There are many players that must come together to form and act as a team when it comes to successful land development projects. This is especially true in circumstances involving brownfield development because of the additional variables that are often present.

Setting the Stage
When Steve and Jay Turner and Joe Barker joined Nashville developer Bill Barkley to purchase the first piece of Nashville property in the area known as “The Gulch” in 1999, they were doing what developers all over the country do almost every day: take a chance on an opportunity they believe will eventually work out for them.

Seven years later, it appears that their business, Marketstreet Equities, is almost to that point.

The Turner’s story is not much different than other developers.

“The first piece we purchased,” relates Jay Turner, “was a seven-acre property owned by CSX Railroad that is considered a brownfield. It was vacant land with no buildings. Then we worked with Bell South to buy their maintenance building – but that was an even bigger risk because they were still using the building. We agreed to build them another facility in a different part of town so we could purchase their Gulch property.”

“We eventually acquired about 30 acres, all with different situations and circumstances,” Turner explained.

As many developers can relate to, Turner states that there were many “gut checks” over the past seven years concerning this project.

“We had all of our money in this project at the beginning and had leveraged virtually all of our assets. We went through some lean years and re-financed the various deals numerous times,” acknowledged Turner.

Now, with $20-40 million in the deal and development well underway, Turner says that Marketstreet is a little more comfortable with the situation, but that doesn’t mean they are relaxing quite yet.

“As recently as three years ago we had some serious concerns typically experienced by developers and we haven’t forgotten those. Plus, we are still probably six years away from finishing this project. It is no time to relax because things always have a way of changing,” says Turner.

A couple of factors that initiated the now-probable success of The Gulch were events that occurred slightly outside of the area, explains Phil Ryan, the Executive Director of the Nashville’s Metropolitan Development and Housing Agency (MDHA).

“The city had been working on both sides of the area,” explains Ryan. “Just to the east, we assisted a private foundation in the conversion of an old post office into a Center for the Visual Arts. To the west, the Country Music Hall of Fame’s move to the downtown had devastated an area that had been a hot tourist spot. With The Gulch being located in the middle – in the heart of the Arts Redevelopment District - it was certainly an area that was the focus of the administration’s attention.”

In fact, Nashville Mayor Bill Purcell and the MDHA were strongly pursuing a goal to significantly grow the residential component of its urban renewal plan. It was, and remains, a cornerstone of the city’s economic development initiative.

Getting Started
The primary team involved with The Gulch includes Marketstreet Equities, the City of Nashville, and the Bristol Development Group. However, Jay Turner, Development Director with Marketstreet also credits some additional entrepreneurs as partners.

“After the city had invested over $7 million in infrastructure improvements and we had developed a small 32-unit edgy loft-style apartment complex, we received a boost when some restaurant owners agreed to take a chance with us,” explains Turner. “These restaurants were new to Nashville and quickly became destination spots and quickly enticed additional entertainment venues to believe in what we were doing.”

From steaks to sushi and croissants to empanadas, The Gulch is home to Nashville’s newest and most exciting dining opportunities. Rooftop terraces and sidewalk seating create an ambiance that will awaken the senses to the sights and sounds that are Nashville.

Rusan’s Japanese Cuisine is based in Atlanta (GA) where it has been recognized as the “Best Sushi and Japanese Restaurant” for the past nine years. Another restaurant, Watermark, offers classic fine dining cuisines prepared by Executive Chef Joe Shaw with such dishes as wood grilled quail with corn spoonbread or braised rabbit with sweetbreads.

Sambuca combines the restaurant experience with the identity of Nashville – music. It boasts an exquisite dining experience mixed with an eclectic atmosphere of live music seven nights a week, along with Grammy Award winning performers.

“Other nightspots such as City Hall and Bar Twenty3, as well as another large music venue are also on the way,” reveals Turner.

Another positive influence that showed everyone that they were heading in the right direction is that  additional housing projects, although small by comparison, proved to be very successful.

“One of the factors that is often forgotten,” Ryan relates, “is that much of the early housing and even a significant number of planned residential units are meeting Nashville’s affordable housing standards ($135-150K for ownership and $800-1,000 for rental units).”

The Residential Buzz
As Turner admits, the events detailed above set the stage for their big housing project, The ICON.

The ICON, originally designed by Bristol Development Group as a complex to feature 217 condominiums and over 207 apartments, will be a 22-story complex and serve as the centerpiece of The Gulch.

It will showcase unobstructed views of downtown Nashville as well as the Gulch district and has all of the amenities attractive to urban dwellers.

Lee Schaefer, VP of Condominium Development with Bristol Development Group, explained that the worked with Cleveland-based ka architecture to incorporate design formulas that have worked well in other metro areas and transported them to Nashville. ICON features “soft industrial” architectural design that reflects the warehouses and materials of The Gulch’s rugged history and is infused with a high-tech sensibility.

“We accentuated the positive aspects of downtown living,” stated Schaefer. “The ICON has open floor plans, floor-to-ceiling glass providing spectacular views, and exposed concrete ceilings and floors.”

Apparently, there was some pent up demand for ICON’s offerings in Nashville. When the doors of the sales office opened in early April 2006, the results even surprised the development team.

All 217 “Initial-Release” condominiums in the new residential tower sold out in an unprecedented 48-hour time period, representing over $72 million in total real estate sales. Initial-release units sold ranged in price from $175,000 to $850,000.

As a result, Bristol and Marketstreet decided to convert the remaining apartments into another 207 condominiums. When sales resumed a couple of weeks later, all units were sold. These units had a significant number in the $200-300,000 range but also included a $2 million penthouse suite.

“While we were confident that we were working in the correct price points,” related Schaefer, “the pace of the sales was a little surprising. It just illustrates that a unique property designed to meet the right target demographics will be well-received by consumers.”

According to Turner, the project is following a fast-track design-build process. Construction started in March 2006 and excavation is completed and the foundation is underway. All indications are that the final drawings will be completed by August with construction completed in the first quarter of 2008.

Ryan, though, is quick to point out that much of the success of the Gulch development needs to go to the developers, Marketstreet and Bristol.

“While we (City of Nashville) have certainly contributed, as other partners on this project have,” stresses Ryan, “we would not have had this level of success without the pursuit and patience of the private developers who continue to put a significant amount of capital at risk on a regular basis.”

Secret Marketing Strategy
Schaefer denied that they used some big secret marketing strategy to achieve the great sales success. In fact, he said, there was some initial concern by some that they may not have done enough.

“We probably spent a good 7-8 months marketing the ICON,” explains Schaefer, “but I think we did it in a way that capitalized on the community’s interest. With the scope of the development in The Gulch, there was already a buzz and an interest within the community. We tried to capitalize on that by hiring Seigenthaler Public Relations to help us keep the community abreast of the project.

“Our design team also spent the time and effort to create realistic graphics that clearly illustrated the ICON,” he said. “Together, we used print and billboard advertising to direct interested prospects to our website, ICONinTheGulch.com.”

One of the more unique strategies was a completely “furnished” condo unit at the site of the sales center. It provided potential buyers and residents with the opportunity to tour the development’s plans including the ‘Skyline’ one bedroom, one bath plus den, 945 sq. ft. model during the construction phase of the development. The model featured samples of floor, counter, cabinet, appliance and entertainment options, as well as a nighttime view of the Nashville skyline as seen from an ICON balcony.

The concept of the sales center, designed by Stephanie Moore of the Moore Design Group in Dallas (TX) reflects ICON’s style with an open floor plan, soaring and dropped ceilings, free-standing walls and the latest in entertainment technology. The center features a six foot tall rendering of the development, a full-scale model of the entire ICON community, video tours on a flat screen display and floor plans with photos of views from a unit’s balcony.

Perhaps the biggest factor, though, was the partnership with Village Real Estate Services.

“We worked through their agents,” Schaefer explained, “to brand our products so that they were clearly explaining what we were going to be offering in Nashville – something that is very new to the city.”

The ICON targets a college-educated demographic and is immersed in the arts and culture. This group is made up of mostly renters including students and singles. Young urban professionals, typically 26-35 years old are often newly married without children. Often looking to purchase a home, this segment prefers luxury condominiums or high-rise apartments located within the city. Buyers and families between the ages of 36-50 often purchase homes in a more suburban area, but some live an active lifestyle that will thrive in an urban setting.

Rob Weeks, project manager at ka architecture, told Southeast Real Estate Business that developers and condo purchasers are also more interested in green design.

“(Our) clients want to know what it will take to make a building LEED (Leadership in Energy and Environmental Design) certified,” Weeks says.

However, the certification process adds extra costs to the project and not every project needs those certifications. The developers and ka architecture, for example, decided not to pursue LEED certification for ICON in the Gulch.

“Its design has many green components that would qualify for LEED, but it was not a marketing necessity as ICON has already sold out,” Weeks says.

Nashville Redevelopment Continues
It was announced by Tony Giarratana, another Nashville developer, that he is behind a $275 million project to build Signature Tower, a 65-story luxury hotel and condominium that will be the tallest building outside of New York and Chicago. The project is scheduled to open in 2009.

“Nashville is just on fire with activity,” boasts Ryan, who has been with the MDHA for 15 years. “Mayor Purcell had a goal to significantly increase residential opportunities in downtown Nashville. We already have 1,700 units and another 2,600 are planned or are under development. This has simply spurred interest in other types of development – retail, entertainment, and office and commercial space.

“We expect to be busy in Nashville for a long time,” he concluded. SLDT