Page 24 - Murfreesboro, TN Comprehensive Plan: Chapter 7, Economic Development

7.24 Chapter 7

DRAFT 12.02.15

7.3 Incent/Market Class rates and rents remain stable. Together, Murfreesboro
and major property-owners need to aggressively
market the City and its commercial office development
A Office Space opportunities to area developers and brokers. Incentive
programs such as TIF also need to be developed and
included as part of the marketing message. See Table
7.1, Metro Nashville Office Market Profile: 1st Quarter 2015
The lack of available “turnkey” Class A office space (CoStar Group Inc.).
has been cited as a main cause of the City’s inability
to attract more professional jobs. Most developers Currently, Rutherford County offers a direct tax
(and commercial real estate lenders) meanwhile, are incentive through the Rutherford County Industrial
generally loath to build (finance) new office construction Development Board (IDB). These incentives are offered
without firm tenant commitments in-hand. This puts to manufacturing companies who can demonstrate that
Murfreesboro in a catch-22 situation when it comes their project will deliver a $3:1 benefit-to-cost ratio based
to landing large commercial office tenants, especially on known new job growth. The IDB’s policy is to incent
companies that are expanding quickly or new to the manufacturing companies although there are no known
region. These types of companies can’t wait out the preclusions to extending rebates to commercial office
typical two-year timeframe it takes to deliver a new projects (save perhaps for the ability to quantify known
building to the market. Consequently, Murfreesboro, jobs arising from a speculative office development).
with little Class A space to begin with, may be missing STRATEGY 7.3.1: Work to expand professional
out on key opportunities. employment and office development opportunities.

Hope rests in the fact that metro Nashville currently has
one of the tightest office markets in the country with a ACTIONS AND INITIATIVES
vacancy rate of only 6.6 percent (compared to 11 percent 1. Work with the IDB to extend tax incentives to new
nationally) (CoStar, 2015). This enviable situation office developments (including speculative office
should make developers and lenders more confident in space).
undertaking speculative office construction as long as 2. Conduct a commercial office market study to
the area’s economy continues to grow, and both interest understand current and projected supply/demand

TABLE 7.1: METRO NASHVILLE OFFICE MARKET PROFILE: 1ST QUARTER 2015 (COSTAR GROUP INC.)

YEAR TO DATE UNDER
VACANCY VACANCY QUOTED RATES
ABSORPTION CONSTRUCTION
Class A 1.34 million sf 6.3% (65,990) sf 2.56 million sf $27.28

Class B 2.90 million sf 8.1% 126,128 sf 95,296 sf $19.56

Class C 866,203 sf 4.2% 51,169 sf 0 sf $15.76

Total Nashville 5.10 million sf 6.6% 111,307 sf 2.68 million sf $21.52

Total Memphis 5.87 million sf 11.6 422,900 sf 650,000 sf $16.02

Total Knoxville 2.60 million sf 7.9% 108,283 sf 2,400 sf $14.72

Total Louisville 4.90 million sf 9.1% 151,236 sf 203,270 sf $16.01

Total National 10.9% $22.74