March 31, 2012
Over the past several weeks the market has seen large assets trade hands or go under contract: 211 Commerce, Synergy Park; McEwen Office Building and we will see some other assets go to market in the near term. This has led to discussion of institutional investment in Nashville and its ramifications.
After being quizzed by our friends at the Nashville Business Journal on this topic, I arrived at my personal conclusion. These sales do not have a widespread impact on the Nashville economy in general, but as institutions increasingly view Nashville as a positive business community there may be some intangible benefits. As institutional investors seek yield, they may consider more speculative investments such as construction joint ventures, new construction has a very direct impact on all of Nashville in addition to beginning to cure the problem of lack of office space (see the posted article on Cool Springs).
All that said, a small transaction occurred this week that may be more significant. An investment group, including some Cassidy Turley brokers, purchased Corporate Park from US Bank. (As a caveat, we were not involved and my comments are pure speculation) But, this represents a commitment from local investors to inject capital in Nashville’s weakest submarket. Certainly their purchase at $20 psf is attractive, but someone still needs to pay rent. Here are the positive implications:
- US Bank let go of an asset they were ill equipped to handle (most banks are ill equipped to handle commercial real estate)
- Local investors committed capital to an underserved and under performing submarket
- Local investors may (should) seek to provide commercial space at low rates (they can afford to at $20 psf purchase) which in turn could provide opportunities for small business owners to get started.
- All of the above may result in job creation!
THIS IS HOW THE US ECONOMY CAN GET OUT OF THE DITCH.
So, kudos to the new owners of Corporate Park…..this is my suggested roadmap…..until next week, have a great Easter week.