Downtown office owners position towers for upturn

Monday, July 28, 2008 at 2:36am
Owners of the Fifth Third Center say they won’t have to raise rates to pay for renovations. Matthew Williams/The City Paper

The owners of Fifth Third Center have launched the final phase of their renovations of the downtown office tower.

Denver-based Amstar Group is spending $1 million on the plaza in front of the 490,000-square-foot building. That follows a series of interior renovations that included a new lobby and cost a total of $5 million.

“At the end of the day, we think we’ve got a real signature or trophy office building,” said Rob Toomey, Amstar’s senior vice president.

AmStar’s renovation is proceeding as the downtown office market has taken a turn for the worse, creating another point in the rallying cry against approving the proposed May Town Center development in Bells Bend.

Including the 90,000 square feet vacant in the Fifth Third Center, real estate brokers are marketing about 700,000 square feet of vacant space downtown — more than 10 percent of the district’s inventory.

That number includes the Pinnacle at Symphony Place, which is under construction south of Broadway. Pinnacle Financial Partners and Bass Berry & Sims have signed on for space, but that leaves 200,000 square feet empty in the building.

Also, the newly opened SunTrust Plaza has 32,000 square feet and the Terrazzo condominium tower under construction in The Gulch has 40,000 square feet.

The largest chunk of contiguous vacant space is in the AT&T Tower, where Nissan just moved out of 240,000 square feet. Since AT&T pays for the space and Nissan was on a sublease, that space isn’t technically vacant.

But it is available.

“We started remarketing the building as soon as Nissan moved in,” said Tom Frye, managing director for CB Richard Ellis, which is handling the leasing for AT&T Tower.

Amstar’s Toomey said his building is being positioned to compete with the new buildings by offering lease rates that are significantly lower — between $10 and $12 per square foot —than the new buildings’. Nashville Commercial/Cushman & Wakefield has that leasing assignment.

“We don’t necessarily have to increase rates to recover the cost of renovations,” Toomey said.

Brokers have long said the building’s 17,000-square-foot floor plate — punctuated by a horseshoe shape — is a challenge.

“Every building has challenges,” Frye said.

Parking is still the main challenge for many properties, particularly the AT&T Tower. Frye said filling it will take a tenant who would lease space and shuttle workers from the LP Field parking lot.

One positive for downtown is that much of its available space is contiguous, something economic developers like because it makes the city more attractive to a company looking to move quickly.

The open space downtown also is one of the issues opponents of the proposed $4 billion May Town Center have used against the project. But Frye said whatever might be built in Bells Bend won’t hit the market for at least five years. Because of that, he said the vacant space isn’t a problem for the downtown market and will rebound with the economy.

“It’s a repositioning,” he said. “My guess is downtown is leased up in two years.”

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