By Richard Lawson
March 12, 2019 | 10:02 AM
An Austin, Texas-based office investor has made its first investment play in Nashville by buying a prominent downtown office tower, blocks from where Amazon will put an operation center and employ 5,000 people.
CapRidge Partners bought the three-decade-old Nashville City Center, a 477,261-square-foot building at 511 Union St., for $105.2 million, according to Davidson County property records, marking the third downtown Nashville office tower to sell this month.
The UBS Tower at 315 Deadrick St. sold for $135 million while Philips Plaza at 414 Union St. sold for $111.5 million. Those, too, are within a few blocks of where Nashville Yards is under construction and Amazon will fill 1 million square feet of office space.
Alexander Tkac, CoStar’s Nashville market analyst, said office sales volume so far this year has already set a new annual record for downtown Nashville. “In fact, two of the top five deals in Nashville dating back to 2010 have occurred in 2019,” Tkac said.
CapRidge’s price may seem low in a hot real estate market relative to those as well as the $103-million price the seller, Alliance Partners, an affiliate of The Shidler Group in Honolulu, paid for the property in 2013.
But Terra Funding, which is part of The Shidler Group, still owns the dirt under the tower, according to property records. After buying the tower, Alliance split off the land under the tower into separate ownership and created the ground lease.
With the deal, CapRidge chose Foundry Commercial as the officer tower’s new representative, replacing Jones Lang LaSalle, known as JLL.
The tower is just shy of 98-percent leased, according to CoStar data. Its largest tenant, law firm Waller Lansden Dortch & Davis, occupies 166,000 square feet. Memphis-based First Tennessee, which has its name on the building, is the second largest tenant with nearly 89,000 square feet.
Vacancy rates sit about 6 percent in downtown Nashville, a historical low. Tkac noted that growth in rental rates are about 3.7 percent over the past year. “This comes despite the active building climate that has increased inventory by more than 10 percent since 2010,” he said.
For the Record:
Morgan Hillenmeyer, Douglass Johnson and Nicole Filkins with CBRE represented the seller.
Please refer to CoStar COMP #4698106 for additional information regarding this transaction.