June 06, 2018
Without tenants, big pension fund green-lights office project
June 6, 2018
One of the larger public pension funds in the U.S. isn’t waiting for signed leases before building the final piece of its Nashville-area office complex.
Construction begins this week on an eight-story office building at the Brentwood Commons development, overseen by Boyle Investment Co., one of the largest commercial real estate developers in Middle Tennessee. The building will contain 120,000 square feet of top-grade Class A space, on four levels sitting atop a four-story parking garage with about 400 spaces.
The building, set to open in early 2020, is the last dose of development planned on the 14-acre Brentwood Commons campus on Old Hickory Boulevard, east of exit 67 of Interstate 65. The land is owned by Gateway Poplar Inc., an entity registered to the Los Angeles County Employees Retirement Association. The pension fund, with roughly $53 billion of assets, is a client of Boston-based real estate investment adviser TA Realty — which has a longstanding relationship with principals of Boyle.
A building permit is under review at Metro (the property has a Brentwood mailing address but lies just inside the Davidson County line, giving Metro agencies jurisdiction oversight of the project).
The most recent Brentwood Commons building opened in the second quarter of 2017. Today, all but 3 percent of the space is leased. Boyle, which announced the start of construction on June 5, noted that work on that predecessor building also began without tenants in hand — a generally riskier move that is a signal of a real estate investor’s confidence in the market.
About 10 percent of the roughly 7 million square feet of office space in Brentwood was available for rent at the end of the first quarter, according to market stats from real estate brokerage firm Colliers International. The average asking rent for available Class A space topped $30 per square foot, indicative of how office rents have spiked amid an economic boom that has driven the region’s unemployment rate to 2.2 percent. That’s the lowest rate of the 51 metro areas in the U.S. with populations larger than 1 million, according to the U.S. Bureau of Labor Statistics.
Bell & Associates Construction, which is based at Brentwood Commons, is building the newly announced office building. Others on the project include architect TMPartners; engineering firms Kimley-Horn and Associates Inc., Stanley D. Lindsey & Associates Ltd. and I.C. Thomasson Associates Inc.; and land-planning firm Kiser + Vogrin Design.