Brokerage Outlook: Tennessee

• Nashville Retail

• Nashville Industrial

• Nashville Multifamily

• Nashville Office

Nashville Retail Dreiling Submitted by David Dreiling, managing director of the Nashville, Tennessee, office of Sperry Van Ness. Posted 08/17/07. What area is your expertise? • I specialize in the sale of retail properties in Tennessee. What trends do you see presently in retail development in your area? • Mixed-use developments are a present trend in our retail development pipeline. What type of retail product is doing well in your area? • Retail products in middle Tennessee are doing very well in general, and mixed-use developments are doing particularly well. What retailers are new to your area? • We have new Publix supermarkets opening up in several places around town. Who are the active retail developers in your area? • Active retail developers in our area include Bovis Lend Lease, Cousins Properties, Faison Enterprises, H.G. Hill Realty, Crosland, Novare Group, The Home Co. and Three Rivers. Please name one or two significant retail developments in your area. What impact will these projects have on the market? • Stones River Mall in Murfreesboro is being redeveloped by Transwestern Stones River. This $45 million project includes a new JC Penney, Dillards and food court. In Bellvue, Barclay Group is developing a 70,000-square-foot shopping center anchored by Publix. Both of these projects demonstrate the strength of middle Tennessee suburban areas that have been revitalized and parallel the overall strength we see in the Nashville market. Nashville remains a strong market for retailers, with vacancy rates continuing to drop in 2006 to a low of 4.25 percent, while net absorption increased over the prior year. Where is the majority of development taking place? Why is this area doing well? • Many big projects are taking place throughout middle Tennessee, driven by our diverse economy and steady demand. What area do you expect to be the next big retail development market? Why? • We expect continued retail development in the downtown and suburban areas. These local economies are supported by strong job and population growth. What types of retailers should look into your market in the coming year? What type of retail is needed? • We see a wide variety of retailers that will look into our market in the coming year. Many high-end retailers will do well in southern Davidson and upper Williamson counties.

Nashville Industrial Harrison Submitted by Scott Harrison, vice president and broker with the Nashville, Tennessee office of Richard Bowers & Co./TCN Worldwide. Posted 09/25/07. What area is your expertise? • I will be discussing middle Tennessee. What trends do you see presently in industrial development in your area? • Continued growth along southeast corridor (Interstate 24) from Nashville to Murfreesboro. What type of industrial product is doing well in your area? • Both bulk warehouse and flex space are doing well. Who are the active industrial developers in your area? • Panattoni Development Co., Duke Realty and ProLogis. Please name one or two significant industrial developments in your area? What impact will these projects have on the market? • Panattoni’s Southpark project in Smyrna and Elam Farms in Murfreesboro are both large developments offering more than 1 million square feet. These developments will help meet the continued demand in these active markets. Where is the majority of development taking place? Why is this area doing well? • The majority of the development is occurring along the I-24 corridor from Nashville to Murfreesboro. This area serves as a major corridor to Chattanooga and offers convenient interstate, rail and air access. What area do you expect to be the next big industrial development market? Why? • The I-40 east corridor towards Lebanon will likely be the site of development activity in the near future due to an availability of land with interstate, rail and air. Please describe the industrial leasing activity in your area. • Industrial activity in the Nashville area is currently very active, despite a decrease in net absorption in first quarter 2007 to 400,000 square feet from 1.6 million square feet in fourth quarter 2006. Please describe the industrial sales activity in your area. • The Nashville industrial sales market is benefiting from the fact that developers in larger cities are looking to expand their portfolios and larger markets are becoming tapped out in terms of available land for new development. Please give a measure of industrial vacancy rates and a measure of available sublease space. • The overall, the industrial vacancy rate for the middle Tennessee area is currently around 6 percent, with a high in flex space at roughly 13.7 percent. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? • As long as interest rates remain steady, I don’t think the market will see much adverse impact. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? • The high tech and manufacturing support industries are both very active within the southeast corridor and along the Eastern U.S. corridor.

Nashville Multifamily Dreiling Submitted by David Dreiling, managing director with the Nashville office of Sperry Van Ness Partners. Posted on 08/23/07. What area is your expertise? • I specialize in the sale of multifamily properties in Tennessee. What trends do you see presently in multifamily development in your area? • We have seen a lot of condo development in middle Tennessee within the Nashville midtown and downtown areas. We also see plenty of mixed-use development. For instance, the West End Summit is a $300 million project in midtown Nashville that is being headed up by Alex Palmer. This beautiful mixed-use project includes an office tower, a hotel, condos, retail and restaurants. The Terrazzo project is a $60 million project going into The Gulch. Crosland is developing this 14-story tower, which will include 109 condos, retail and office space. Who are the active multifamily developers in your area? • Middle Tennessee has several active multifamily developers working on projects. Giarratana Development has the $275 million Signature Tower, which is a 65-story tower with 400 condos and a luxury hotel coming on board. Marketstreet Equities and Bristol Development have teamed up on their project, Icon, in The Gulch. Icon will bring to market 424 new condos and apartments. Novare Group is developing Encore in Sobro. Encore is a 20-story, 333-unit condo tower and 20,000 square feet of retail in the works. Please name one or two significant multifamily developments in your area. What impact will these projects have on the market? • The Jamison Station project in Franklin, a suburb of Nashville, is now under way and is significant in that we are seeing demand for a mixed-use project outside of the more densely packed city. With a cost of about $80 million, this project sits on about 19.9 acres and will include 300 living units. In the high-end Belle Meade market, Giarratana Development and Newport Development are teaming together to build 65 condos at a cost of about $30 million. Where is the majority of development taking place? Why is this area doing well? • We are seeing numerous projects being developed in the downtown and midtown Nashville area. The Nashville economy is diverse and strong. Good jobs here continue to prime the commercial development pump. Many have reported the first three quarters of 2006 were the strongest the Nashville market has ever seen. Although we saw a decline in the fourth quarter, the year as a whole was quite robust. The Nashville Downtown Partnership forecasts continued trends of the past few years with steady upward pressure on rental and occupancy rates. What area do you expect to be the next big development market? • My research suggests that we have a full pipeline of developments currently under way in middle Tennessee with a combined cost of more than $1.5 billion. What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing? • Middle Tennessee apartments are continuing to show high occupancies. I don’t see any areas that are struggling. Please give a measure of apartment vacancy rates. • I have seen reports with vacancy rates ranging from 3 percent to 6 percent depending on the area. What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year? • Given our low vacancy rates and strong local economy, interest rate movement will have minimal effect on our market. What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market? • Middle Tennessee’s steady job growth and low unemployment are keeping the overall market strong, including the multifamily market.

Nashville Office Cooper Submitted by Carlos Cooper, vice president-brokerage with the Nashville, Tenn. office of Chas. Hawkins Co. Posted 11-06-07. What area is your expertise? • I specialize in commercial sales and leasing in the Cool Springs submarket just south of Nashville. What trends do you see presently in office development in your area? • There continues to be speculative development in and around Cool Springs on the office side. We’re also seeing the emergence of more and more mixed-use development in the area.  Specifically Boyle Investment Company’s Meridian development and Southern Land Company’s McEwen Place are creating a new dynamic in Cool Springs. Class A office condo developments are also seeing a resurgence.  Caden Holdings, The Stauffer Company and Alliant Commercial each have new buildings underway that will allow smaller prospective office buyers to purchase condos in the 3,000-square-foot range and up.    Who are the active office developers in your area? • Crescent Resources, Boyle Investment Co., Duke Realty and Highwoods Properties have the biggest presence in Cool Springs. Please name one or two significant office developments in your area. What impact will these projects have on the market? • The mixed-use developments mentioned earlier will allow for a better commingling of living, working and playing. The new headquarters for Nissan North America and Healthways are well underway.  These projects should further bolster the area by increasing need for housing and amenities.   Where is the majority of development taking place? Why is this area doing well? • The Carothers corridor on the east side of Interstate 65 is seeing the most development because of the supply of land currently available.  The recent opening of the McEwen exit off of I-65 is also pushing development farther south along Carothers Parkway. What area do you expect to be the next big development market? Why? • The Pickering Farm just off the McEwen exit and Crescent Resource’s land right across the street will be the focus for larger development.  I’m excited to see who ends up purchasing the 170-plus acres included in the Pickering Farm.  There will be some unusable land due to existing hilltops and topography but the rest should make for a beautiful setting.    What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • All of Cool Springs remains strong because of the continued relocation of companies to the area. I think that will hold true for at least the short-term.  In the long-term the market may soften. Please give a measure of office vacancy rates. • The office vacancy for the Cool Springs submarket is currently around 8.4 percent.  The greater Nashville area’s vacancy rate is approximately 9.1 percent. What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year? • Interest rates and construction costs leave only the biggest developers building the larger projects.  I think we may also see an increase in vacancy as new and existing businesses re-evaluate what there leasing needs are in the current market.  We may see less businesses moving to the area and possibly some going out of business as we’ve already seen with some with direct ties to the residential market. What is the status of job growth/(un)employment rates and what bearing will it have on the office market? • Job growth is still good in the Cool Springs area.  The addition of Nissan, Healthways and Verizon should help maintain that positive growth.  Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? • Businesses that support the new Nissan headquarters will most likely lead to the absorption of available space.     Would you like to make any additional observations about the office market in your area? • The Cool Springs submarket has seen remarkable growth and stability in the last couple of years.  The available office space, infrastructure, housing and overall appeal to company executives will be the factors that keep the office market in Cool Springs as one of the top submarkets in Middle Tennessee.  It doesn’t hurt that we now have four exits off of I-65.