Nashville Mixed-Use Project Receives $135M Refi

June 27, 2024

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The historic structure is part of DZL Management's portfolio in the city's Gulch district.

DZL Management has obtained $135 million in refinancing in the form of a five-year, fixed-rate loan for Cummins Station, a 408,000-square-foot historic mixed-use asset in Nashville, Tenn. The property is in the Gulch district near downtown, location of more than 3,000 residential units, more than 10 hotels and 60 food and beverage establishments.

Cummins Station is part of the DZL Management's portfolio in Nashville's Gulch district — Cummins Station is part of DZL Management’s portfolio in Nashville’s Gulch district. *Image courtesy of JLL*

JLL Capital Markets led the financing efforts for Cummins Station on behalf of the owner, Nashville-based DZL. Despite the difficult macro-economic climate and headwinds facing the office sector, a pool of liquidity for office assets in good locations with strong tenancy still exists, according to JLL, who did not specify the lenders in the deal.

Cummins Station is the adaptive reuse of a historic warehouse, and is a mix of retail, restaurants and office space. Current retail tenants include Morning Glory Deli, Pullman Standard and Wild Wasabi, with Starbucks and fitness studio Lagree Nash recently joining the roster. Office tenants include Clark Construction, Gibson Brands, ad agency GS&F, Eventbrite, Civic Financial Service and Serendipity Labs, a coworking space.

The four-story concrete and masonry Cummins Station was built in 1906 as a wholesale warehouse building servicing railroad lines that ran through the area near Union Station and was the largest reinforced concrete warehouse in the world at the time of its development.

Until its initial redevelopment in the 1990s, it was used continuously as a warehouse space, and retains many of its original design elements. It is on the National Register of Historic Places.

In October, Nashville-based DZL hired Avison Young to provide advisory services regarding the entire Station District, which includes Cummins Station, but also the 61,000-square-foot office and retail Baggage Building, the 58,000-square-foot Cannery Hall event space, and more than 12.4 acres of developable land.

DZL, which assembled the portfolio over the last 20 years, is reportedly open to a sale, joint venture, or other opportunities for the Station District.

Nashville retail hot, office not so much

Downtown and Midtown Nashville experienced 58 percent of all office leasing activity across the market in the first quarter of 2024, mostly at mixed-use projects and on Music Row, which indicates that flight-to-quality includes in-building and neighborhood amenities, according to JLL. Overall, however, there was negative net absorption of 371,000 square feet of office space in Nashville in the first quarter of 2024 as demand lags.

On the retail side, by contrast, Nashville has been a boomtown in recent years, Matthews Real Estate Investment Services reported in late 2023, supported by economic and population growth with few parallels elsewhere in the nation. The metro area’s population surged by nearly 25 percent from 2011 to 2021 and currently sees nearly 100 new residents per day move there each day, according to Census Bureau data.

Net retail absorption has bested 200,000 square feet in seven of the most recent eight quarters as of the end of last year, Matthews reported, putting overall vacancy at a tight 3.3 percent, nearly a 15-year low.