An Exercise in Due Diligence

If you’ve been in real estate circles since the new millennium (we have!), you can easily recall the ‘07/’08 market. Vacancy rates climbed, property values plummeted, lending was hard to come by, and the impact on the economy was undeniable.

While we’re nowhere near this kind of market, those who are paying attention know the cycle is ready for a turn, and signs that it’s on the horizon are becoming more frequent. In Nashville, deals are stalled. It’s a stable market and one of the most desirable in the country; everyone wants to be here. We’ve been working with some clients for over two years who can’t find the land or property they need because it simply doesn’t exist right now.

So, for those who are willing to settle in and be patient to get what they’re looking for, what can be done in the meantime? In the name of due diligence, we came up with a few questions that tenants and buyers should be asking themselves if they’re currently stuck in a holding pattern and waiting for just the right space to open up:

How can I get creative? Many clients who want to relocate or open another location in Nashville have crafted an idea of exactly what they need. But we’ve found a more accurate description is that they’ve crafted an idea of what they think they need. We can’t stress enough the importance of driving the market. This helps tenants see the juxtaposition of their concept with the reality of what’s actually available. While this might sound deflating, it can be just what that client needs to accept that fact and start to entertain the idea of other properties that they’d previously convinced themselves wouldn’t work. These are the ones who are signing leases while the ones stuck in the box are … stuck in the box.

Has my concept traveled well? We know that Nashville is a hot spot because businesses are patronized by tourists and locals alike, not just one or the other. That doesn’t necessarily mean that anyone and everyone can find success here. There have been some big players in the hospitality and retail industries that have attempted to open locations in major metro areas and, for whatever reason, have failed miserably! Having a built-in customer base is not an automatic guarantee of success in any given market.

Have I considered the topography? Some of the traits that make Nashville so picturesque and desirable are, unfortunately, also the ones that pose the biggest challenge for potential tenants & buyers. The impact of the topography is enormous when it comes to making site decisions. It affects the way people drive and shop here. It affects what kind of development is possible. There are natural barriers everywhere you look. Again, driving the market will allow you to see these things in a way that you can’t on Google Maps and can potentially open up new options that would be impossible to envision apart from seeing them in real life.

Is my financing secure? In a market like we’re in right now, the surest way to sabotage a project is to have financing fall through. While there’s nothing wrong with private equity and venture capital, the most successful retailers are merchant-minded and know they’re more than just a financial transaction. Make sure that your funding is in line with who you want to be long-term as a Nashville resident.

Why do you want to be here? Now is the best time to realize that if you don’t have a laser-focused answer to that question, it’s time to put pen to paper and figure out exactly why Nashville is the market for you. You may find that the long lead times and competition for space don’t align with your ultimate goal, and that’s okay. But if you know without a doubt Nashville is for you, the wait will absolutely be worth it to get a piece of one of the hottest markets in the country. If you need help defining this for yourself, please reach out!