Nashville's On The National Stage: What It Means For Hotels, Restaurants And Retail
One question that all of the speakers at Bisnow's Nashville State of the Market event addressed was when the peak would come for Nashville. Sooner rather than later, or the opposite? The thinking behind that question is that Nashville has been a boom city for long enough that it has to come to a sudden end.
That might be the wrong question. Nashville, long a colorful but still secondary market, has entered the national stage, the speakers said. The city is evolving into something else. There will still be periods of stronger and weaker growth, but it could be that Nashville will never be a sluggish secondary market again. It has reached critical mass.
The first panel discussed hotels, restaurants and retail, which have seen especially strong and visible growth in Nashville in recent years. The challenge they face is summed up by a single word: oversaturation. But if people keep moving to Nashville, and visitors keep coming, the demand will be there, the speakers said.
Tennessee Hospitality & Tourism Association and Greater Nashville Hospitality Association President and CEO Greg Adkins, whose organization has about 1,700 members statewide, offered some statistics about the Nashville hospitality and tourism market to kick things off.
In 2017, Nashville had 14.5 million visitors, an all-time record representing about $6B in direct economic impact.
"Those kind of numbers mean huge payrolls — $1.5B in payrolls," Adkins said. "The hospitality industry employs about 10% of the population, and while that many visitors is great, we're also seeing issues with labor. Probably most of our members always have a position open at their businesses. That didn't used to be the case."
The Nashville hotel market is booming, and Adkins quantified that a bit.
"There are about 41,000 rooms in the greater Nashville area, including the surrounding counties, with revenue per available room up by 7% to 8% in recent years," he said. "That means there's still a lot of demand for hotel rooms."
There is also demand for restaurants, Adkins said.
"In the last five years, the industry has grown 16% to 17%, with about 5,300 restaurants in Nashville, about half of the state's total."
Fresh Capital partner Nicholas Cesnik, whose company is the development arm of Fresh Hospitality, said different parts of Downtown Nashville have exploded in recent years with new restaurants, retail, hotels and residential space — probably to the point of saturation in some cases, such as Broadway.
"There are only so many places to go," he said.
That does not mean that opportunity is drying up in Downtown Nashville.
"Pie Town is one of the more interesting parts of Downtown Nashville," Cesnik said. "I believe that in the next 18 months, we'll see more and more properties trade there, and more restaurants and retail."
In the last two years, Fresh Capital has acquired three pieces of Nashville urban core property to develop new concepts on, including the site of Martin's Bar-B-Que Joint on Fourth Avenue.
"We're ready to break ground on the site next to Martin's," Cesnik said. "It will be another high-volume concept."
McDevitt site specialist Elliot Kyle, who is working on the retail at Fifth & Broadway and other projects, such as a hospitality redevelopment on Dickerson Pike, said Dickerson is the corridor to watch now.
"It's going to pop," he said. "We've seen this dynamic in other comparable corridors."
For some time, Kyle said, he has had the notion of redeveloping a run-down, 1950s-era motel.
"The idea is to completely turn it around," he said. "I've seen it in other markets. When I go to Austin, I stay at the Austin Motel, an old property made new again. So we bought a 26-room hotel on Dickerson, and raised the financing for its redevelopment in 24 hours, underwriting it to rent for $109 a night."
The property will be a value proposition to Aibnb, Kyle said.
"And it will be in an area that doesn't have any hotel rooms to speak of, with that eclectic vibe that people come to East Nashville for. If all goes as planned, it will open by this summer."
The property will also be part of the revitalization of Dickerson Pike.
"There's a lot of interesting brick-and-mortar up and down that corridor that could be acquired," Kyle said. "We want to be in early on the evolution of the corridor."
Royal Investments principal Alex Marks, whose company is working on the Dream Hotel, said his company owns 60% of the frontage on Printers Alley. The Dream Hotel Nashville, part of a mixed-use project, is also part of the transition of Printers Alley from a rougher area.
The area certainly has history. The Dream Nashville hotel site consisted of four buildings, the Climax Saloon, Utopia Hotel and two smaller buildings in between. The two named buildings were the hub of the Gentlemen’s Quarter, one of the most popular entertainment spots of 19th-century Nashville.
"We bought four buildings on Printers Alley, and unfortunately we had to tear down three," Marks said. "Our goal is to built back the character of Printers Alley, and take advantage of the growth around the area, and make it a destination again. There's retail and restaurant operations coming nearby, with a little more sophistication than before."