STILL IN THE WORKS

The pandemic won’t stop plans to turn more of Cool Springs into a quasi-urban, walkable district

BY MATT BLOIS

early a quarter century ago,

N crops covered an adjacent eld as construction started on what is now the Carothers Building. It was the rst major o ce project in Cool Springs and would long house Primus Financial Services. It rose as most of the surrounding land was agricultural and the internet was brand new.

A few years later, the dot-com bust slowed down the U.S. economy, but other o ce buildings were popping up in Cool Springs. e real boom started in 2005 when the Japanese carmaker Nissan decided to build its North American headquarters on Carothers Parkway, paving the way for a string of major corporate headquarters. Nissan nished its o ces in 2008. at year, the nancial crisis devastated the global economy. By 2009, unemployment in the county climbed to 7.5 percent.

However, development in Cool Springs exploded over the next decade. Boyle Investment developed its Meridian complex and Jackson National, Ramsey Solutions, Schneider Electric and Mars Petcare all opened or added to large o ces in the area. More recently, medical device manufacturer Medacta, car maker Mitsubishi and Spirit Airlines all announced major o ce projects.

Cool Springs is now in its third recession since transforming into a regional o ce hub, but developers say the area is poised to weather this one just as it did the others. e COVID-19 pandemic is pushing back construction timelines but could end up making the area even more attractive as companies and employees based in cities look for more space in the suburbs. Workers from dense, expensive cities searching for a lower cost of living have been migrating to the Nashville area for a long time. Between 2013 and 2017 alone, more than 2,000 people moved to Williamson County from the Los Angeles, Chicago and Phoenix areas.

In the midst of the virus outbreak, several developers are moving forward with projects that promise to further change swaths of Cool Springs into a quasi-urban, walkable business district lled with restaurants, shops and other amenities. Glenn McGehee, president of Franklin developer SouthStar, estimates the coronavirus outbreak has pushed back by about six months the timeline for his company’s Aureum development at the southwest corner of Carothers and McEwen Drive.

“We’re very excited about the future. Is it going to happen as fast as we would have told you it was going to happen? … We had hoped to already be moving dirt there,” McGehee says. “ at’s just a product of our environment. It’s not because the site’s not a good site.”

Aureum will eventually include 480 apartments, 750,000 square feet of o ce space, 100,000 square feet of restaurant and retail space and 700 hotel rooms. McGehee hopes to start construction by early 2021. He says some tenants are skittish because of the uncertainty caused by the coronavirus but he doesn’t expect that to last. He sees the pandemic forcing companies in dense cities to reconsider their o ces, which could bene t areas like Williamson County — and he’s not alone.

“ is pandemic is only going to accelerate that trend,” MarketStreet Enterprises Development Director Dirk Melton said. “ e population growth of Williamson County is going to be gangbusters. ere’s no reason to believe that’s going to be any di erent today than we thought six months ago. We need to be in a position to respond to that in the development community.”

MarketStreet — the master developer of e Gulch neighborhood in downtown Nashville — aims to do that with its East Works District in Cool Springs. e rm plans to build 500,000 square feet of o ce space, 60,000 square feet of retail and restaurants and 600 hotel rooms around the Carothers Building, the same property that was surrounded by crops in 1994.

Melton says MarketStreet hopes to draw on the company’s experience in e Gulch to create a walkable neighborhood packed with restaurants and stores.

“People only want to park their car once. ey want to have amenities at their doorstep,” he says. “ at’s probably the most successful aspects of e Gulch. You’ve got close to 80 di erent restaurants, retailers and enter-

tainment venues … e Cool Springs project will be a smaller microcosm of that.”

Melton says East Works will also be less dense than the Gulch, with lots of open space. His team doesn’t expect the rst phase of construction to start until the fall of next year. Between now and then, MarketStreet will have to determine what to build in the rst phase — not an easy task in the middle of global pandemic.

“Our job as developers is to build what people want, in the location that they want it at the price they’re willing to pay,” Melton says. “With the pandemic, it’s very, very early in the process of trying to discern what the global changes to commercial real estate look like.”

By the time MarketStreet delivers the rst phase of East Works, the COVID pandemic will be over. But it’s not clear whether o ce spaces will look the same. At SouthStar, McGehee says it’s probably too early to know what the health crisis means for o ce development.

“I don’t think people are in a real rush to totally redesign the way we do o ces,” he says. “I think there is this wait-and-see. Certainly, conversations are being had after going through a pandemic: ‘What does the next one look like? How can we be better prepared?’ ose are conversations that are going into design.”

Melton agrees that it’s hard to predict how o ces will change, but he imagines that companies may prioritize collaborative space over o ces and workers might only spend a few days a week on site.

“ at’s when the meetings happen, that’s when the collaborations happen,” he says. “ e physical space has to respond to what that is rather than having a oor full of desks.”

North Carolina-based developer Highwoods Properties still plans to build up to 1.4 million square feet of o ce space in the Ovation development already underway but progress is currently stalled. A co-developer has failed to build the retail and residential portion of the project, which makes it hard to market new o ce space.

Despite the delays, Highwoods Senior Vice President Brian Reames says he’s optimistic about the future of the Cool Springs o ce market. Even with rising vacancy rates — which hit double digits even before the virus outbreak — Cool Springs remains a good place to build.

“Cool Springs has really never experienced a vacancy rate like that, but it’s because there’s a lot of building going on to respond to the energy,” Reames sys. “It’s a great submarket, and it’ll just be a matter of time before it’s back.”

According to research rm Avison Young, the vacancy rate for o ce space in Cool Springs rose from 7.1 percent in the second quarter of 2018 to more than 10 percent at the end of 2019 and nearly 16 percent in the middle of this year.

Melton says the task of anticipating trends in o ce development is like a hockey player moving to where the puck is going to be. Getting there too early means climbing vacancy rates and wasted resources. Getting there too late means a missed opportunity.

“We’re hopeful to get, just like everybody else, more visibility about how the market’s responding to the situation we’re in right now. It’s changing week by week,” he says. “Hopefully, when it’s time to go we’ll be ready to go, too.”