It’s finally done.
After months of negotiations first reported in The City Paper, Vanderbilt University Medical Center and management of 100 Oaks Mall signed a long-term lease for more than half the space at 100 Oaks. The deal was completed late Monday afternoon.
“This has been a big one,” said C. Wright Pinson, associate vice chancellor for clinical affairs at VUMC.
Though specific terms of the deal were not released Monday, the deal represents tens of millions of dollars. Pinson said the lease is worth about $65 million to VUMC. That includes $36 million VUMC expects to spend for renovations and build-out, on top of the “significant investment” mall management said they plan to spend on the interior and exterior of the space.
“The Vanderbilt lease marks the beginning of the total redevelopment of this property as a commercial, shopping, office and medical environment,” said Frank Mihalopoulos, who with Tony Ruggeri is a partner in 100 Oaks Plaza LLC and M & R Investors, LLC of Dallas.
The initial lease is for 12 years, with five renewal periods of 10 years, Pinson said. The deal includes a right of first refusal for VUMC to purchase the entire mall if Mihalopoulos and Ruggeri attempt to sell it, and for VUMC to have options to lease additional space if existing tenants leave.
VUMC has set an anticipated occupancy date as July 2008. Nashville architecture firm Gresham & Smith has been contracted by both parties to undertake most of the work, though VUMC is completing its own medical build-out, Pinson said.
In a statement Monday, Mihalopoulos and Ruggeri said 100 Oaks will still be home to a large base of retailers on the first floor. Current tenants set to remain include Michaels, CompUSA, TJ Maxx, PetSmart, K & G Fashion Superstore and Burlington Coat Factory. AmSouth Bank/Regions, Guitar Center and Regal Cinema will also remain.
Most of the mall’s first floor is currently occupied, but mall management said they’re in negotiations to secure tenants for the remaining space. The Reebok store, currently on the mall’s second floor, is reportedly in negotiation with the mall to move to outdoor frontage on the first floor.
VUMC will lease a total of 436,524 of 100 Oaks’s 850,000 square feet for administrative and clinical purposes, filling the mall’s second and third floors as well as the nearby office tower. Pinson said the hospital will place several clinics on the second floor, with billing and patient accounting on the third floor and in the office building. A wellness center — which includes space for rehabilitation and fitness — will fill a north-side large tenant space, and the food court will be renovated into a cafeteria selling healthy food options, Pinson said.
VUMC expects more than 1,000 staff members to work from 100 Oaks, and for the space to accommodate a patient flow of about 2,000 per day. Clinics to be moved to the facility include cardiology, the breast center, obstetrics and gynecology, dermatology, bariatrics, an imaging and laboratory center, the pain clinic, neurodiagnostics, pharmacy, pediatrics, cytogenetics and rehabilitation.
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. The hospital will lease 3,400 parking spaces.
The deal will also mean changes to the area’s infrastructure, according to 100 Oaks management. Mihalopoulos and Ruggeri said in a statement that they have been working with the city to realign traffic lights, to create better traffic flow patterns, and to reconfigure entrances and exits with a boulevard leading to the main entrance, the office entrance and the patient entrance. This work is in addition to the redesign of the exterior of the buildings in a way that provides more natural light.
Mihalopoulos and Ruggeri credited Tom Jurkovich, director of the Mayor’s Office of Economic & Community Development, and Anna Page, Metro Council representative for the 100 Oaks area, for their help in completing the deal. Ken Leiser, senior vice president at CBRE, represented Vanderbilt in the lease negotiations.
Janet Sterchi and Lisa Maki, both with CB Richard Ellis, handle office leasing for 100 Oaks Plaza, LLC. John Forster and Brian Forrester of the Shopping Center Group are overseeing the retail leasing.
100 Oaks Mall, located at 719 Thompson Lane on a 57-acre site, was the first enclosed-shopping mall built in Nashville. Through the years, it was home to a variety of well-known retailers including Harvey’s and J.C. Penney. Belz Enterprises owned 100 Oaks Mall from the time it first opened in 1967 until it was sold to 100 Oaks Plaza, LLC in December 2006. The purchase of 100 Oaks Mall was the first transaction in Tennessee of Texas-based M & R Investors, LLC.