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Highwoods Tees Up Major Nashville Development, In Talks with Asurion to Anchor 479,000-SF Office Component

February 8, 2018
The same day Highwoods Properties (NYSE:HIW) announced it had closed on its purchase of a pair of redevelopment sites in downtown Nashville's Gulch district totaling nine acres for $50.3 million, the North Carolina-based REIT also confirmed it's in advanced talks with a lead tenant to take the bulk of space in a new, 479,000-square-foot office complex planned for the first of the two sites.

Nashville-based Asurion, a fast-growing provider of repair and replacement insurance policies for cell phones and tablet owners, is planning to consolidate its four current locations in the new Highwoods project.

Highwoods is buying the prime development sites along with Jim Caden, a local retail developer and co-founder of Nashville restaurant group M Street. The two buyers were selected last year to negotiate a contract for The Tennessean newspaper's former complex at 1100 Broadway.

The sellers include The Tennessean's owner, Gannett Co. Inc., which put the Nashville newspaper's longtime location up for sale in 2016, along with Liquidity Partners and Brownlee Currey.

Highwoods said it used escrowed 1031 exchange funds from property sales in 2017 to acquire the two downtown Nashville parcels, which are entitled for an aggregate of 1.2 million square feet of office development.

The office REIT led by President and CEO Ed Fritsch is planning to develop a $252 million, 479,000-square-foot build-to-suit for Asurion on the 5.4-acre parcel, located at Church St. and 11th Ave. North. The other parcel measures 3.6 acres.

Design plans for the first site call for two structures, one totaling eight stories and another totaling seven stories above a six-level structured parking garage, half of which will be located below grade.

Highwoods said it expects construction to begin on the Hastings Architecture-designed office complex in the first quarter of 2019 with third quarter 2021 as the targeted completion date, subject to finalizing a definitive lease with Asurion.

Highwoods was already one of the city's biggest office property owners even before its latest acquisitions. The Raleigh-based REIT controls more than 4.2 million square feet of office space in the Nashville market, including the new 30-story, 514,000-square-foot corporate headquarters for Bridgestone Americas and the 29-story Pinnacle at Symphony Place office tower at 150 3rd Ave. South anchored by law firm Bass, Berry & Sims.

Highwoods is also developing a pair of connected office buildings totaling 224,000 square feet in its Ovation in the Cool Springs district of Franklin, TN for the US headquarters of Mars Petcare.

Meanwhile, according to local reports, The Tennessean has up to 15 months to find a new location, and Gannett is reported to be in the process of negotiating letters of intent for new office space.
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