Forget Miami or New York, Buy in Nashville
by Graham Summers
November 27, 2006
The Signature Tower goes on… and on… and on.
As the slender steel and glass condominium complex slides across the screen of the 50-inch high-definition TV, I turn and look out the window of Tony Giarratana’s eleventh floor boardroom to where the building will stand in downtown Nashville.
Nashville’s skyline already bears Giarratana’s mark in the form of the Cumberland, Viridian, and Bennie-Dillon: previous residential developments of Giarratana and his partners.
However, at 1,057 feet, the Signature Tower will dwarf all of these buildings, and, if completed today, will be taller than every building in the U.S. outside of New York and Chicago.
I spoke with Giarratana at length last Tuesday morning regarding the Signature Tower and other developments in downtown real estate. “Where is the demand for these condos coming from?” I asked.
His simple answer was “everywhere.”
45% of current downtown Nashville residents come from Davidson County: the city’s surrounding area. Yet one in four downtown residents (27%) are from out of state.
These people are well educated, with more than half (54%) of them holding college degrees and an additional 32% holding post-graduate degrees. They’re also young: nearly half (43%) are between the ages of 22 and 34. And 51% of them are single.
Simply put, Nashville is happening.
The low cost of living is the primary driver of the immigration. The discrepancy between the cost of living on the coasts and Nashville has contributed to this massive influx of young, smart professionals. Another draw is Tennessee’s great quality of life and absence of a state income tax. And then there’s the cheap real estate…
You can get a condo in Giarratana’s Encore building for roughly $330 per square foot, with condos in Signature Tower selling for just over $500 per square foot. The average price for a Manhattan condo is well over $1,000 per square foot. So you can get a condo in Nashville for one-third to one-half of what it would cost you to buy in Manhattan.
Giarratana and other Nashville real estate gurus are capitalizing on the influx of young smart professionals by bringing as many condos online as possible. But the scarcity of sites and tight planning controls keep inventories low. At the beginning of 2004, only 13% of downtown Nashville residences were condos. By 2006, it was 58%. In 2007, the number of Nashville condos will have doubled since 2001.
And demand is ravenous. Of the condos currently under construction to come on line in 2008, over 90% have already been purchased. Tony told me that his Encore building opened sales on October 20 and has already sold over 65% of the building’s 333 units. And construction only started in July.
Nashville’s downtown real estate market is still very much in its infancy. Prices have risen steadily during the last several years. And when Tony’s luxurious Signature Tower comes online in 2010, new price levels will be established.
There are plenty of investment opportunities in Nashville real estate, whether you buy a condo or look at some of the companies Tony and others partner with to build these condominium complexes. For instance, Tony partnered with Atlanta-based Novare Group on several recent downtown projects including Viridian and Encore.
Simply put, Nashville real estate looks like one of the most promising investments of the next ten years… and the reasonable prices here prove once again that talk of a national housing bubble is hogwash. I’m hoping to relocate here myself within the next year.
Good investing,
Graham
P.S. You can see all of Tony’s current projects online at http://www.giarratana.com. And if you see something you like, you can contact Tony’s sales manager, Kimberly Baker at 615-254-0555. 
