SOUTHEAST SNAPSHOT, APRIL 2005
Nashville Retail Market
The retail market in Nashville, Tennessee, continues to grow and flourish, especially in the suburban sectors. Shopping centers remain a prime investment, and the push for grocery-anchored developments has become quite intense. Publix continues to populate the middle Tennessee market in an attempt to compete with Kroger, which, for the time being, retains market dominance. Vacancy rates are hovering at approximately 6 percent, and according to Colliers Turley Martin Tucker’s 2004 year-end market report, this number falls just below the national average of 6.2 percent. As a result, vacancy in the Nashville retail market remains low across the board, and in general, demand is outpacing supply. The average rental rate is $13.80 per square foot, ranging from $7 per square foot up to $30 per square foot in the most desirable areas. In addition, Colliers notes that as of last October, retail sales in the Nashville area were up by 3.6 percent from October 2003, again with most of the improvement coming from suburban areas.
Nashville’s increasingly prosperous retail sector currently is seeing several major developments across the metro region. One of the most significant developments in the entire area is Nashville West, where Newton Oldacre McDonald is constructing a new retail center. Situated on 67 acres, Nashville West is the most prominent development in its submarket, encompassing 750,000 square feet of retail space. Costco will occupy a freestanding space, and T.J. Maxx plans to be one of the complex’s anchors. Newton Oldacre is one of Nashville’s most active retail developers, along with Crosland and Carolina Holdings.
In Mount Juliet, a suburb to the east of Nashville, Providence Market Place will feature a dozen outparcels utilized for restaurants, banks and service providers. The development will also include a hotel, a movie theater and a grocery-anchored center, all fronting a 1,000-acre mixed-use project being constructed by both local and national developers.
While the outlying areas of the Nashville metro area have plenty of room for growth, unfortunately, many of the most desired locations in the immediate Nashville area retain a lack of available land, effectively constraining these regions from new construction. Therefore, growth in these areas has become dependent upon renovations of existing centers, where developers are simply tearing down dilapidated sites and starting fresh to rebuild them. In Green Hills, H.G. Hill Company has taken initiative of this persuasion, demolishing its former location at the Mall of Green Hills and re-constructing a 162,000-square-foot mixed-use development.
Since the city of Nashville does not have much space available, except for Nashville West, most of the major developments are being constructed in outlying suburban counties Wilson, Sumner and Rutherford. The bulk of Nashville’s residential growth is occurring in these areas, and there simply is more vacant land available outside the city; consequently, new retail development is likely to flourish much more in these areas.
Recently, AJ Wright and Ross have opened stores in the Nashville market, and they are the newest retailers to break into the area. In addition, The Cheesecake Factory, Cole Haan and L’Occitane will open shop at the Mall of Green Hills; these retailers are expected to commence business activities within the next year.
As new retail development continues, several major leases have been signed throughout the area: at Providence Market Place in Mount Juliet, Belk has signed on for 76,000 square feet; Publix has leased 45,000 square feet, anchoring Concord Village at Nolensville Road and Concord Road; at Oakwood Commons, located at Lebanon Road and Andrew Jackson Boulevard, Ross Dress For Less will occupy a 30,187-square-foot space, and Bed Bath & Beyond has signed a lease for approximately 25,000 square feet; in Hendersonville, HomeGoods will occupy 25,000 square feet at Glenbrook Shopping Centre; and finally, on West End Avenue, J. Alexanders has signed a lease for 14,000 square feet.
In the future, retail development in Nashville’s suburban sectors will continue to expand. In particular, Sumner County retains favorable demographics in the cities of Hendersonville and Gallatin. In addition, Murfreesboro in Rutherford County, and Cool Springs and Mount Juliet in Wilson County also will continue to see a marked amount of new retail construction. According to Colliers, 1.5 million square feet of new retail space is expected in 2005 as Nashville continues to be a growing and vibrant retail market.
— Arthur Perlen, senior associate, Grubb & Ellis|Centennial
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