Exclusive: $80M Gulch Apartment Project Just the Start for Developer

By Adam Sichko, Nashville Business Chronicle

By the end of this month, demolition and site work will begin on a 376-unit apartment complex at a high-profile property in Nashville's North Gulch.

The developer — Atlanta-based Pollack Shores Real Estate Group — is only just getting going.

"I feel certain this will not be our only deal that comes to fruition this year," said Michael Blair, who is managing director of development at Pollack Shores.

"We're still looking, largely in the Gulch area, at opportunities both for luxury high-end rental units, as well as for-sale condos. Both make sense in Nashville right now, and I'm not sure we would say that about every market just yet," Blair told me Wednesday.

First things first: On May 11, Pollack Shores paid $15.5 million to buy 3.44 acres in the North Gulch, directly across the street from Nashville Electric Service headquarters on Church Street. The site covers an entire city block, bordered by Church, 12th Avenue North, George L. Davis Boulevard and Grundy Street.

All told, the development will cost just shy of $80 million, Blair said. JPMorgan Chase (NYSE: JPM) is providing the construction loan, according to public records filed with Davidson County.

This is the first ground-up development for Pollack Shores. The company entered Nashville in 2011, buying the Velocity in the Gulch and converting the units from condos to apartments. Pollack Shores sold the building the following year.

Of course, Pollack Shores is but the latest multifamily developer to swarm Nashville. They're all aiming to profit off of the region's job gains and population growth. Both tallies steadily rank among the strongest in the nation.

"We're looking at the fundamentals: renter demand, what's the supply, and equally as important, what are the lifestyle amenities afforded by a project. All those have to be in place," Blair said.

"We need to make sure the job-growth projections continue to outpace supply — which they do in Nashville. I know there is a lot of new product being delivered in Nashville, but it continues to be a strong market because of all the job growth," Blair said. "The Gulch is a destination."

Case in point: Two blocks away, construction is underway on an office building that will house 2,000 or more employees of Nashville-based HCA Holdings Inc. (NYSE: HCA), the nation's largest for-profit hospital chain.

Blair said he expects construction of his company's apartment complex to begin this fall. If so, that would put the first apartments on pace to be available in late 2016. The complex would be fully open around summer 2017, Blair said.

The vacant Gossett Building on-site will be demolished to make way for the apartment complex. Local preservation group Historic Nashville has ranked the building among the most endangered by development.

Blair said Pollack Shores will save the building's neon sign.

"You've got a bit of a landmark there in that sign. We absolutely want that to be part of the plan, whether it's the exterior of the building or something neat in one of our courtyards," Blair said.

The site drops off notably moving from Church Street back to Grundy Street, and down to 12th Avenue North. At that corner, Blair said about 8,500 square feet of retail and restaurants will be located on street level. Amenities for tenants will be located closer to Church Street, as well as a few live-work units for rent, Blair said.

"The trend toward smaller and more efficient units, we don't see that stopping. It forces you to be very high-end in your finishes, and the amenities have to be top-of-the-market," Blair said.

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