Development hurdles in nashville:
what tenants need to know

While Nashville’s growth offers tremendous opportunities for businesses looking to expand or relocate, it’s important to be aware of the challenges developers face in bringing projects to fruition. These challenges can significantly impact both timelines and budgets the prospective in these projects.

Construction Delays: Patience is a Virtue

Even with improvements in permitting processes, construction delays are common in Nashville.  While permitting in Davidson County is definitely speedier with the decrease in applicants compared to prior years, delays still occur, especially in popular suburbs.  Furthermore, despite the less aggressive number of projects on the horizon in the Nashville area, we have not seen any increase in the speed of actual construction.  Candidly, these delays can impact a tenant’s planned opening dates and create financial strain as they wait for their space to be ready.

Landlord Deliverables: Understanding the Shell Game

Tenants need to be aware of the condition in which landlords deliver commercial spaces in Nashville, as our market trends toward the cold dark shell.  While a white box space typically includes basic finishes (the walls and everything within them are complete – it’s an actual “white box” inside the unit), a cold dark shell is a completely empty space down to the studs, requiring substantial work to bring it to white box status. When a cold dark shell is delivered, the tenant is responsible for completing the interior construction, adding time and expense to their project. Delivery condition may – or may not – be negotiated as part of the lease terms. Some developers simply will not agree to any stipulations.

Entitlement and Zoning Challenges: Drive-Thru Dreams and Zoning Realities

Navigating entitlement and zoning regulations can be a complex process that impacts tenants’ plans. For many of our restaurant clients, the availability of a drive-thru is critical to their business.  But obtaining entitlements for drive-thrus can be challenging and time-consuming, even in areas zoned for restaurants. Moreover, some cities have implemented substantial restrictions on drive-thrus, either banning them outright or limiting their visibility. A word of caution: rezoning properties in Nashville can be difficult or downright impossible, which may limit options for certain types of businesses.

How Tenants Can Navigate Development Hurdles

The commercial real estate industry in Nashville is very insular. The best thing a tenant can do is ensure their real estate department is working with a knowledgeable local broker. Your local broker (hopefully one of us at Centennial Retail Services!) helps navigate the development process, identify potential challenges, and negotiate favorable lease terms. In any and every development project, if you are considering a space, you should ask in-depth questions about the permitting status, anticipated construction timeline, and delivery condition. Be prepared for potential delays and ask for adequate contingencies for construction to minimize disruptions to your business. You do not want to be in violation of your lease for a delayed opening due to construction issues.

By understanding the development hurdles in Nashville, tenants are able to be adequately prepared for expansion or relocation – and we work with them every step of the way.