Negotiations between Vanderbilt University Medical Center and 100 Oaks officials are in their final stages. But changes are already beginning to take place in the 100 Oaks Mall area as tenants and business owners prepare for what some believe will be a wave of leasing rate increases.
“It looks to me like this is the first thing that they’ve done that’s really going to change the face of it and the perspective of it,” said Gary McDuffee, owner of McDuffee Tire Service on Thompson Lane. McDuffee, who has done business in the area for 29 years, said he’s taking the VUMC negotiations into consideration as he evaluates his tenancy contract. “I don’t see how it could not make a difference.”
VUMC officials first confirmed to The City Paper in March that they are pursuing space at 100 Oaks for a mixture of clinical and office space. C. Wright Pinson, associate vice chancellor for clinical affairs at VUMC, said Friday that negotiations are in the final stages – and, as such, he prefers not to add pressure to the remaining talks by providing further details.
“We are still in serious negotiations, but we are hoping to finalize those soon,” Pinson said.
He did, however, confirm that what The City Paper already knows is still on the table. VUMC is negotiating to lease – possibly with an option to buy – approximately 400,000 square feet and 3,400 parking spaces at the mall, with a target occupancy date of spring 2008. That’s approximately half the mall, plus the adjoining office tower.
According to Pinson, VUMC and its focus groups would like to see a primarily glass exterior on the building. Nashville-based Gresham Smith and Partners is the architecture firm involved.
“Pending an agreement, we’ll undertake work with the owners to accomplish a full transformation of the interior and exterior spaces to a state-of-the-art outpatient and wellness facility,” said Cyril Stewart, director of VUMC facilities planning.
Other additions to the space could include a renovated food court, open to the public during business hours and offering healthy selections. A shuttle service is in development for transport between the two campuses. Data services would need to be enhanced to accommodate Vanderbilt’s online patient database system.
In addition to finishing negotiations, Pinson said the deal will require approval from Vanderbilt’s board of directors once costs are calculated.
VUMC has expanded at a pace of about 300,000 square feet annually for the last five years, Pinson said, and it makes financial sense to find office space away from the highly coveted – and expensive – campus area.
If a clinical and wellness center is established at 100 Oaks, some patients needing therapy or routine appointments will not need to navigate the congested VUMC. In addition to making good business sense, Pinson said the development would help fulfill VUMC’s societal mission of providing the community easy access.
A source close to the deal says VUMC is negotiating rates that are approximately in the range of what other office tenants in the area are paying. But those doing business in the vicinity of 100 Oaks are optimistic about how the deal could affect property values.
“It’s going to be like a small city,” McDuffee said.
Businesses at the mall, which currently have only interior facades may be in the process of relocating to other mall space with individual, external entrances that aren’t in the VUMC negotiations. One business has confirmed to The City Paper that this is the case, but preferred not to be named in this story as negotiations are still under way.
Ryon Hoard, a manager at the Reebok store, said the existing tenants with plans to remain at the mall if the VUMC deal goes through are enthusiastic.
In the case of Reebok, there are already podiatrists in the area that refer patients to the store. Being located in the vicinity of medical offices and receiving the traffic from those patients should be a boon for business.
“It should be good for all of us,” Hoard said. “If we are, in fact, to move outside, it would definitely be good for business.”
But not all existing tenants will get to stay in the area. Bob Melton of The Masonry Institute, which has operated from the 100 Oaks office tower for 12 years, said he was notified by mall management in May that he would have to leave the building. The previous year, he had been told by the mall’s old management that he could only renew his lease on a month-to-month basis, which is what he says other tenants of the building have had to agree to as well.
The Masonry Institute left 100 Oaks for a new location June 14. Prior to relocating, Melton said his rate at the building was $11.95 per square foot, though he estimated the other tenants in the area paid $14 to $16.
“That’s a good rate in that area.” Melton said. “It’s not Class A. It’s a little bit below Class B. There are no amenities in the building.”
For Melton, the primary challenge in relocating was not only finding office space with a price to match his budget, but to find something small enough.
“It’s very difficult to find small square footage for rent,” Melton said. “If you want anything from 650 to 1,200 square feet in a decent location, it’s tough to find.”
The mall property is owned by 100 Oaks Plaza LLC, a Dallas, Texas, investment group headed by Tony Ruggeri and Frank Mihalopoulos, and includes about 850,000 square feet.
When they purchased the mall last December, Ruggeri and Mihalopoulos said it would be revitalized during the next two to three years with a mix of retail and office space.
“We don’t comment on ongoing lease negotiations as a matter of policy,” said Janet Sterchi, the CB Richard Ellis representative heading up office space leasing. “However, we can say that the 100 Oaks mixed-use redevelopment includes office and retail…We are working with the city and the community to ensure that we have the correct infrastructure in place to handle the redevelopment.”
Sterchi said John Forrester at The Shopping Center Group manages retail leases for the mall.