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VOL. 36 | NO. 6 | Friday, February 10, 2012

Midstate retail trends toward mixed-use development

By Hollie Deese

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Artist rendering of 12 South Lofts, which combines retail, apartment, office and restaurant space.

-- Courtesy Of Southeast Ventures Llc / H.G.Hill Realty

When it was announced in December that H.G. Hill Realty and Southeast Venture were teaming to build 12 South Lofts, a mixed-used building in the 12South neighborhood, there were mixed-reactions.

Some in the community are up in arms about the loss of longtime neighborhood favorites such as Rumours Wine and Art Bar. Plus, the neighborhood already has a similar structure just blocks away, 12 South Station.

But the 10,000-square-foot ground floor retail space, combined with 67 luxury rental apartments, is only the latest in a line of similar structures being built in Middle Tennessee that combine retail, living, office and restaurants.

“Things seem to be trending that direction, and it makes a lot of sense for a lot of different reasons,” says Greg Coleman, a broker with Southeast Venture, specializing in office and retail. Previous to this project, his company worked on the 220,000-square-foot, mixed-use Hill Center Green Hills and the 48,000-square-foot Hill Center Belle Meade, anchored by a Publix.

“It can just be a central destination for people to go shopping, or to have lunch or dinner, but also have office space right there,” he adds. “And having a grocery store there is awfully convenient.”

But not all such projects are progressing as smoothly. Another recently proposed mixed-use property on 21st Avenue in Hillsboro Village has hit a snag.

“Our design team met yesterday and has decided not to submit an application to the Metro Planning Commission to amend the Hillsboro Village’s urban design overlay (UDO),” says Jimmy Granberry, CEO of H.G. Hill Realty Company.

“Instead, we will continue to explore the development possibilities under the current parameters of the UDO adopted over 10 years ago. It is our desire to have any plan that we pursue be embraced by the Hillsboro Village Community and, to keep our tenants informed, we will make these plans public as they are solidified. We appreciate the interest and input of the merchants and community and we look forward to working with them as we move ahead.”

Nashville has fared better than much of the nation in recent years, largely because of its historically cautious growth. Now, after holding relatively steady over the past five years or so, growth is again on the rise.

“Throughout the boom of the mid- to late-2000s, Nashville never plateaued at as high of an activity level as many other areas nationally,” says Devin McClendon, president of commercial real estate firm NAI Nashville.

“In turn, Nashville did not have as far to fall when there was a drop off. There is certainly a higher amount of square footage available in retail in the entire Middle Tennessee market than most developers and investors and landlords prefer. But right now, we are seeing a lot more interest by national retailers. We are seeing incremental interest and activity.”

One large development was the announcement last month of a new 14,000-sqaure-foot Apple store in CoolSprings Galleria by CBL and Associates. Brooks Brothers closed last week to accommodate the new space, but will be moving to Opry Mills, scheduled to reopen in March.

“That is a pretty big coup for CBL,” McClendon says.

Cool Springs is considered a retail hot spot, along with Green Hills. New space is a premium, and old, desirable spaces rarely open up. Both areas excelled during the downturn, mainly because there was enough population density to support existing retail.

“Green Hills is very tight on space and it always will be,” says McClendon. On Richard Jones Road, the Greenbriar Village development from Brookside Properties is an expansion behind the Hillsboro Plaza Shopping Center where Levy’s is housed, and they have had no problem leasing space prior to completion.

“Last year or even in 2010 you couldn’t have done that,” McClendon says. “National credit retailers weren’t growing and local retailers couldn’t get financing from a bank. Brookside is getting very strong rents for the space.”

Indeed, it’s good space if you can get it. Jackson Miller owns a Plato’s Closet clothing resale stores in Murfreesboro and Cool Springs, and is hoping to soon open a third location in the Green Hills/White Bridge Road area. He likes strip mall space with good parking and an extended lease.

“We are excited to be expanding into this new market,” he says. “We think the demographics and population in West Nashville are incredible, maybe the best in the Middle Tennessee area.”

With the Music City Center set to open next year, there continues to be retail growth downtown and in the Gulch. Crissy Cassity, the retail recruiter with the Nashville Downtown Partnership, anticipates big growth in 2012.

“You are going to see more strong, independent retailers that are unique and interesting,” Cassity says. “Just in the downtown core we have three that are opening in the first quarter of this year.” Cassity actively recruits retailers from outlying areas of Middle Tennessee and across the state. In the past four years, 137 new retail stores opened and 87 closed, a net gain of 50 retail locations.

“From a retail perspective, Nashville is in a good position, particularly as the economy improves,” McClendon says. “There is a good supply in the tertiary markets and some new products being delivered in the primary areas.

“Now is a time where we are seeing a lot more retailers back and actively looking at deals.”

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