health Systems, the national hospital management company, which moved from an address near the Maryland Farms office park.

“We’re seeing (health care companies) come to Cool Springs after they mature. Since 2007, health care has dominated Cool Springs’ growth,” Emery says.

There are reasons why 40 percent of the members of the Nashville Health Care Council have Williamson County addresses, says Cindi Parmenter, president of the Brentwood Cool Springs Chamber of Commerce., with executive neighborhoods, a strong housing market and good schools are at the top of the list.

“It’s not just (office space) availability. It’s the lifestyle,” Parmenter says.

When Franklin-based EnableComp decided to look for new space, its focus quickly narrowed to Cool Springs because of the office park’s central location and amenities, including 200-plus restaurants clustered around nearby CoolSprings Galleria shopping mall, says EnableComp President David Jones. The company works to ensure that hospitals are properly paid for worker’s compensation cases.

“We took a map and put a pin in it for where everybody lived,” he says. The company asked “what’s easiest for commuting and quality of life.”

Now Cool Springs is filling up. Healthcare Management Systems is taking one of the last continuous spaces large enough for a large headquarters and setting the stage for the next construction cycle.

“Then we’re out of space, like everyone else,” says Jason Holwerda, leasing representative for Crescent.

Space in Cool Springs tightened even further with the recent announcement that Carlisle Transportation Products is locating its corporate headquarters in Southern Land Co.’s McEwen Building. The company is taking 28,000 square feet of space. The lease leaves the 175,000-square-foot building about 90 percent occupied.

Cool Springs has about 400,000 square feet of vacant space, but it’s spread among many buildings, Emery says. “A tenant who needs say, 60,000 square feet, would have to build” or look for space downtown or in one of the office parks near Nashville International Airport.

Now several companies are poised to break ground, but only after a tenant commits to the space.

Crescent has zoning approval for another 2.2 million square feet of Class A office space on several sites. First out of the starting gate for the company will be Two Greenway Center, a planned 155,000-square-foot building next to the building occupied by Jackson National Life Insurance’s regional office, which moved in last year. But, signaling that the recession has been felt even in Cool Springs, Crescent has no plans to build on spec in anticipation of attracting a large tenant later.

“We have plans on the conference table,” Holwerda says. “With an anchor tenant we would kick that off.”

Duke Realty is ready to break ground at Keystone Crossing, a 180,000-square-foot midrise building. The site has already been graded, but the company put its plans on hold when the recession hit, says Jeff Palmquist, senior vice president.

“We’ve presented it, (but) no tenant yet,” says Palmquist. “I would assume no one is going to go spec.”

Emery declined to discuss the timetable for construction of new buildings, but he did say Spectrum has plans for something new to Cool Springs. Parking garages will take the place of large surface lots, leaving more room for green space around the company’s buildings, all of which are LEED certified as “green” structures.

Just as downtown Nashville did 15 years ago, Cool Springs now may be seeing a new competitor emerging seven miles further south along the I-65 corridor. Mars Petcare recently announced it is moving its headquarters from Cool Springs to Thompsons Station. The company will build a 54.4-acre corporate campus with 500,000 square feet of office, research and manufacturing space.

The company’s desire to consolidate R&D and manufacturing at its headquarters didn’t fit Cool Springs’ zoning requirements, says Emery, who also notes that the city of Franklin recently raised its impact fees, which make construction more expensive in Cool Springs.

Even with the new fees, no one is predicting that the Cool Springs building boom is going to end any time soon.

“It’s pretty amazing for a sleepy little town that in 1995 (had) no spec office buildings,” Emery says.

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