December 17, 2015

Cool Springs Offices Sold to Local Investors

By Richard Lawson
– The Tennessean –

Two Cool Springs buildings that helped launch the area as an office destination have been sold to a group of Nashville and Memphis investors.

Boyle Nashville LLC bought One and Two Corporate Centre for $36 million from the Strategic Property Fund, which is managed by New York based J.P. Morgan Fleming.

J.P. Morgan had bought One Corporate Centre in December 1997 for $18.5 million. It bought Two Corporate Centre a year later for $20.8 million.

The deal becomes the largest real estate transaction for Memphis based Boyle Investment Co. in Nashville since teaming up in 2001 with Nashville real estate brokers Jeff Haynes and Phil Fawcett. Insurance giant Milwaukee based Northwestern Mutual Life also is a partner.

Boyle bought its first office building in the Nashville area a year ago – Center Court in Brentwood’s Maryland Farms Office Park. That property cost $5.25 million, a far cry from the price tag on the new Cool Springs deal.

“We weren’t nervous,” Haynes said of the $26 million purchase. He said the firm’s strategy in Nashville has been to acquire Class A office and retail properties in areas where jobs and population growth is strong. We’re finally making progress toward that goal,” Haynes said.

The firm competed for Burton Hills I and II in Green Hills, but came in second to a local group led by real estate developer John Eakin.

In a separate deal, potentially one of the partnership’s most significant, Boyle plans to develop 600 acres south of Franklin along Interstate 65 for residential and commercial uses.

The Corporate Centre deal represents one of the top sales this year. One Century Place in the airport area sold in May in a deal valued at about $51 million.

Douglass Johnson, an investment real estate broker, said the Corporate Centre sale is positive for the suburban office market around Nashville, given past weakness in leasing.

“It shows a perception of increasing strength,” Johnson said.

Cool Springs, Brentwood, Green Hills and the airport areas have Class A vacancy rates ranging from 10% to nearly 15%, not counting the sublease space that is available.

Charlotte based Crescent Resources launched Cool Springs as a suburban speculative office market with construction of One and Two Corporate Centres. Several more buildings were built, and two more national developers entered with their own space.

One and Two Corporate Centre are about 92% leased, leaving room for growth. Typically, 95% is considered full occupancy.

Tenants include Cigna, General Electric Capital Corp. Franklin American Mortgage and Manchester Tank.

Jones Lang LaSalle, the New York real estate firm representing J.P. Morgan said in a release that half the bidders on the buildings were local and the other half were investors seeking entry into the Cool Springs office market.

Boyle fits the current trend in investment real estate sales. Because of low interest rates, private equity groups have been able to compete on properties with large instructional investors such as retirement funds.

Burton Hills I, II and III, for example, were sold to private investment groups.

More big sales could come early next year.

Johnson said there is “a lot of activity in the marketplace.”