Baker: We are still seeing concessions of all kinds for the right tenants, mostly in the form of free rent and tenant improvement allowances. Many landlords are spending significant amounts of money in order to lure tenants into existing spaces. In instances where spaces are being retrofitted for alternative uses, the dollars are going toward the conversions. Most tenants want space that is in turnkey condition, or close to it. The amount of money the landlord is willing to spend on the space is often directly related to the credit of the tenant, with more money being spent on long-term leases with national tenants.

LeClaire: What trends are you seeing in retail real estate there? Are certain sectors of retail more active than others?

Baker: We are not seeing any sector that is more active than another. However, end-cap restaurant users seem to have an aggressive appetite for space right now. For example, the quick serve restaurant industry has been expanding in the market with stores of between 2,000 and 4,000 square feet. Concepts like Panda, Panera, Moe’s and Qdoba have all been opening stores in both newly constructed and existing structures in quality areas like those near the new Stone Crest Medical Center in Murfreesboro, and in front of the newly expanded Vanderbilt Medical Facility at 100 Oaks.

LeClaire: How does the retail real estate landscape compare to other sectors of commercial real estate?

Baker: From what I understand, the industrial sector is still pretty slow with an 11.8% vacancy rate, while the office market—at a 12.27% vacancy in certain areas—is showing signs of improvement and a need for additional new construction.

LeClaire: What do you expect in 2011? Are we turning a corner, hitting bottom, etc?

Baker: In Nashville, we have been very lucky. We are supported by several industries that help to diversify our economy, including healthcare and automotive. Healthcare is the largest industry in this market, employing over 200,000 people. Also, over 70% of US managed-care hospitals are controlled by Nashville-based companies. In addition, Nissan has its US headquarters here. As a state capital, our tourism is strong, the music industry is popular, and we have 11 different major colleges, including Vanderbilt, right here in the city. Add to that, both an NFL football team and an NHL hockey team, and Nashville is a very attractive destination for visitors and residents, which has helped to keep our market strong.

LeClaire: Any closing thoughts?

Baker: Because of the many positive aspects mentioned above and the fact that our market did not overbuild, Nashville retail has not experienced the downturn that many other markets have. Our topography combined with our zoning policies usually prevents massive overbuilding.