May Town Center Development Chatter Resumes

may town center aerialToday, Tennessean reporter Nate Rau, wrote an article explaining that Metro Council discussions of the decidedly utopian 500 acre West Nashville May Town Center development could be revived as early as March. Councilman Matthews, whose district includes the potential site, is considering putting the development proposal on a March public hearing agenda. The Councilman was quick to point out that the May Town Center project would be mostly privately funded and presumably provide a significant increase to the city’s tax base.

The timing is curious, the subject is still slightly toxic and if the Councilman and May family are not careful, the backlash could be significant. Why? Simple, the Metro Council has just approved the financing package to build a brand new downtown convention center at a cost of $650 million and quite a few citizens are still mystified by this expenditure. Many still believe that taxpayers will be left ultimately holding the bag for a significant portion of the project’s construction and operating costs. Skepticism runs rampant and to be honest, the project’s organizers did not help themselves by allowing several publically embarrassing mistakes to be made during the planning process.

All of the cynicism aside, there is reason to question any new development that promises not to tap taxpayer dollars. There is also always reason to investigate the proposal further at a reasonable cost. It is no secret that I am a pro growth and pro progress individual, but I am also an advocate of fiscal responsibility and logical thought. From my ten thousand foot view, it would seem difficult for a brand new urban area to sprout and flourish in the May Town Center’s proposed location without significant public works spending on bridges, access points and increase infrastructure. It appears that the Metro Council is committed to revitalizing our current downtown and I fear that a split focus would dilute the potential positive growth. It feels like this project is coming online a decade too soon. However, I would like to see the developer’s proposal and am open to their thoughts and plans.

What is May Town Center?

May Town Center is a $4 billion mixed-use development that features green and sustainable office, retail and residential buildings. It is best described as a mini-urban city. According to the project’s website, “May Town Center is an historic project in the history of Nashville, a model of sustainable economic development. It’s about jobs. Working with nature, reviving local agriculture, preserving land, fighting sprawl, protecting Nashville’s tax base, and putting Nashville in a position for sustained success.”

Where is the Proposed May Town Center Site?

May Town Center is proposed on a 500 acre site in rural Bells Bend, an area that is 5.4 miles due West from downtown Nashville. The site is literally a half mile from the new Nashville West commercial development on Charlotte Pike and is surrounded by the navigable Cumberland River.

may town center location in nashville

The Impact of May Town Center

According to the project’s analysis, “This carefully master-planned, smart growth development will generate over 40,000 jobs which, at an average of only $50,000 per year, equates to over $2 billion in annual payroll. These jobs represent opportunities for taxpayers of Nashville-Davidson County.” For reference, the US Census in 2007 states that the average household income in Davidson county was $44,486.

I’m really not sure what to think at this point, but my curiosity is peaking.

Embattled 5th & Main Condos Earn FHA Approval

The 5th & Main condo project in East Nashville, the first large condo project to enter receivership in February 2009, has received approval to issue FHA insured loans (according to the HUD website). The project has qualified under the new, lower FHA guidelines that only require a project to be 30% presold in order to qualify for the government backed loans. The FHA loan concentration has also been temporarily increased to 50% concentration and owner occupancy has been reduced to 50%. The changes in FHA guidelines could not have come at a better time for 5th & Main and should lead to quite a few sales over the coming months should Wachovia/Wells Fargo get aggressive with their pricing.

5th & Main is a 130 condo development located on the East bank of the Cumberland River. Up until this point, the developers and listing agents have only managed to close 8 total condos, 3 of which were cash purchases after the project entered receivership. However, that is all sure to change in the near future. In fact, downtown is about to change fast.

Good News for 5th and Main Could be bad for Others

The price point of 5th and Main condos is quite reasonable and sure to get even more so in the coming months. That is great news for the embattled project, but potentially bad news for nearby buildings who have been courting those same value buyers. When comparing numbers to numbers, 5th & Main is sure to stack up very well and is sure to compete for buyers who are interested in newer buildings like Encore, Velocity and Viridian. As rough as that may seem, the real pain will be felt by the smaller projects physically located in East Nashville like mc3 and the East Nashville Lofts.

Only time will tell for sure, but one fact is indisputable: there are a finite number of condo buyers currently in the market and the competition for those buyers is about to get a lot stiffer. Condo buyers are the new “tweens”.

Fifth 5th and main FHA approval

9 Against, 29 in Favor of New Nashville Convention Center

new nashville convention music city centerThe Metro Nashville City Council has voted 29 to 9 to move forward with funding the new $585 million downtown Nashville convention center also known as the Music City Center. The financing package approved by council tonight allows for a maximum of $650 million. That covers both the price of the project and financing costs such as the establishment of a $40 million debt service reserve fund.

The Music City Center totals 545,000 square feet of exhibit, ballroom, meeting and retail space and also includes a 1,800-space parking garage. The current Convention Center, by comparison, has 150,000 square feet of combined meeting and exhibit space. The current center was completed and opened on January 31, 1987.

The new convention center, set to open in February 2013, is the largest municipal project in state history and represents the hopes of downtown retailers and urban enthusiasts alike. Construction is set to begin starting in just 60 to 90 days.

Likely Benefits of the new Nashville Convention Center

Four years after opening, the project is projected to have a $135 million economic impact on the city in additional revenues and tax income.

It is reported that the Music City Center will create 2,500 immediate new construction jobs and more than 30,000 additional jobs once the center is complete. It’s my sense that the construction jobs estimate are quite accurate; however, I feel that the ultimate job creation estimate may be overestimated as much as 40%. That being said, 18,000 additional direct and indirect jobs is incredibly good news for downtown Nashville residents.

The construction of a new convention center paves the way for Dallas based Market Center Management to acquire the current convention center site for adaptive reuse as Tennessee’s first ever medical trade center. Market Center Management officials plan to construct a 12-story tower above the existing convention center with more than 1.5 million square feet of exhibit space at a cost of $250 million. This effort should create yet another 2,700 new Nashville jobs. Look for the group to execute a 5 year hold over lease in the vacant Lifeway warehousing space on 11th Avenue North in downtown very soon.

Real estate wise, the Encore just got a new lease on life. Actually, I should say that Encore condo owners just got their government bailout (for full disclosure, I am one). All of the increased focus and activity in Sobro will surely bring renewed interest on what just became one of the most well located buildings in the city.

Mortgage Rates Lower, Stable in Q1 2010

mortgage rates lower in 2010

The average interest on long-term mortgage rates fell this past week, after rising for four consecutive weeks. Freddie Mac reports that 30-year fixed mortgage rates averaged 5.09 percent, down from 5.14 percent a week ago and compared with 5.01 percent in 2009. Also, 15-year, fixed loans fell 0.4 percent to 4.5 percent; five-year adjustable-rate mortgages were unchanged; and one-year ARMs declined 0.03 percent to 4.31 percent.

Forecasting Nashville Mortgage Rates

It appears that mortgage rates will remain quite stable in the first quarter of 2010, hovering just above 5 percent. The second quarter of 2010 also looks quite stable with mortgage rates predicted to only rise 0.15 points to around 5.17 percent.

However, the second half of the year appears to be a time when either inflation begins to affect the rate or the Treasury Department purposefully raises the lending rates. Nashville Mortgage rates are predicted to rise another 0.20 percent in Q3 and another 0.20 percent in Q4 leaving the mortgage rate close to 5.57 by the end of 2010.

Nashville Plans Free Wireless Internet for City

free nashville wifiNashville Technology Council President Todd Fetherling has told the Nashville Post that the organization plans to implement a free wireless Internet network in downtown Nashville. The group plans on placing its first transmitter in the central business district and believes that a strong wireless signal should emanate within a 0.9 mile radius. The location of this first transmitter will be the Nashville Technology Council’s headquarters located at Third Avenue and Commerce Street.

The planned wireless network is a mesh network, sometimes called a mesh cloud, the system that most cellular companies currently use. According to Wiki, “A mesh network is reliable and offers redundancy. When one node can no longer operate, the rest of the nodes can still communicate with each other, directly or through one or more intermediate nodes.”

To start, the program will go through a month-long pilot period that will begin later this month or in early February. The launch will cost about $3,100, which covers a couple of main transmitters and a solar-powered unit that could be used for outdoor events.

Extending Nashville’s First Free Wireless Network

According to the Nashville Post, “Businesses on the outskirts of [the] coverage area then could buy smaller transmitters, or “nodes,” that would mesh with the network to extend the signal outward. Companies would connect the transmitter to their existing network and partition off as much bandwidth as they’d like to contribute to the public network, Fetherling said.

Participating Nashville businesses would be charged a one-time fee of $200 for a node to connect to the network. There is no word if future bandwidth charges would apply or how system wide maintenance or administration would be handled.

I am very excited by the thought that my laptop or smart phone could potentially have access to high speed Internet anywhere I go in Nashville, but I am also worried about who would maintain this mesh network and what that would mean for reliability and future costs. I don’t want to get addicted just to have it go away…that would be like my favorite Starbucks closing on the coldest day of the year. Despite these concerns, bravo Nashville Tech Council, BRAVO!

Griffin Plaza Condo Site in Gulch Gets Reprieve

griffin plaza condos nashvilleIn 2007, Crosland Tennessee President Bill Barkley announced plans to develop a 2 acre parcel of land in the Gulch into Griffin Plaza, a $35 million 10 story project with 140 apartments and 32,000 square feet of ground-floor retail space. With that announcement, the website went live and the buzz began to build with mentions of urban revitalization, green spaces, LEED certifications and urban pocket parks. However, as most of my readers know, 2007 was the very end of an era and the lender, First Carolina Bank, realized that turning dirt was not a prudent decision.

Fast forward a few years and rumblings of liquidity issues at both Crosland Tennessee and First Carolina Bank begin to emerge as the Southeastern real estate market continues a rather abrupt decline. At some point that Fall, Crosland does miss a $90,500 installment payment on their original $15 million loan and the stage is set. In late October 2009 a foreclosure filing was ordered and Crosland was set to lose the land the following month.

At this same time, Crosland was in the midst of a giant condo auction at their other Nashville project, The Terrazzo. This condo auction’s massive amount of news coverage brought a new awareness to the Gulch as well as to the potential of the Griffin Plaza project and new potential equity began to rear its pretty little green head. As a result, First Carolina Bank takes notice and gives Crosland a month long stay of execution in hopes that a deal can be negotiated. Fast forward and another 30 days and the same scenario plays itself out a second time.

Now we find ourselves approaching the third, and what was supposed to be, final drop dead date of January 11, 2010 and…well, you see exactly where this is going.

Griffin Plaza in the Gulch Scuttlebutt

The truth is that the land on which Griffin Plaza was supposed to be built is worth only a fraction of what was paid back in 2007 and the bank owning the property really doesn’t put them in a better financial position, especially if there is a subsequent buyer or potential equity injector. The project itself is pretty solid, except for the 32,000 square feet of unnecessary retail space. The one, two and three bedroom units that range in size from 550 to 1,400 square feet are still right in line with what the Nashville marketplace demands and the location is pure genius.

If I’m a developer, say a successful developer not currently tied to a half empty building, I am salivating at the opportunity to acquire this land and the original site, construction and architectural plans at a hefty discount. In my opinion, let’s resurrect this phoenix with less retail and a few more residences and come to market in 2012 when no one else could. I think that I might also condo the retail space that I did keep in order to be able to sell individually in the future. Heck, MarketStreet owns all of the retail space in the Gulch, someone is going to want to buy a small slice of this heaven in the future!

Update 2/2/2010 Gulch Site Bought

Local investment group Corner Partners has purchased the Griffin Plaza site for $1.75 million on Friday. This amount represents roughly half of what Crosland had purchased the site for in 2007. No immediate plans have been announced, the group has stated that it could be 4 or 5 years before a structure is erected on this site.

According to the Tennessean, the Corner Partnership also owns the Hilton Downtown Nashville hotel, the Union Station hotel and developed The Adelicia condos in midtown. This is a very savvy group for whom I have the have the highest respect.

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