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Need for more office space

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http://tennessean.com/business/archives/05...ent_ID=68443977

Big tenants are sniffing around for office space

By RICHARD LAWSON

Staff Writer

For about a year, Health Management Systems looked around Nashville for new office space to house its headquarters and 240 of its employees.

The health-care information technology company would have taken a large chunk of space somewhere, 60,000 or so square feet, possibly downtown.

''At this point it looks like, we are staying here for a few more years,'' said Paul Agee, the company's chief financial officer, said of its offices at American Center II at 31st and West End avenues.

That takes one of several large tenants out of the hunt for new space around Nashville.

The number and size of the office-hunting tenants is so large right now in the Nashville area that if all of them went into one brand-new building, it would be nearly the size of the 30-story BellSouth Tower.

Health Management's largest customer, Community Health Services in Brentwood, is searching for 150,000 square feet.

American Healthways, which now is in Green Hills, wants 200,000 square feet or more. Downtown law firm Bass Berry & Sims is looking for 150,000 square feet, and Regions Bank is mulling space of as much as 75,000 square feet, according to real estate brokers and developers.

If and when they land in new digs, they would be likely to create more new space because the tenants are looking primarily to anchor new buildings.

''They are whole buildings that would bring spec building with them,'' said David McRae, director of leasing for developer Crescent Resources in Cool Springs. Spec building is additional space constructed to attract more tenants to a development.

The big tenants looking around could lead to construction of 1 million or more square feet of office space over the next couple of years, real estate experts said.

Nashville's latest office vacancy numbers have improved, but there's still some caution. In the first quarter, vacancy dropped to 11.1%, down from nearly 16% a year ago.

Little space emptied in the first quarter. Roughly 280,000 square feet to 360,000 square feet were leased, depending on which firm is doing the measuring.

Available sublease space, or so-called shadow space, dropped to just less than 600,000 square feet. This space is leased but empty and the one paying the rent is trying to find a replacement, marketing it at rents lower than space without leases.

''It hasn't been under 600,000 in a long time,'' said J.C. Caudell, director of leasing for Highwoods Properties, the largest owner of multi-tenant office buildings in the Nashville area.

Health Management could have filled some holes in buildings downtown where vacancy is at 13.5%.

Potential locations included Boult Cummings Conners & Berry's space in the Bank of America building downtown and unused space in the BellSouth Tower. Agee said the company looked near the Nashville airport, as well.

''They all certainly made us feel wanted,'' Agee said.

But he said moving an information technology company with a lot of computers is tough and expensive, so they decided to stay a little longer at American Center II.

''It's a great building and a great location,'' he said. ''It's an expensive building, as well.''

Brokers say Bass Berry & Sims and Regions favor locations in or near downtown. And everyone with a plan is making the pitch.

Developer Tony Giarratana has pitched the law firm about anchoring the mammoth Signature Tower he has proposed for Fifth Avenue and Church Street. Southeast Venture has presented its Plaza of the Arts office building at 12th Avenue South and Demonbreun Street.

''We've had discussions with them and would love to have them if the timing issues could be worked out,'' said Barry Smith, president of Eakin Partners, which is developing the SunTrust Plaza next to the Ryman Auditorium.

The developer breaks ground on the 383,000-square-foot building in May and would be complete in a couple of years before the law firm's lease expires.

Alex S. Palmer & Co. would like to have one of the big tenants as an anchor for West End Summit at 17th and West End avenues.

''We're not going to be greedy,'' said Rick Frazier, who represents Palmer. ''We'd like to get at least one of them in play now.''

Brokers say, though, Community Health and American Healthways are looking toward the suburbs

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That follows along with other reports telling us to expect big things in the office construction arena before long. It's a positive, but understandably cautious, article.

Regardless of whether Signature ever hosts a family of pigeons, or whether or not W.E. Summit gets going, we're about to inundated with cranes. I plan to keep an eye to the sky for lightning for the next couple of years.

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I think we could see a nice little boom for office space DT...I wonder if the city could give the same type of incentives for companies building offices downtown to "lure" them in rather than going into the suburbs. Property tax breaks for DT businesses?? Just a thought.

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When you think of the amount of untaxed land around this county with churches sitting on them, you'd think an office building wouldn't be such a big deal to give a tax break to...would ya?

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Give tax breaks on land for all developements over 10 stories...or something like that. It'll never happen.

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Dave, I agree with you. Don't get me started on churches not paying property tax! Afterall, Jesus said give to Caesar what is Caesars and to God what is God's.

I hope our state bird becomes the "crane." :D

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Give tax breaks on land for all developements over 10 stories...or something like that.  It'll never happen.

<{POST_SNAPBACK}>

Why? So the city could have a better looking skyline?

Go to a metro council meeting and try to pitch that one to the citizens of Nashville.

When taxes are cut/frozen/taken off the rolls for one group, it just shifts the burden to another group.

Memphis/Shelby hawked that approach for years with the PILOT deal (payment in lieu of taxes). Effectively, no new businesses pay property taxes. Yet, homeowner rates now are close to double those in Nashville.

Go whole hog with that in Nashville, and watch Davidson County start to empty out.

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Dave, I agree with you. Don't get me started on churches not paying property tax! Afterall, Jesus said give to Caesar what is Caesars and to God what is God's.

I hope our state bird becomes the "crane." :D

<{POST_SNAPBACK}>

I would not touch this comment with a ten foot pole.

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