Behind Oracle’s HQ Move to Nashville
And why it’s not surprising.
Oracle Chairman Larry Ellison may have inadvertently spilled the beans about moving the software company’s world headquarters to Nashville, Tenn., Tuesday but the news wasn’t a total surprise in the city that has seen other big corporate relocations and major office and mixed-use developments in recent years.
The Austin, Texas-based company was already in the city, having bought a 65-acre site in the city’s East Bank section in 2021, with plans to develop an office campus for as many as 8,500 employees over the next decade, and leasing office space in the interim. The Metro Council also approved a proposed $1.2 billion investment plan for the site, according to The Tennessean newspaper.
The Oracle property is adjacent to River North, a 105-acre mixed-use development planned by MRP Realty and Creek Lane Capital. Oracle is working with city officials to provide infrastructure upgrades in East Bank, including a deal to invest in a pedestrian bridge across the river, the newspaper reported.
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Warren Smith, principal & managing director of Avison Young’s Nashville office, said the software company’s land acquisition in 2021 provided an impetus for increased development in the area, which is already seeing a new $2.1 billion football stadium being built for the Tennessee Titans. It is being built adjacent to the current Nissan Stadium, which will be demolished when the new stadium is completed by 2027.
“That whole part of Nashville is being energized,” Smith told Commercial Property Executive.
The Oracle news from Ellison came just days after the Metro Council unanimously approved a master development agreement between Metro Nashville Government and The Fallon Co. to develop a 30-acre mixed-use project on Metro-owned land on the East Bank. The agreement is part of Nashville’s Imagine East Bank Vision Plan, which was developed by the Nashville Planning Department over a two-year period of community engagement.
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The site will have more than 2 million square feet of office, retail, hotel and residential space. More than 40 percent of the 1,550 residential units will be set aside for affordable housing, including some deeply affordable apartments, to help grow the new mixed-income neighborhood. It will also include wide sidewalks for pedestrians, bike paths and dedicated transit lanes. Preliminary studies estimate infrastructure costs for the public-private project will be about $147 million.
Michael Fallon, CEO of the Boston-based development firm, noted that the Oracle site is just north of the Metro-owned East Bank property. He said the Oracle project is just beginning the zoning process so he was not sure which components will be built first, but said that the company’s headquarters decision “certainly reinvigorates the potential office demand.” He added that it validates the East Bank and Nashville and may provide tailwinds for other development.
Health-care hub and corporate relocations
Ellison made his remarks during a fireside chat at the Oracle Health Summit in Nashville with Bill Frist, a former U.S. Senate majority leader. He said he wanted to move the company’s world headquarters to Nashville to be closer to the center of the health-care industry as Oracle expands its presence in the sector. Oracle bought Cerner, a Kansas City, Mo.,-based company that provides software for managing electronic health records in 2022 for $28 billion. Health-care companies in the Nashville area include HCA Healthcare, Community Health Systems, HealthStream, Change Healthcare, Acadia Healthcare and Vanderbilt University Medical Center.
“HCA is the largest for-profit hospital chain in the world and they’ve diversified in a lot of businesses, so it’s just an amazing health-care atmosphere on the business side,” Smith told CPE.
Ellison also touched on Nashville’s quality of life. During the livestream he called Nashville a “fabulous place to live” and “great place to raise a family” with a unique and vibrant culture. He said when they surveyed employees, Nashville ticked all the boxes.
Fallon said that does help draw such companies as Oracle, Amazon and AllianceBernstein, the global investment firm, which announced in May 2018 it was relocating from New York City to Nashville. In May 2022, AB unveiled its new corporate headquarters at 501 Commerce in the mixed-use Fifth + Broadway development, where it occupies more than 221,000 square feet of office space. The firm is expected to employ more than 1,250 people by this year.
While The Fallon Co. had been in the Nashville market prior to 2019, Fallon said AB’s surprise move to Nashville solidified their plans to focus on the city as a key market.
“They cited a lot of the same things a lot of other companies probably cite about the business climate, and it certainly does have an advantageous tax environment,” Fallon said.
Both Nashville and Tennessee are regarded as offering a business-friendly climate that has no state taxes. While he wasn’t familiar with the incentives being provided to Oracle, Smith said the city, state and economic development agencies are very pro-active with companies seeking to relocate or develop.
While Amazon didn’t choose Nashville as its second headquarters during a yearlong search between 2017 and 2018, the e-commerce company announced in late 2018 it would open offices at Nashville Yards in two office towers and create about 5,000 jobs.
Oracle left Silicon Valley in 2020 to open its U.S. headquarters in Austin, Texas. In May 2021, Oracle sold Sobrato Office Tower, a 378,961-square-foot Class A office building in San Jose, Calif., to PIMCO and Lane Partners for $155 million.
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