Spring 2015 issue of Horizons

Describe the current economic state of real estate development in Nashville.

How has the real estate market changed?

Rosenblum: Many national firms are looking at Nashville in a different light than a few years ago. Once viewed as a secondary or even tertiary market by national firms, Nashville now attracts interest from California to New York and all points in between. The pricing of assets in Nashville is beginning to reflect the pricing experienced in the gateway markets over the past 12-18 months. Institutional investment groups such as Hines, JP Morgan and Carlyle are seeking yield when they can no longer find it in New York, San Francisco, Washington D.C. or Miami. Groups that have a lower cost of capital and are used to even more severely constrained cap rates of the gateway markets are finding investments in Nashville to rank well on a risk-adjusted basis. As Nashville continues to grow, we expect this level of aggressive pricing to persist making it more difficult for local and regional firms to compete. Rosenblum: We are very fortunate to have attracted the highest quality team I could have imagined. Each member of our team is passionate, dedicated and creative. And moreover, they have intense integrity and are family focused. I believe every member of the team would say this is the last place they ever intend to work. The culture of Elmington is empowerment, so it’s no coincidence that every member of the leadership team has previously worked in large, bureaucratic institutions. Elmington provides a space for each teammember to be themselves and shepherd their own ideas to reality. While these concepts may sound cliché, we truly focus on creating an environment in which we all want to work. It helps that a large part of the extensive interview process is to ensure a shared sense of humor and enjoyment of margaritas. How would you describe Elmington Capital Group?

Rosenblum: Until recently, real estate development had been largely muted amongst the major product types except for multifamily and hotel. However, the office development machine is picking up in force. Nashville boasts one of the lowest Class A vacancy rates in the country at less than 5%. The market has taken notice as Market Street Enterprises came out with a new speculative 205,000 square foot office building in the Gulch, which was followed by Eakin Partners beginning construction on a 15-story speculative office building a couple of blocks from Market Street. Recently, Hines Company announced their return to Nashville after a 15-year hiatus. They are partnering with C.B. Ragland & Co. to build a 300,000+ square foot office building in the heart of downtown on Demonbreun and 2nd Avenue, which is located less than two blocks from where Bridgestone is building their new 500,000 square foot corporate office location. We believe there will be more activity in the coming months with new office projects to be announced or started. Multifamily has seen a tremendous amount of new development. Much of this is located in urban infill pockets such as Germantown, the Gulch, 12th Avenue South, Charlotte Pike and the Melrose/Franklin Road corridor. The desire to live near the urban core has drawn developers from Phoenix, Atlanta, Charlotte, Dallas and many other national development firms to Nashville. As you drive around Nashville, there is an abundance of construction cranes delivering thousands of Class A apartment units with new projects being announced almost weekly. Retail continues to have limited activity largely due to the inability to find sites, so most retail is concentrated within a mixed-use development that has offices or apartments above it.

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