In an article for Urban Land Institute, Bass, Berry & Sims attorney Mike Stewart provided insight on Nashville’s hot commercial real estate trends, and outlined important aspects that both local and out-of-town developers should be aware of when financing a deal for a project in the city. Tennessee offers tax breaks and direct subsidies 105 percent higher than the national average. Two of these property tax incentives are payment in lieu of taxes (PILOT) and tax increment financing (TIF). These incentives are enhanced by Nashville’s commitment to expansion, including Amazon’s upcoming build of its Center of Excellence in Nashville. Other high-profile corporate relocations to Nashville in recent years include Bridgestone Americas and AllianceBernstein.

Mike points out that while Tennessee has no state income tax, the state has franchise and excise taxes that impact business owners with real estate assets.

Federal Opportunity Zones (OZs) constitute one of the big development opportunities in Nashville, and developers are aggressively pursuing these with a large number within walking distance of the city’s downtown developments, including the Gulch, which is where Amazon will locate its Center of Excellence.

Opportunities for development exist in every category, including office, industrial, mixed use, hospitality and others. However, one sector that will require more development over the next few years will be single-family and multifamily housing. Given Nashville’s increasing population, particularly with young workers who want to be close to the city’s center, adequate housing will continue to be in demand.

“Many out-of-town developers bring their own financing and other services,” said Mike “but Nashville banks are competitive and have the resources to support most deals. Their familiarity with the development landscape often results in smoother transactions and easier connections in the community. Opportunities will continue to come up for investors who have the sophistication to get deals done in a competitive environment.”

The full article, “Understanding the Investment Climate for Nashville Real Estate,” was published by Urban Land Magazine on March 8, 2019, and is available online.