Feasibility Study Commercial Real Estate

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					Final Report
Market Feasibility Study
for
Rolling Mill Hill

Submitted to
Metropolitan Development and Housing
Agency (MDHA)
Nashville, TN




Submitted by
Economics Research Associates
Washington, DC


In association with
The Walker Collaborative
Nashville, TN


June 2003


ERA Project No. 14981
Table of Contents


Executive Summary                                                             2
              Introduction                                                   2
              Scope of Work                                                  2
              Site Context                                                   3
              Key Findings & Program Recommendations                         4
              General & Limiting Conditions                                 11
Site & Area Analysis                                                        13
              Location                                                      13
              History                                                       14
              Access                                                        15
              Site Characteristics                                          16
              Existing Buildings                                            16
              Policy & Development Context                                  19
              Previous Planning Efforts                                     20
              Recent Area Developments                                      22
Demographic & Economic Profile                                              24
              Introduction                                                  24
              Demographic Characteristics                                   24
              Employment Trends & Forecasts                                 26
Real Estate Market Conditions                                               28
              Introduction                                                  28
              Metropolitan Area Housing Trends                              28
              Rental Market Survey                                          28
              Downtown Housing: How Are Other Cities Doing?                 31
              Commercial Office                                             37
              Hotel/Lodging                                                 38
Demand Analysis & Positioning Strategy                                      40
              Introduction                                                  40
              Demand Analysis & Positioning Strategy                        40




                                                                              1

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN            ERA Project 14981
Executive Summary
Introduction
Economics Research Associates (ERA) of Washington, D.C. and The Walker
Collaborative of Nashville were retained by the Metropolitan Development & Housing
Agency (MDHA), in January 2003 to examine the redevelopment potential of Rolling Mill
Hill, a 34-acre site owned by Metro Government. The feasibility study is the first phase of
a three-stage process to examine redevelopment opportunities at Rolling Mill Hill. The
results of ERA’s feasibility analysis and program recommendations will be used to guide
the preparation of a detailed master plan, which is scheduled for completion in the summer
of 2003. In the third stage, both the feasibility study and master plan will be incorporated
into developer requests for proposals (RFPs) to be issued by MDHA to solicit developer
interest in the site’s redevelopment.

The feasibility analysis was guided by the following objectives as set forth by MDHA:
§   To examine the overall redevelopment potential of Rolling Mill Hill as a mixed-use
    community;

§   To identify a range of uses that are market supportable and create long-term value,
    such as multi-family and attached single-family residential units, office, retail and
    other supporting uses;

§   To outline the timing and logical phasing of market supportable development strategies
    over a short-term (i.e., within five years) and longer-term development horizon;
§   To assess an appropriate mix and allocation of uses that take into account market
    trends in Nashville, including such factors as net absorption of commercial space,
    housing starts, and other indicators that drive demand for various types of real estate;
    and

§   To consider the site’s locational characteristics, including proximity to downtown, its
    competitive position relative to nearby projects, and its regional identity in the
    marketplace.


Scope of Work
The feasibility study for Rolling Mill Hill was completed in two stages. The first stage
included an initial “diagnostic” to fully understand the site’s development context and to
evaluate fundamental sources of demand as part of the creation of a market supportable
program and development strategy. We also conducted a series of industry interviews to
gauge market response to the project’s physical and locational characteristics, assess views
of competitive product types, absorption potentials, target markets, pricing, and
development costs.

The second stage analyzed the site’s economic potential. Using market analysis
methodologies, ERA and the Walker Collaborative examined the site’s competitive
                                                                                               2

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
position for a variety of land uses, and established an “envelope” of supportable
development. We also identified the conditions necessary to reposition the site to support
the kind of employment base, housing, retail, and amenities envisioned by MDHA and the
City. Our work was conducted during February and March 2003.

This Executive Summary highlights our key findings and program recommendations.
Subsequent sections of this report include:
§   Site & Area Analysis

§   Demographic & Economic Profile
§   Real Estate Market Conditions
§   Demand Analysis & Positioning Strategy

For purposes of this study, numerous references are made throughout the report to either
“downtown” or “greater downtown”. We note that this is geographically defined to
include the core CBD as well as adjoining/nearby neighborhoods such as Rutledge Hill,
The Gulch, Midtown, Germantown, and Hope Gardens. This is consistent with the
geographic definition of downtown according to the Nashville Downtown Partnership.


Site Context
Rolling Mill Hill is situated on a bluff overlooking the Cumberland River on the north side
of Hermitage Avenue, which is a secondary arterial that links the site with Nashville’s
Central Business District. The site, which contains seven separate parcels, is located in the
Rutledge Hill Redevelopment Area. It was formerly occupied by Metro General Hospital,
which vacated its facilities in 1998 with the completion of a new hospital on the grounds of
Meharry Medical College. Remaining buildings include the hospital, nursing dormitories
and trolley car barns along Peabody Street. Portions of the site and building stock are used
by various Metro Government agencies, including the Office of Emergency Management,
Metro Police, Public Works, Fleet Services, Metro Fire Department, GSA Radio Shop,
Central Printing Shop, Public Property surplus, and others.
According to information provided by MDHA, approximately 140,000 sq. ft. of usable
space are used among these various agencies. ERA notes that the feasibility study did not
examine or identify opportunities to re-use existing buildings , which will obviously
require more detailed analyses to address structural, engineering, historic preservation, cost
estimating, and environmental issues as the project’s overall redevelopment moves
forward.
From the perspective of marketability, however, ERA believes the site is extremely well
positioned to attract private-sector development over the long-term for a number of
reasons. These include:




                                                                                            3

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
§   A contiguous, 34-acre tract of land under single (public) ownership that provides the
    opportunity to structure a master development agreement and/or to subdivide the site
    for individual developers to provide a mix of uses as market conditions warrant;
§   The site’s location within walking distance (less than one-mile) of the downtown core
    and a potentially “captive” downtown employment base estimated at 25,000 to 30,000
    in the core itself and another 35,000 to 40,000 employees in a broader geography
    extending from “interstate to interstate”;

§   The site’s relative proximity to major “anchors” such as the arena, Country Music Hall
    of Fame, convention center, the Broadway/2nd Avenue entertainment district, and other
    venues;

§   Ongoing transportation improvements, including the opening of the new Gateway
    Boulevard (Franklin Street extension) and Gateway Bridge at the site’s “front door”;
    the bridge and the boulevard to 4th Avenue are reportedly scheduled for completion at
    the end of 2003;
§   Construction of large-scale infrastructure projects, such as the new District Energy
    System power plant, and other civic projects such as the proposed Symphony Hall,
    reflect significant public investment;
§   Momentum on the part of public officials to support new housing both in the core of
    downtown Nashville and in immediately adjacent neighborhoods such as Rutledge
    Hill, The Gulch, Germantown, Hope Gardens, etc.;
§   The ability to utilize public incentives such as Tax Increment Financing (TIF) to assist
    in the site’s redevelopment; and

§   Opportunities to capitalize on the site’s physical characteristics, including outstanding
    views of the downtown skyline and Cumberland River, and varied site topography and
    historic buildings that may (pending further study) accommodate a range of uses such
    as new housing.


Key Findings & Program Recommendations
Our key findings and program recommendations are detailed below. Supporting market
and economic models (referenced as tables) are contained at the end of this section of the
report.
Office (Tables 31 & 32)

From a regional perspective, future employment levels and market demand for office space
are closely linked. In addition, a critical determinant of both future employment and
market demand is the degree to which a community or specific site is competitive. Factors
defining this competitive positioning include local and regional access, overall physical
characteristics such as highway frontage and visibility, proximity to economic activity such
as job creation, business costs such as property taxes and the like.

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
As a rule, office uses require access to a qualified labor pool, contemporary
floorplates/building configurations, adequate (and oftentimes the provision of extra)
parking, nearby convenience and supporting retail and services and pedestrian-scale
amenities.

§   In terms of demand modeling, ERA estimates that future employment growth in office-
    using sectors will generate demand for roughly 8.0 million sq. ft. of office space
    across the MSA between 2000-2010.

§   Presuming that downtown Nashville maintains its competitive position (fair share) of
    the region’s office inventory at 24% (and this is uncertain based on a decline in market
    share from 28% in 1997), yields 1.9 million sq. ft. of future demand allocated to the
    CBD. In other words, downtown remains as competitive in 2010 as it is today as
    compared to other office submarkets in the region.
Given limited job growth in the near-term as well as a glut of vacant office space in both
the CBD and suburban submarkets, however, it is highly unlikely that any speculative
office development will move forward in downtown Nashville over the next several years.
As the economy recovers and job growth enhances demand for space, it will initially be
absorbed by either existing vacant and/or available sublease space first; in downtown, that
amounts to almost one million sq. ft.
Furthermore, MDHA estimates that approximately 34 acres of land (currently used as
surface parking lots) ring the edge of the CBD. As economic conditions strengthen, these
sites may be more competitively positioned to attract commercial office development given
their proximity to the CBD. As a result, ERA believes that opportunities for speculative
office development at Rolling Mill Hill are limited.
There may be a play, however, to enhance prospects for limited commercial office
development at Rolling Mill Hill by setting aside that portion of the site with frontage on
the new Gateway Boulevard to attract an owner-user. Brokers indicate that downtown is at
a competitive disadvantage relative to suburban office submarkets in the cost premiums
associated with parking. The provision of free parking and lower land costs as well as
specific locational advantages of Rolling Mill Hill (e.g., easy proximity to CBD, Gateway
Boulevard frontage, visibility, etc.) may be used as bargaining chips to attract an owner-
user.

§   It would appear reasonable that Rolling Mill Hill could capture a small increment of
    total demand—say on the order of 3% to 7%—given the site’s advantages as noted
    elsewhere in this report. This capture suggests a planning target of roughly 70,000 sq.
    ft. to 150,000 sq. ft. as a possible office program for Rolling Mill Hill. Depending on
    site configuration, parking requirements and densities, a building prototype could be 2
    to 4 floors with floorplates in the range of 20,000 sq. ft.


                 Planning Target-Office: 70,000 to 150,000 Sq. Ft.
                           Oriented to Owner-User(s)

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                      ERA Project 14981
Housing (Tables 33 & 34)

A critical mass of housing at Rolling Mill Hill is extremely important. It serves to create a
neighborhood, fosters demand for other uses such as convenience and service retail, and
reinforces the importance of proximity to downtown businesses (and the office market)
with a potential supply of labor and consumers with disposable incomes. Importantly,
downtown housing has to successfully compete in the regional marketplace. It cannot,
however, replicate suburban product.

To ensure the overall marketability and success of both rental and for-sale housing at
Rolling Mill Hill, niche opportunities must be created. For example, The Cumberland
offers amenity value with its core downtown location, strong views and some in-house
offerings (e.g., business center). However, The Cumberland does not provide the
characteristics to differentiate it from its counterparts in outlying locations.
By comparison, the rehabilitation of the Bennie Dillon Building offers a unique, high-
quality product with very high finishes (e.g., granite countertops, hardwood and Terrazzo
flooring). This quality level was reflected in very rapid absorption when the project was
delivered and consistently high occupancy levels since despite the lack of amenities in the
surrounding neighborhood.
Moreover, Mercuryview Lofts has raised the threshold of unit quality and achievable rental
rates ($1.45 to $1.84 per sq. ft.) for new housing in downtown Nashville, much as the
significant, earlier success in rents and leasing achieved at the Bennie Dillon Building
($1.41 to $1.82 per sq. ft.). Granted both of these are small projects that have continued
the “incremental” delivery of new residential units to the greater downtown. However,
ERA believes that the precedent has been established for subsequent deliveries at
Rolling Mill Hill and in The Gulch to achieve similar quality levels with respect to
architectural design and unit finishes as well as the ability to command
commensurate rental rates (see Pricing Strategy below).
“Performance Gap” Ratio
There are several ways to examine market potentials for residential development. One
method includes target marketing, which measures selected “lifestyle clusters” of
households living in specific trade areas with a propensity to live in downtown housing.
Another method is to measure the residents-to-jobs ratio against regional comparisons. As
detailed feasibility for specific housing units moves forward, yet another method is to
“income-qualify” potential target households.
§   For this study, ERA examined the relationship between downtown employment,
    housing and population in selected similar cities across the Southeast in order to
    understand how Nashville compares to similar cities in attracting residents to live
    downtown. This is known as a “performance gap” ratio. In Section 3 of the report,
    ERA has profiled downtown demographics, housing development activity and product
    mix, and the use of incentives designed to encourage the development of downtown
    housing in Charlotte, Chattanooga, Raleigh, Memphis and Knoxville.

                                                                                              6

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
§   The 3,800 residents living in greater downtown Nashville represent only 5.7% of
    downtown’s approximately 67,000 employees, or roughly one resident for every 19
    jobs. This is well below other cities in the Southeast, such as Chattanooga (1 per 5)
    and Charlotte (1 per 7).

Induced Demand Scenario
ERA has estimated potential housing demand at Rolling Mill Hill under an Induced
Demand scenario that relies on a series of critical assumptions, among which include:

§   The creation of a high-quality, mixed-use (primarily residential) neighborhood that
    serves to reinforce the competitive position of Rolling Mill Hill in the marketplace;
§   Funding of the “public realm” (e.g., streetscape, amenities, etc.) is provided by the
    public-sector both on- and off-site (i.e., in adjacent areas such as Rutledge Hill);
§   The successful attraction of new commercial office tenants to the CBD, together with
    other public policy initiatives designed to strengthen downtown's competitive position
    in the region; and
§   The provision of incentives such as TIF financing which may be critical in funding
    certain elements of the project such as infrastructure.

Under these assumptions, CBD employment increases from its current share of 10% to
roughly 12.5% of total MSA employment. This would result in several thousand new jobs
in downtown Nashville by 2010 under assumed growth rates.

As a result of these and other public policy initiatives designed to enhance the overall
marketability of downtown Nashville for housing, the model assumes that the share of
employees working and living in downtown doubles from its current level of 5.7%. That
is, instead of one resident for every 19 jobs in downtown Nashville, it produces one
resident for every nine jobs. As a result, Nashville achieves a penetration ratio of
residents-to-employees comparable to selected cities in the Southeast such as Chattanooga
and Charlotte.
§   In terms of demand modeling, this methodology produces a net gain in downtown
    residents of approximately 7,500. Assuming an average household size of 1.7 persons
    per household would generate demand for more than 4,400 new housing units in the
    greater downtown—from “interstate to interstate”.
§   The next step is to estimate the capture of this universe of potential new downtown
    households to Rolling Mill Hill. Of course, the project’s ability to successfully capture
    is based on critical assumptions related to location, visibility, product quality,
    amenities and overall project environment, critical mass and other factors.

§   Under an Induced Demand model, competition for a larger pool of potential downtown
    residents increases from additional sites in play. For example, the creation of public
    policy incentives (not defined here) could be expected to solicit the interest of an
    increasing number of property owners to redevelop specific parcels in various locations
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
    across the downtown. As a result, the ability of Rolling Mill Hill (and The Gulch
    project) to capture a dominant share may be reduced.
§   The Induced Demand model assumes that Rolling Mill Hill captures from 20% to
    30% of potential downtown residents. In addition, an inflow factor of 5% considers
    other potential demand sources (e.g., households relocating to Nashville from other
    metropolitan areas, from the suburbs to downtown, acquiring second homes and
    households desiring a reverse commute).

§   This analysis results in potential market support for approximately 900 to 1,400
    housing units at Rolling Mill Hill (by 2010) or average annual absorption of roughly
    100 to 200 units per year depending on market conditions.

§   At a minimum, ERA suggests that the unit mix include at least 35% owner-occupied
    units—or roughly 300 to 500 units. This will serve to reinforce Rolling Mill Hill as a
    viable downtown neighborhood.

§   ERA compared the site’s carrying capacity against market potentials assuming a 20%
    allocation to on-site circulation and parking and assumed densities ranging from 20
    units per acre for moderate-density housing to as much as 35 to 50 units per acre for a
    high-density housing product. While this is clearly one of the primary objectives of
    the Phase II master plan, this suggests that the site can accommodate the majority of
    the 900 to 1,400 units identified in the housing demand analysis.

                 Planning Target: 900 to 1,400 New Housing Units
                    Minimum of 35% Owner-Occupied Product


Absorption, Phasing & Pricing Strategy
§   In terms of phasing, the site is of sufficient size and variations in topography may
    enhance the ability to “parcelize” the site and phase development opportunities (and
    product types) in response to changing market conditions. Master planning efforts
    should carefully identify “pad-ready” sites that reflect the ability to phase (i.e.,
    infrastructure to stub) and accommodate development of specific uses.

§   Upon completion of critical infrastructure necessary to deliver pad-ready sites, it is
    likely that the project’s initial phase will encompass multi-family rental housing. (That
    is, for-sale housing is less likely in an untested location). Further, to achieve a critical
    mass of units as well as economies-of-scale (e.g., on-site project management),
    national housing developers would typically seek to develop on the order of 150 to 200
    multi-family units in the project’s initial phase (say 1 to 2 years).

§   Master planning for subsequent phases (say 2 to 4 years) should identify other pad sites
    at Rolling Mill Hill that could accommodate additional large-scale projects (greater
    than 150 units per project) as well as in-fill opportunities for delivery of for-sale units
    (say 25 to 30 units per project). Phasing and siting should carefully consider
    opportunities to accommodate owner-occupied housing in the form of condominium

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
    flats, lofts and townhouses on the order of 35% of the total (or roughly 300 to 500
    units).
§   Based on ERA’s market analysis, average annual absorption for residential
    development at Rolling Mill Hill is likely to be on the order of 100 to 200 units per
    year depending on market conditions. Of course, this is a substantial jump from
    historic deliveries of new housing in greater downtown. As noted, these estimates
    assume the successful attraction of new commercial office tenants to the CBD, together
    with other public policy initiatives designed to strengthen downtown’s competitive
    position in the region. Public initiatives (e.g., incentive-based) designed to reinforce
    market opportunities for new housing in the areas that comprise the greater downtown
    are considered equally important.
§   Consideration should be given to identifying a location on the site to accommodate a
    high-quality, high-end for-sale product in a later phase. This should be sited to tap the
    site’s advantages, such as commanding views of the CBD skyline as well as the
    Cumberland River.
§   A pricing strategy should be flexible to reflect the mix of products, unit types and
    sizes, and overall quality levels for individual projects. For rental units, ERA’s survey
    of competitive and comparable properties located in greater downtown indicates an
    average price in the range of $1.35 per sq. ft. While detailed feasibility will be
    required as specific projects move forward, as a rule, a suggested pricing strategy for
    market-rate, multi-family units should generally fall in the range of $1.35 to $1.50 per
    sq. ft. (in current dollars).

§   ERA also believes that there is a strong opportunity at Rolling Mill Hill to develop
    high-quality, high-end rental units on par with other recent projects in greater
    downtown, including Mercuryview Lofts and the Bennie Dillon conversion. This
    presumes that such units are carefully sited to take advantage of views and on-site
    amenities and offer both high quality interior and exterior finishes and design. As
    noted, these projects command monthly rents ranging from $1.40 to $1.85 per sq.
    ft.—the top end of the market—and both projects enjoyed ready market acceptance
    and immediate absorption upon delivery.
§   It is more likely, however, that early-on housing development at Rolling Mill Hill—
    particularly if introduced by a national developer and assuming delivery of 150 to 200
    units—will command average rents in the $1.35 to $1.50 per sq. ft. range. Concurrent
    development of smaller (say 30 units or less), high quality rental buildings at higher
    price points as noted above also appear to be market supportable.
Retail & Restaurants (Table 35)
For a number of reasons, ERA does not believe that Rolling Mill Hill is an appropriate
location for large-scale destination retail or food and beverage uses. It is unlikely that such
uses could effectively compete with the critical mass of entertainment and dining located
along both Broadway and 2nd Avenue. Moreover, household densities—even with a

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
significant amount of new housing on-site—are insufficient to support large-scale retail
uses.
However, 1,000+ units of new housing, combined with demand generated by on-site
employment as well as pass-through traffic on Gateway Boulevard and Hermitage Avenue
could be expected to support a small increment of convenience and service retail uses.
§   Based on limited potential capture on the order of 10% to 20% of annual on-site
    household and employee expenditures as well as assumed productivity (i.e., annual
    sales of $200 per sq. ft.), ERA estimates potential market support for roughly 5,000 to
    8,000 sq. ft. of general retail uses. These uses will require a highly visible location on
    the site.

§   Presuming a seasoned restaurant operator(s) on a highly visible corner with excellent
    visibility (e.g., at the intersection of Gateway Boulevard and Hermitage Avenue),
    ERA believes that limited market support exists for a small food & beverage program.
    Based on conservative capture rates as well as assumed sales productivity of $300 per
    sq. ft., we estimate potential market support for roughly 6,000 to 8,000 sq. ft. of food
    & beverage uses. This could be expected to enhance the site’s overall marketability
    for end-user office tenant(s).
§   ERA notes that the retail demand analysis does not consider the impact of potential
    demand created by a destination use in the trolley barns (e.g., arts-related, cultural,
    creative industries, etc.). There does not appear to be a readily apparent “anchor” or
    any supporting uses that could occupy these buildings.

                     Planning Target: 10,000 to 16,000 Sq. Ft. of
                         Supporting Retail & Restaurants


Grocery Store (Table 35)

As the market for downtown housing increases over time and a critical mass of units are
built at Rolling Mill Hill, at The Gulch and on in-fill sites in Rutledge Hill, supporting uses
are likely to follow. Given reported market interest from several grocery stores in scouting
potential sites on the periphery of downtown Nashville, ERA has examined—on a
preliminary basis—potential market support for an urban prototype grocery store.
§   The demand model assumes that a grocery store is able to capture or penetrate a
    minimum of 30% of on-site household expenditures on groceries as well as 15% to
    20% of expenditures from households residing within a three-mile radius of Rolling
    Mill Hill. (This would encompass the area extending from The Gulch to portions to
    East Nashville).
§   Capturing grocery expenditures at annual sales productivity of $550 per sq. ft.
    translates into potential demand for a grocery store in the range of 23,000 to 32,000 sq.
    ft. ERA notes that extensive market research will be required.


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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
             Planning Target-Grocery Store: 23,000 to 32,000 Sq. Ft.
                         Appears Market Supportable


Lodging (Table 36)
As noted in our analysis of hotel market conditions, given current market dynamics and
significant difficulties in the capital markets for hotel development, near-term opportunities
for new hotels in downtown Nashville will be limited. As a rule, the capital markets will
require average annual occupancies of 70% or greater before consideration is given to
financing new hotel development. This would suggest that recent or ongoing public
investment in economic “drivers” that generate visitor and tourism-related traffic to
downtown Nashville are critical.
Current market conditions and locational characteristics suggest that Rolling Mill
Hill is not an appropriate location for hotel development. While an on-site office
program of 70,000 to 150,000 sq. ft. could be expected to generate some incremental
demand for hotel roomnights (estimated at 20 to 40 rooms), this can be adequately met
among currently unoccupied rooms at both full- and limited-service properties in the
downtown hotel inventory.
Our recommended program is summarized in the attached table.


General & Limiting Conditions
Every reasonable effort has been made to ensure that the data contained in this study reflect
the most accurate and timely information possible. These data are believed to be reliable.
This study is based on estimates, assumptions and other information developed by
Economics Research Associates from its independent research effort, general knowledge of
the market and the industry, and consultations with the client and its representatives. No
responsibility is assumed for inaccuracies in reporting by the client, its agent and
representatives or any other data source used in preparing or presenting this study.
No warranty or representation is made by Economics Research Associates that any of the
projected values or results contained in this study will actually be achieved.
Possession of this study does not carry with it the right of publication thereof or to use the
name of "Economics Research Associates" in any manner without first obtaining the prior
written consent of Economics Research Associates. No abstracting, excerpting or
summarizing of this study may be made without first obtaining the prior written consent of
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consent of Economics Research Associates. This study may not be used for purposes other
than that for which it is prepared or for which prior written consent has first been obtained
from Economics Research Associates.
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
This study is qualified in its entirety by, and should be considered in light of, these
limitations, conditions and considerations.




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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
                                                   TABLE 31
                           NON-AGRICULTURAL EMPLOYMENT TRENDS & PROJECTIONS
                                     FOR THE NASHVILLE MSA, 1990-2010
                                       Rolling Mill Hill Feasibility Study




                                          TN Dept. of Labor              Woods & Poole              CHANGE: 2000-2010
               CATEGORY                   1990         2000             2000       2010               %       Amount

   Construction                            23,800        34,400          55,700        61,000            9.5%         3,273
   Manufacturing                           88,500        96,900         100,000       102,000            2.0%         1,938
   Transp/Comm/Public Utilities            28,700        36,600          40,500        46,500           14.8%         5,422
   Wholesale & Retail Trade               124,200       163,400         196,300       234,100           19.3%       31,465
   Finance/Insurance/Real Estate           31,100        41,700          76,200        86,900           14.0%         5,856
   Services                               136,600       221,600         306,500       401,600           31.0%       68,757
   Government                              69,000        85,900          81,200        91,800           13.1%       11,214
TOTAL - NASHVILLE MSA:                    501,900       680,500         856,400     1,023,900           19.6%      127,925
Annual % Change                                -           3.6%              -          19.6%                       (2)

Difference:                                                             175,900
                                                                         (1)


(1) This includes part-time and self employment (i.e., employees that do not contribute to state unemployment insurance).
(2) Estimates for future job growth, by sector, were calculated by applying the Woods & Poole growth rate (2000-2010) to
    the state's Department of Labor 2000 base year employment.

SOURCE: TENNESSEE DEPARTMENT OF LABOR & WORKFORCE DEVELOPMENT; WOODS & POOLE, INC.;
      ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                           TABLE 32
                                 OFFICE DEMAND ANALYSIS
                  FOR THE NASHVILLE MSA & DOWNTOWN NASHVILLE, 2000-2010
                               Rolling Mill Hill Feasibility Study


                                                        SQ. FT.          DEMAND FOR NEW SPACE
                                           % OF            PER                   (In Sq. Ft.)
                                          OFFICE        OFFICE            Actual            Estimates
              CATEGORY                    USERS           USER          1990-2000           2000-2010
DEMAND ANALYSIS                                            (1)
   Construction                                 10%            175          185,500             57,282
   Manufacturing                                20%            175          294,000             67,830
   Transp/Comm/Public Utilities                 50%            200          790,000            542,222
   Wholesale & Retail Trade                     15%            175        1,029,000            825,948
   Finance/Insurance/Real Estate                80%            250        2,120,000          1,171,102
   Services                                     25%            225        4,781,250          3,867,607
   Government                                   50%            175        1,478,750            981,185
TOTAL DEMAND:                                   36%            196       10,679,000          7,513,000
                                                Estimates                                   Rounded
Plus
   Vacancy Adjustment (Rounded)                             (2)             267,000             188,000
   Cumulative Replacement Demand (Rounded)                  (3)             534,000             376,000

TOTAL OFFICE SPACE DEMAND (IN SQ. FT.):                                  11,480,000           8,077,000
Average Annual                                                            1,148,000             807,700


FAIR SHARE ANALYSIS
Allocation to Downtown Nashville
    Current Fair Share                                      (4)                                  24.3%
    Total Demand (In 000s Sq. Ft.)                                                           1,966,000
                                                                                            Rounded
Capture to Rolling Mill Hill
   Say                                                                         3.5%                7.5%
                                                                             68,800 to          147,500


(1) Reflects office-using employees in each employment sector requiring office space.
(2) This allows for a 2.5% "frictional" vacancy rate in new space delivered to the market.
(3) This represents new space required by existing businesses to replace obsolete or otherwise un-
    usable space. This is assumed to represent 5% of total demand.
(4) This represents Downtown Nashville's fair share of office space demanded by future employment
    growth (see Table 18). This analysis assumes that the CBD's fair share is held constant over
    time (i.e., Downtown remains as competitive in 2010 as it is today as compared to other office
    submarkets in Davidson County).

SOURCE: ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                               TABLE 34
           EMPLOYMENT-BASED HOUSING DEMAND ANALYSIS
               FOR DOWNTOWN NASHVILLE, 2002-2010
                       "INDUCED" SCENARIO
                   Rolling Mill Hill Feasibility Study


                                                 2002                 2010
Office Employment
Regional Office Inventory (Sq. Ft.)            24,531,694
CBD Office Inventory (Sq. Ft.)                  5,970,068
     CBD as % of Region                             24.3%

MSA Employment                                    680,500              808,425
CBD Employment                          (1)        67,100              101,100
   As % of MSA                          (2)          9.9%                12.5%

Downtown Housing Potentials
Induced Demand Analysis
    Current Share Doubles @                                              11.2%
Total - Downtown Residents:                                             11,321
    Less Existing Residents                                              3,757
Net Gain - Residents:                                                    7,564
    Assumed Persons Per HH                                                1.70
Net Gain - Downtown Housing Units:                                       4,450

Project Capture
    Say                                 (3)         20.0%    to          30.0%
    Plus Inflow @                       (4)          5.0%                 5.0%
Supportable Units (Rounded):                          900                1,400




(1) As estimated by the Nashville Downtown Partnership.
(2) Assumes downtown's share of regional employment increases as a
    result of a targeted economic development/tenant recruitment strategy
    and other public policy initiatives designed to reinforce downtown Nashville
    as the region's primary employment center.
(3) Under an Induced Scenario, competition for a larger pool of potential
    downtown residents increases from additional sites in play, thus reducing
    project capture.
(4) Includes other market segments (e.g., households relocating to Nashville
    from other metropolitan areas with downtown/urban housing).

SOURCE: NASHVILLE DOWNTOWN PARTNERSHIP; MDHA; ECONOMICS
      RESEARCH ASSOCIATES, MARCH 2003.
                                       TABLE 35
                         POTENTIAL RETAIL EXPENDITURES
                          AND SUPPORTABLE SPACE, 2010
                           Rolling Mill Hill Feasibility Study

                                                            Induced Scenario @
                                                        20% Capture    30% Capture
RESIDENT EXPENDITURE POTENTIALS
On-site Households
    Total                                                         900            1,400

Average HH Income (In Current $)             (1)        $      73,140    $      73,140

Household Expenditure Potentials (As % of Household Income)
(1) General Retail                         12.9% $     8,493,278         $   13,211,766
    Food & Beverage                         6.6%       4,314,909              6,712,081
    Groceries                               9.6%       6,322,839              9,835,527

Resident Expenditure Potentials:                        $   19,131,026   $   29,759,373

On-site Employees
    Sq. Ft.                                                    68,800          147,500
    No. of Employees @                            200             344              738
                                          sq. ft. per

Annual Employee Expenditure Potentials
   General Retail                                       $          750   $         750
   Food & Beverage                                               1,500           1,500

Employee Expenditure Potentials:                        $     774,000    $    1,659,375

SUPPORTABLE SPACE: GENERAL RETAIL
Households
   On-site                                              $    8,493,278 $     13,211,766
   Estimated Capture Rate @                                      10.0%            10.0%
Captured Expenditures:                                  $      849,328 $      1,321,177
   Required Productivity          (2)                   $          200 $            200
Subtotal - Households:                                           4,247            6,606

Employees
    On-site                                             $     258,000 $        553,125
    Estimated Capture Rate @                                    20.0%            20.0%
Captured Expenditures:                                  $      51,600 $        110,625
    Required Productivity                    (2)        $         200 $            200
Subtotal - Employees:                                             258              553

Plus Inflow @                                (3)                 5.0%             7.5%

Supportable Space - General Retail:                              4,730           7,696
Pg. 2 of 2                                      TABLE 35 (Continued)
                                         POTENTIAL RETAIL EXPENDITURES
                                          AND SUPPORTABLE SPACE, 2010
                                          Rolling Mill Hill Feasibility Study

                                                                               Induced Scenario @
                                                                           20% Capture    30% Capture
             SUPPORTABLE SPACE: FOOD & BEVERAGE
             Households
                 On-site                                               $       4,314,909 $        6,712,081
                 Estimated Capture Rate @                                           5.0%               7.5%
             Captured Expenditures:                                    $         215,745 $          503,406
                 Required Productivity          (2)                    $             300 $              300
             Subtotal - Households:                                                  719              1,678

             Trade Area Households
  27,036         0-3 Miles                                             $      34,051,000 $       34,051,000
                 Estimated Capture Rate @                                           3.5%               3.5%
             Captured Expenditures:                                    $       1,191,785 $        1,191,785
                 Required Productivity                                 $             300 $              300
             Subtotal - Households:                                                3,973              3,973

             Employees
                 On-site                                               $         516,000 $        1,106,250
                 Estimated Capture Rate @                                          20.0%              25.0%
             Captured Expenditures:                                    $         103,200 $          276,563
                 Required Productivity                        (2)      $             300 $              300
             Subtotal - Employees:                                                   344                922

             Plus Inflow @                                    (3)                  20.0%              25.0%

             Supportable Space - Food & Beverage:                                  6,043              8,216

             SUPPORTABLE SPACE: GROCERIES
             Households
                 On-site                                               $       6,322,839 $        9,835,527
                 Estimated Capture Rate @                                          30.0%              30.0%
             Captured Expenditures:                                    $       1,896,852 $        2,950,658
                 Required Productivity                        (2)      $             550 $              550
             Subtotal - Households:                                                3,449              5,365

         Trade Area Households (Within 3 Miles)
             Total Households                                                     27,036             27,036
$ 26,375     Total Expenditures                                        $      68,493,566 $       68,493,566
             Estimated Capture Rate @                                              15.0%              20.0%
         Captured Expenditures:                                        $      10,274,035 $       13,698,713
             Required Productivity                            (2)      $             550 $              550
         Subtotal - Employees:                                                    18,680             24,907

             Plus Inflow @                                    (3)                   5.0%               7.5%

             Supportable Space - Groceries:                                       23,235             32,542

             (1) Assumes current average household incomes of $60,000 grown at 2% per year.
             (2) Required productivity is the estimated minimum annual performance (in sales per sq. ft.)
                 required by all general retail and restaurant tenants.
             (3) Represents potential expenditures from other market segments to Rolling Mill Hill, such
                 as pass-through traffic on the Franklin Connector, business visitors to on-site
                 employees, etc.

             SOURCE: ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                  TABLE 36
                                 INCREMENTAL HOTEL ROOMNIGHT DEMAND
                                      Rolling Mill Hill Feasibility Study


                                                                                  Incremental Room Demand @
                                                                                 3.5% Capture    7.5% Capture

New Office Square Footage                                                                68,800        147,500
    Employment @                          200 Sq. Ft. Per Employee                          344            738
    Annual Visitors (240 Workdays) @    20.0%                                            16,512         35,400
    % of Hotel Stays                    50.0%                                             8,256         17,700
    Length of Stay                        1.5 nights                                     12,384         26,550
    Party Size                                                                             1.25           1.25
    Annual Roomnights Generated                                                           9,907         21,240
Subtotal-Rooms Demanded by Office Employees:                   (1)                           19             41



POTENTIAL HOTEL DEMAND:
    Gross Potential Room Demand                                                              19             41
    Less Existing Room Demand to Achieve 70% Occupancy                (2)                  (101)          (101)
Net Potential Room Demand:                                                                  (82)           (60)


(1) Assumes occupancy of 70% over 365 days.
(2) Represents existing excess/vacant rooms available for occupancy levels to increase to 70%.

SOURCE: ECONOMICS RESEARCH ASSOCIATES, MARCH 2003
                                      TABLE 37
                                PROGRAM SUMMARY
                          Rolling Mill Hill Feasibility Study

                                                         INDUCED SCENARIO @
                 LAND USE                              20% Capture 30% Capture

Site Information
     Size (Gross Acres)                                           34.0             34.0
     Allocation to Circulation/Parking @     20.0%                 6.8              6.8
Net Usable Land Area (NULA):                                      27.2             27.2

Housing
TOTAL HOUSING UNITS - MARKET:                                     900            1,400

Moderate-Density Housing                      (1)
    NULA Allocation @                                           35.0%            25.0%
    Acres                                                          9.5              6.8
    Density (Units Per Acre)                                        20               20
Subtotal - Units:                                                 190              136

High-Density Housing                          (2)
    NULA Allocation @                                           65.0%            75.0%
    Acres                                                        17.7             20.4
    Density (Units Per Acre)                                       35               50
Subtotal - Units:                                                 619            1,020

CARRYING CAPACITY (UNITS):                                        809            1,156

Commercial (Retail & Office)
General Retail                                (3)                4,700           7,700

Food & Beverage                                                  6,000           8,200

Grocery Store (Urban Prototype)                                 23,000          33,000

Office                                                          68,800         147,500

TOTAL COMMERCIAL (Sq. Ft.):                                  102,500           196,400

(1) Moderate-density housing prototype could include low-rise condominium flats,
    garden apartments (3 to 4 floors), and/or stacked townhouses. Assumes an
    average unit size of 1,200 sq. ft.
(2) High-density housing prototype could include mid-rise buildings (4 to 8 floors),
    and high-rise, high-end tower(s) of up to 15 floors in selected locations of the
    site. Assumes an average unit size of 1,200 sq. ft.
(3) Includes demand generated only by on-site residents and office employees.
    Does not include potential demand created by a destination use in the
    trolley barns (e.g., arts-related, cultural, creative industries, etc.)..

SOURCE: ECONOMICS RESEARCH ASSOCIATES, APRIL 2003.
Site and Area Analysis
The site analysis is intended to examine the site’s locational and physical characteristics as
they may inform overall marketability for redevelopment. As part of this analysis, ERA
and The Walker Collaborative reviewed previous planning studies, including zoning, as a
means of understanding the policy and planning implications on redevelopment
opportunities at the site. This is summarized below.


Location
Rolling Mill Hill is situated on a bluff overlooking the Cumberland River on the north side
of Hermitage Avenue, which is a secondary arterial that links the site with Nashville’s
Central Business District (CBD). As illustrated in the aerial photograph below, the
property is strategically located to the immediate southeast of the CBD in the Rutledge Hill
neighborhood.




Source: Nashville Civic Design Center’s Rolling Mill Hill Report - 2002


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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
History
Although the site is considered part of the Rutledge Hill neighborhood, both Rolling Mill
Hill and Rutledge Hill were developed as separate areas. Davidson Academy, a military
academy started in 1796, was the earliest development in Rutledge Hill. By the mid-19th
Century, Rutledge Hill was sparsely developed with stately homes, while Rolling Mill Hill
contained a public reservoir and pump house, lumber mills and rock quarries. It was also
during this period that Nashville’s grid system of streets and blocks were extended into
both areas.
In 1872 the Tennessee School for the Blind was constructed on Rolling Mill Hill, and in
1890, the City Hospital was built. These two institutions were the predominant uses on the
site through the mid-20th Century. The City Hospital—later, Metro General Hospital—
expanded over time, with key additions in 1911and 1931. The western-most portion of the
site has contained transportation-related uses since the early-20th Century; in fact, the
City’s horse stables were built around 1914 and the brick “car barns” used for storing
trolley cars were developed later.
The site remained in institutional use during most of the 1900s. In 1959 the School for the
Blind was demolished following its relocation, allowing additional room for hospital
expansion. However, Metro General Hospital vacated its facilities in 1998 with the
completion of a new facility on the grounds of Meharry Medical College. Today,
remaining buildings at Rolling Mill Hill include the hospital, nursing dormitories and
trolley car barns along Peabody Street.
Portions of the site and building stock are used by various Metro Government agencies,
including the Office of Emergency Management, Metro Police, Public Works, Fleet
Services, Metro Fire Department, GSA Radio Shop, Central Printing Shop, Public Property
surplus, and others.

According to information provided by MDHA, approximately 140,000 sq. ft. of usable
space are used among these various agencies. ERA notes that the feasibility study did not
examine or identify opportunities to re-use existing buildings, which will obviously require
more detailed analyses to address structural, engineering, historic preservation, cost
estimating, and environmental issues as the project’s overall redevelopment moves
forward.




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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                      ERA Project 14981
Access
ERA believes that a key advantage of Rolling Mill Hill is its proximity to nearby
streets and highways providing excellent regional access. Local streets include
Hermitage Avenue, which provides primary access to the site and serves as its southern
boundary. According to MDHA, average daily traffic counts on Hermitage are
approximately 16,000 trips per day.




                Hermitage Avenue
Two other key roadways flank the eastern and western ends of the site:

§   I-40, at the eastern end of the site with an interchange to Hermitage Avenue, enhances
    regional access to the site; and
§   The new Gateway Bridge and Gateway Boulevard (Franklin Street extension), at the at
    the site’s “front door”; the bridge and the boulevard to 4th Avenue are reportedly
    scheduled for completion at the end of 2003. This will provide immediate and direct
    access to Rolling Mill Hill (and the southern edge of the CBD) for all of East Nashville
    via Shelby Street.
The Cumberland River and a rail line serve as the site’s northern and eastern boundaries.




                                                                                            15

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
Site Characteristics
The site’s most significant feature is its location on a hill. In fact, the site constitutes the
most southeasterly hill among a chain of hills that surround downtown Nashville. The
geology is comprised of limestone, which is evident in locations adjacent to some of the
historic hospital buildings that were quarried. For the most part, the terrain is gently
rolling; however, a significant difference in elevation separates the trolley barns from the
historic hospital buildings. In terms of phasing, the site is of sufficient size and
variations in topography may enhance the ability to “parcelize” the site and phase
development opportunities (and product types) in response to changing market
conditions.




                 Entrance from Hermitage Avenue


Existing Buildings
While this feasibility study did not examine existing or potential historic building status,
previous studies indicate that Rolling Mill Hill contains several buildings that are historic
and/or architecturally significant and worthy of preservation. The most significant
structures remaining on the site are described below:
City Hospital
The northern-most section of this building is the most historic. It includes the original
1890 section (the oldest structure on the site) as well as the 1911 copper-roofed East Wing
addition overlooking the Cumberland River. The most prominent portion of the hospital is
the 1932 brick addition with Hermitage Avenue frontage. It is considered one of
Nashville’s best examples of Art Deco architecture. Several other post-WWII brick
buildings were added over time and do not appear to have either historic or architectural
significance.

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                           ERA Project 14981
Pending further historic research, ERA and The Walker Collaborative believe that since
many of these structures do not materially contribute to the site’s character, they should be
considered candidates for demolition in order to enlarge the size of “pad sites” to
accommodate potential new development.

Howse Wilson Hall
 This brick structure was built in 1922 as a school for nurses and enlarged in 1931 when
the original City Hospital was expanded. Its scale, materials and architectural character are
very similar to that of the original City Hospital building and its 1911 addition.




City Hospital                                             Howse Wilson Hall
Boiler House & Smokestack

Located adjacent to the original hospital buildings, the brick boiler house and smokestack
were constructed in 1927. Although the smokestack would be considered functionally
obsolete for the site today, it is an imposing structure that serves as a prominent reminder




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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
of the property’s historic and functional past.




    Historic Trolley Car Barns

Car Barns
The site also features eight one-story brick car barns built in the early 1920s (in the same
location as the City stables) to service and repair the City’s electric streetcars. According
to previous planning studies, the car barns are representative of the evolution of
Nashville’s transportation system. The physical relationship of these simple but well-
designed structures creates a very human-scale—particularly between the buildings—and
an urbane environment that, pending further study, may accommodate particular uses such
as arts-related live/work studios.
Other Site Features

Beyond the site’s existing historic buildings described above, there are several other
features on the site that should be considered in the master planning process and
incorporated into the plan to reinforce the project’s overall identity. For instance, an
attractive stone wall and piers adorn the site’s key entry points off of Hermitage Avenue.
Sections of the wall also extend to other portions of the site. Based upon the similar
appearance of stone used in the site’s early-1930s development, these stone walls likely
date from the same era.




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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
Also, while no known physical remnants have been identified, the Rolling Mill Hill site
played a significant role in the Battle of Nashville in the Civil War in December 1864. A
Union line was anchored near the site at Murfreesboro Pike. In addition, a historic marker
located on the site’s Hermitage Avenue frontage interprets the old water works plant.


Policy & Development Context

Sub-Area Plan & Zoning
For planning purposes, Davidson County contains several sub-areas in its Comprehensive
Plan, which address land use, densities, infrastructure, public facilities, and development
character. These plans are periodically updated utilizing public input. Further, zoning
regulations should be consistent with sub-area plans.

Rolling Mill Hill is located in the southern portion of Sub-area 9. Sub-area 9 encompasses
the core of downtown and includes 1,780 acres. In general terms, a major focus of
planning efforts for Sub-area 9 includes the creation of a "24-hour downtown," and
provides for a mix of residential, retail, entertainment, and office uses. A primary goal
for Sub-area 9 is to strengthen the number of residents living downtown. This is
based on the premise that an increase in the number of downtown housing units and
supporting retail serving downtown residents would create more activity in the downtown
as a whole. ERA and The Walker Collaborative note that because Rolling Mill Hill
occupies only 34 acres of this larger, 1.2 square-mile area, the sub-area plan is not very
detailed regarding this site. Consequently, it would appear to defer to other plans that have
been created specifically for Rutledge Hill and/or Rolling Mill Hill. These are summarized
below.

Zoning
Two general zoning categories apply to Rolling Mill Hill—“base” zoning and “overlay”
zoning:

§   The site’s base zoning dictates land uses and most key bulk requirements related to the
    scale and location of buildings. Rolling Mill Hill is zoned Core Frame (CF), a
    classification that is applied to most of the Central Business District. It allows for the
    most diverse and intensive range of uses in Nashville-Davidson County.
§   The Urban Zoning Overlay District (UZO) is a special zoning district designed to
    address specific situations. Overlay zoning can be placed "over" base zoning for a
    specific parcel or area to alter some of the regulations. The UZO district was created
    to improve/simplify regulations regarding development in older areas of Nashville.
    Most development in UZO districts occurred before World War II. However, current
    zoning was generally designed for newer suburban locations with far different
    development patterns. As a result, the UZO allows for placement of buildings closer to
    the street, less on-site parking requirements and, as a rule, greater consistency with
    historic development patterns.

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
In summary, Core Frame (CF) base zoning, combined with the UZO, provide for
significant flexibility to accommodate a wide range of uses and design alternatives at
Rolling Mill Hill. This is expected to enhance the site’s overall marketability for
redevelopment and to provide the flexibility necessary to accommodate a mix of uses and
to respond to changing market conditions over time.


Previous Planning Efforts
A number of previous planning studies have been completed for Rolling Mill Hill and the
surrounding area over the past 20 years:
Rutledge Hill Redevelopment Plan – MDHA (1986)
This MDHA plan was revised several times between 1986 and 1997, and includes a set of
restrictive covenants adopted by the Metro Council in 1997 as part of a final amended plan.
The plan also updates the Tax Increment Financing (TIF) status of the property, which was
originally established in 1980. The 1997 amendments increase the site’s use of TIF up
to $15.5 million with a final maturity on or before the end of 2025. Sections of the plan
include a description of the project area, a land use plan, a land acquisition strategy, public
improvement recommendations, obligations of the redeveloper, a relocation assistance
strategy, TIF provisions, and procedures for amending the plan.
Key recommendations include a variety of residential, commercial and institutional uses,
and design review was based on the Market and Design Study for Broadway (completed
prior to 1986). However, those design standards were replaced in 1997 when a set of
guidelines specific to the site were created. The primary requirement of the design
guidelines are that cross streets running perpendicular to Hermitage Avenue must be
extended into the site , and three historic features must be preserved: the car barns, the
powerhouse and smoke stack, and the stone wall along Hermitage Avenue.
Rolling Mill Hill Neighborhood Development Plan – Nashville Downtown
Partnership (1996)
This plan was prepared by the Nashville Downtown Partnership’s Metro General
Subcommittee, which is comprised primarily of designers and developers. Its creation
resulted, in part, from the 1997 revisions to the 1986 MDHA plan. The plan illustrates
how the design guidelines described above can be physically achieved, including the
extension of cross streets into the site, and adaptive re-use of the car barns and power
house. It also includes a series of cross-sections that illustrate treatment of the bluff, and
development of structured parking in the rock quarry. The Hermitage Avenue cross-
section features three driving lanes, on-street parking on either side, sidewalks and street
trees, and three to four-story buildings lining both sides of the street. Artist renderings
depict a vibrant urban environment with outdoor dining.
The Plan for SoBro – The Nashville Scene (1997)

This plan’s creation utilized an intensive three-day design charrette involving a core team
of diverse planning and design professionals, as well as citizen planners in which public
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                          ERA Project 14981
input was strongly nurtured. The resulting plan covers a much broader geographic area
than simply Rolling Mill Hill, extending to The Gulch. The plan contains numerous
graphics. Key ideas include a rich mix of uses, human-scale buildings, single-family
homes with front porches, pedestrian friendly streetscapes, and the development of the
proposed “Franklin Street Corridor” into a true urban boulevard.
Rolling Mill Hill: Statement of Qualifications and Proposal for Development –
Post Properties, Inc. & The Mathews Company (1997)

This plan was the result of a Request for Proposals (RFP) process sponsored by MDHA.
This developer-driven process featured two proposals—by Post Properties and
Trammell/Crow Residential. The Post Properties design team included RTKL and several
local firms, and the study’s recommendations are relatively consistent with the ideas
generated in previous planning efforts. The Post Properties development program (which
ultimately was selected by MDHA) included the following uses:

§   104 fee simple townhouses
§   1,320 rental units
§   150 hotel rooms
§   180,000 sq. ft. of office space
§   30,000 sq. ft. of retail


The Post Properties submittal proposed the preservation of the smokestack and the car
barns.
The Rolling Mill Hill Plan – Trammell/Crow Residential (1997)

This plan was also submitted in response to MDHA’s RFP process. The proposal included
preservation of the car barns and smokestack as well as conversion of the historic hospital
building into residential lofts. The phased development program included the following
uses:
§   333 conventional apartments
§   255 loft apartments
§   63 loft condominiums
§   65 fee simple townhouses
§   98,630 sq. ft. of office space
§   104,020 sq. ft. of retail space
§   Approximately 150,000 sq. ft. of “community” space in the form of a community
    center, greenways/parks and arts facilities


Rolling Mill Hill and the Rutledge Hill Neighborhood: Findings and
Recommendations – Nashville Civic Design Center (2002)

This document was prepared by the Design Center in 2002 and features a great deal of
public input. It builds upon earlier efforts in anticipation of MDHA’s efforts to again issue
a developer RFP for the site. The study focuses on the provision of two very important
                                                                                           21

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
features in a master plan for Rolling Mill Hill, including useful background information on
the site, and achieving public consensus on key issues. In addition to providing a set of
key planning and design principles to guide the site’s development, it also focuses on the
site’s rich history and provides a solid overview of previous planning efforts.


Recent Area Developments
There has been significant public and private investment in numerous projects since
MDHA issued its Request for Proposals for Rolling Mill Hill in 1997. As a result of this
investment and ongoing public investment in transportation improvements and
infrastructure enhancements, ERA and The Walker Collaborative strongly believe that
Rolling Mill Hill is extremely well positioned to attract private-sector development
over the long-term. Recent or proposed projects proximate to Rolling Mill Hill include
the following:
Country Music Hall of Fame

This impressive museum is located on Demonbruen Street near the Gaylord Entertainment
Center. It has succeeded in drawing tourists and other visitors to the south side of
Broadway—an area that historically has had limited success in capturing this important
market in downtown Nashville.
Hilton Suites & Park
Fronting on a new park and opposite the Country Music Hall of Fame, this 330-room hotel
includes restaurants and meeting space, while the park features underground parking.
Gateway Bridge & Gateway Boulevard (Franklin Street Extension)
This new bridge will link Shelby Street in East Nashville with Franklin Street on the west
side of the Cumberland River (which may be renamed Gateway Boulevard). The bridge
and “urban” boulevard (to 4th Avenue) are scheduled for completion at the end of 2003.
Power Plant Relocation

The Thermal Plant, which provides power to many downtown buildings and has occupied
a key site on the Cumberland River for many years, will be demolished once its
replacement, the District Energy System facility, is completed on a site to the south of the
current site. There is reportedly wide speculation on a replacement use for the existing
Thermal site, ranging from a minor league baseball stadium to a convention center to
mixed-use development.

Symphony Hall
A new facility for the Nashville Symphony Orchestra is proposed on the site of the main
downtown fire station, located on the eastern edge of the new park and Hilton Suites on 4th
Avenue. Construction is scheduled to commence as the design phase concludes.


                                                                                          22

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
Pedestrian Bridge

This on-going project is converting the historic Shelby Street Bridge into a pedestrian
bridge. It is modeled on the Walnut Street Bridge conversion in downtown Chattanooga,
and is intended to provide better pedestrian access to Tennessee Titans football games at
the stadium across the Cumberland River.




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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                     ERA Project 14981
Demographic & Economic Profile
Introduction
As the basis for evaluating development opportunities at Rolling Mill Hill, ERA analyzed
demographic and economic conditions across several geographic areas—downtown
Nashville, Nashville-Davidson County, and the Nashville Metropolitan Statistical Area
(MSA). This profile includes various factors such as population and household growth,
employment growth and other appropriate economic indices. It synthesizes key findings
and trends as reported by both public and private sources used during the course of our
research.

The economic overview focuses on those variables that affect demand for housing and
commercial uses such as office and retail space. These variables include population
growth, employment growth and distribution and 20-year forecasts of growth by
employment sector. We note that this analysis informed subsequent testing of specific
uses. Data are detailed in Tables 1 through 8 in the Appendix.


Demographic Characteristics
Population & Households (Tables 1 & 2)
§   Nashville-Davidson County added almost 6,000 new residents annually between 1990-
    2000, for a population of 570,000 in 2000. While outlying counties such as
    Williamson and Rutherford had higher rates of growth during the 1990s, Davidson
    remains the region’s most densely populated jurisdiction.

§   Notably, Nashville-Davidson’s share of the region’s population has been declining as a
    result of population growth in outlying jurisdictions. In fact, in 1990, Nashville-
    Davidson’s population represented 52% of the metropolitan total. By 2000, this share
    had declined to 46%.
§   The number of households in Nashville-Davidson increased by almost 30,000 over the
    past 10 years—to 237,400 in 2000—for an average household size of 2.40 persons.
    Consistent with national trends, the rate of household growth was greater than
    population growth as household size declined.
§   Based on forecasts prepared by Metro Planning Department’s 2010 Davidson County
    Population Projections, Nashville-Davidson County’s population is forecast to
    increase by 9% between 2000 and 2010, or approximately 52,000 new residents. At
    the County’s current household size of 2.40, this translates into another 22,000
    new households by 2010. It is likely that household size will continue to decline, thus
    translating into a greater number of households and, hence, housing units.
§   According to MDHA, there are 1,200 existing housing units in the Central Business
    District; outside of the immediate CBD, there are another 600 or so units in adjacent
    neighborhoods, including Rutledge Hill, Germantown, The Gulch and Hope Gardens.

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                      ERA Project 14981
    Assuming an average household size of 1.7 persons, this would suggest about 3,800
    residents in the CBD and immediately adjacent neighborhoods .



              MDHA Estimates: 3,800 Residents live in the CBD
                       & Adjacent Neighborhoods


Age of Householders (Table 3)

§   ERA compared changes in the age of householders in both Nashville-Davidson and the
    MSA between 1990 and 2000 (Table 3). In Nashville, there was no change in the
    number of householders ages 25-34 between 1990 and 2000—remaining flat at
    approximately 53,000. This is typically an age cohort with a stronger propensity to
    live downtown.
§   Conversely, the number of householders ages 45-54 increased by almost 50%—to
    44,000 between 1990 and 2000. This is the age cohort of households entering the
    “empty nester” stage. Clearly, some of these households could also be considered
    candidates for urban living in locations such as Rolling Mill Hill, as they downsize
    from larger, maintenance-intensive suburban housing.
As noted in the Executive Summary, there are several ways to examine market potentials
for residential development. One method includes target marketing, which measures
selected “lifestyle clusters” of households living in specific trade areas with a propensity to
live in downtown housing, such as those identified above. Another method is to measure
the jobs-to-housing ratio against regional comparisons. As detailed feasibility for specific
types of housing moves forward at Rolling Mill Hill, yet another method is to “income-
qualify” potential target households.

                      Empty Nesters Represent a Potential
                        Target Market at Rolling Mill Hill


Household Income (Table 4)

§   Median household incomes in Nashville-Davidson County increased to nearly $40,000
    in 2000 (in 1999 real dollars). This represents a solid rate of growth of 40%
    (unadjusted for inflation) since 1990. Combined with an increase in population, this
    generated additional consumer spending, which fueled demand for retail—particularly
    in outlying locations of the County.
§   By comparison, median household incomes in the other jurisdictions comprising the
    MSA increased at far greater rates. In fact, Davidson had the second-lowest household
    income level of all eight counties in the MSA as well as the lowest rate of growth over
    the past 10 years. For example, median household incomes in Williamson County
    jumped by 58%, to $69,000 in 2000.

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
§   Median household incomes in the MSA as a whole in 2000 were $44,000.

Trade Area Demographics (Table 5)
As part of our testing of potential uses at Rolling Mill Hill, ERA examined demographic
characteristics of a more tightly defined geographic area encompassing a 0-3 mile ring
surrounding downtown Nashville.
§   This potential “trade area” contains approximately 70,000 residents in 27,000
    households. Average household incomes—while generally low at $30,000 per year—
    are forecast to increase by 22% over the next five years—suggesting that additional
    consumer expenditures will be available to support new retail development in selected
    locations in this trade area.

Consumer Spending Patterns (Table 6)
§   According to the Tennessee Department of Labor & Workforce Development,
    metropolitan area households spend approximately $33,900 per year in all retail
    establishments. This is above the national average and is, in part, the reason why new
    retail development such as Big Box and category-killer retail stores have been built in
    many locations across the metropolitan area—particularly in outlying locations.

§   While Nashville-Davidson County has 50% of the region’s households, it captured
    58% of all retail sales in the MSA in 2000. While its capture declined slightly from
    1990, Nashville-Davidson remains the region’s primary economic engine for retail and
    other forms of economic growth.


Employment Trends & Forecasts
A critical barometer in evaluating demand for real estate is employment growth. The
following highlights relevant trends and/or projections for the MSA, as provided by
various sources, including the state’s Department of Labor & Workforce Development, the
U.S. Census, and Woods & Poole, Inc.

Employment Distribution (Table 7)
§   Table 7 illustrates the distribution of employment, by county, across the metropolitan
    area. Not surprisingly, Nashville-Davidson has the lion’s share of employment—with
    296,000 jobs, or 46% of the entire MSA . However, Davidson’s share of
    metropolitan area employment declined from 53% in 1990, as new jobs were created in
    outlying locations such as Rutherford County that are undergoing rapid population
    growth.
Employment Trends & Projections (Table 8)
§   Between 1990 and 2000, the Nashville Metropolitan Statistical Area added
    178,600 new jobs—roughly 18,000 new jobs per year. This fueled significant
    demand for office, retail and industrial space across the region. The largest job gains

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
    were posted in Services (85,000), Retail Trade (39,200), Government (17,000), and
    Finance/Insurance/Real Estate (11,000).

           The MSA Boomed During the 1990s: Adding Roughly
                     18,000 New Jobs Every Year


§   Interestingly, unlike many areas of the U.S., the number of jobs in the Manufacturing
    sector also increased as a result of job growth in auto parts, suppliers and production.
    In fact, the number of manufacturing jobs increased by 8,000 between 1990 and 2000.
§   ERA utilized the forecasted growth rates in employment generated by Woods & Poole,
    Inc., a demographic forecasting firm, and applied those rates to 2000 base-year
    employment as calculated by the Tennessee Department of Labor, to arrive at
    employment estimates for 2010. This is expected to create 128,000 new jobs between
    2000-2010 across the MSA. Services (69,000), Wholesale/Retail Trade (31,000), and
    Government (11,000) are likely to be the strongest sectors. Moreover, job growth will
    continue fueling demand for office and retail space and warehousing and distribution
    in many locations across the metropolitan area.

§   A logical market segment for downtown and near-downtown housing includes
    those employees who work in downtown Nashville . The Nashville Downtown
    Partnership estimates that greater downtown—as measured from I-440 on the west to
    I-24 on the east—contains about 67,000 employees. As a proportion of total MSA
    employment, downtown Nashville comprises roughly 10% of the region.

                       Downtown Has 67,000 Employees:
                            Only 10% of the MSA




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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
Real Estate Market Conditions
Introduction
ERA examined historic and current market conditions and characteristics across a variety
of real estate product types, including housing, office, retail, and hotel/lodging in specific
locations or submarkets across greater Nashville. This section of the report analyzes
inventory, rental and vacancy rates, historical development and absorption trends, major
tenant relocations or expansions, and other appropriate potential supply and demand
factors as they affect development opportunities at Rolling Mill Hill.
Relevant real estate data are illustrated in Tables 9 through 29 in the Appendix.


Metropolitan Area Housing Trends (Tables 9-12A)
§   Davidson County has issued roughly 2,500 building permits for single-family
    development on an annual basis since 1997.
§   According to Metro Planning Department, within a two-mile radius of 2nd Avenue and
    Broadway, approximately 250 permits have been issued since 1997 for single-family
    housing, only 1% of the County’s total—and roughly 35 units per year.

                        Greater Downtown Has Added 250
                         Single-family Units Since 1997


§   Information on historical permits issued for multi-family units was not available, since
    permits pulled do not indicate the actual number of units proposed in specific projects.
    However, for 2002, Metro Government issues permits for 546 multi-family units.
§   Between 1990 and 2000, the proportion of owner-occupied units increased from 63%
    to 66% across the metropolitan area as a result of new, largely single-family
    construction in outlying jurisdictions (as well as lower interest rates and a strong
    economy). In Davidson, however, the number of owner-occupied units remained
    roughly the same—in the range of 55%.

§   According to the Greater Nashville Association of Realtors, median prices for single-
    family units in the Nashville area have increased by 5% since 2000—to $136,000.
    Notably, pricing for the area’s condominium units have jumped almost 22%—to
    $117,300. This reflects lower interest rates that have made home ownership more
    affordable, particularly for first-time buyers.


Rental Market Survey (Tables 13-15C)
ERA conducted significant research into the region’s rental apartment market, focusing on
market characteristics such as size, occupancy levels and monthly rental rates as the basis
for identifying a pricing strategy and product mix for potential housing units at Rolling
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                          ERA Project 14981
Mill Hill. In addition, we conducted a detailed survey of the rental and for-sale housing
complexes in greater downtown, which includes the CBD core as well as nearby/adjacent
areas or neighborhoods such as Germantown, The Gulch, Rutledge Hill and Hope Gardens.
We note that the information and market findings presented below are based on a
response rate of approximately 77% from roughly 25 rental and for-sale complexes in
these locations.
§   The Greater Nashville Apartment Association tracks occupancies and rents for the
    roughly 60,000 rental apartments in 12 submarkets across the metropolitan area on a
    quarterly basis. Multi-family units—typically in the form of garden apartments—are
    concentrated in several suburban locations, including Nolensville Road,
    Donelson/Hermitage and Hickory Hollow. Each of these submarkets contains between
    10% and 15% of the region’s inventory.
§   Notably, the GNAA incorporates the CBD and West End as a single submarket, with
    roughly 3,600 rental units , or only 6% of the region’s inventory.
§   For the region as a whole, average rental rates exhibit annual increases on the order of
    1% to 2% per year—barely keeping pace with inflation. In 2002, the region’s average
    apartment rent across 60,000 units was $0.74 per sq. ft. on a monthly basis.
§   Recently, several factors have contributed to a slight decline in the region’s occupancy
    levels. New units developed during the late 1990s economic boom and delivered to
    the market over the past two years have obviously increased supply at the same time
    that the regional economy was weakening, with business contractions and job losses.
    In fact, overall occupancies declined slightly from 94% in 1999 to 92% in 2002.

Downtown Rental Market
§   By comparison, the CBD/West End submarket has held up reasonably well despite the
    economic downturn. Occupancy levels remain strong in the range of 93%, and
    average monthly rents have ticked up slightly—from $1.01 per sq. ft. in 1999 to $1.03
    per sq. ft. in 2002.

       The CBD/West End Rental Market Commands the Region’s
                  Highest Rents: $1.03 Per Sq. Ft.


§   Moreover, during the past three years, average monthly rents in the CBD/West End
    submarket have outperformed the regional average—increasing more than 9% as
    compared to a regional bump of 4%.
Tables 15 and 15-A summarize ERA’s detailed survey of the greater downtown rental
housing market. Notable trends follow:
§   Survey responses were tabulated for roughly 2,100 units. Vacancy levels for units
    reporting such information are in the range of 10%, skewed largely by higher
    vacancies at the 20th & Grand building in Midtown.

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
§   Limited information provided by property managers regarding annual turnover rates in
    the Downtown/CBD and Midtown submarkets indicate that roughly one-third of the
    units in each of these submarkets turns over on an annual basis.

                   Roughly 30% of CBD Residents Surveyed
                            Also Work Downtown


§   Average rents on a per sq. ft. basis, by bedroom size, are as follows:

        1 BR: $1.05 to $1.47, with an all-in average of $1.32 per sq. ft.
        2 BR: $1.18 to $1.54, with an all-in average of $1.33 per sq. ft.
        3 BR: $1.12 to $1.84, with an all-in average of $1.36 per sq. ft.


§   Based on ERA’s survey, the overall average rent for multi-family units in six areas
    comprising greater downtown is currently $1.35 per sq. ft.

      The Overall Average Multi-family Rent in Greater Downtown
                          Is $1.35 Per Sq. Ft.


§   Interestingly, Mercuryview Lofts, a high-end building completed in 2002 as the first
    component of a larger mixed-use project in The Gulch, achieves some of the highest
    rents in the marketplace, ranging from $1.45 to $1.84 per sq. ft.

§   Importantly, Mercuryview Lofts has raised the threshold of unit quality and
    achievable rental rates for new housing in downtown Nashville, much as the
    significant, earlier success in rents and leasing achieved at the Bennie Dillon
    Building ($1.41 to $1.82 per sq. ft.). Granted both of these are small projects that
    have continued the “incremental” delivery of new residential units to the greater
    downtown. However, ERA believes that the precedent has been established for
    subsequent deliveries at Rolling Mill Hill and in The Gulch to achieve similar
    quality levels with respect to architectural design and unit finishes as well as the
    ability to command commensurate rental rates.

Downtown For-Sale Market
Table 15-C highlights limited information obtained for the for-sale housing market in
greater downtown.

§   For-sale housing in downtown Nashville and adjacent areas is in its infancy, with only
    limited numbers of units. While there exist several long established (i.e., 1980s)
    condominium complexes in Rutledge Hill, such as Academy Square, there are few
    other for-sale projects.
§   However, as momentum builds across the greater downtown to create a critical mass of
    new downtown housing, several projects have recently been completed or announced.
    In Germantown, Germantown Partners LLC recently completed 12 high-quality,
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                          ERA Project 14981
    detached units, ranging in size from 1,400 to 1,900 sq. ft. These were priced between
    $139,000 and $235,000—or roughly $73 to $93 per sq. ft. Notably, the developer
    paid significant attention to architectural detail and quality level, and provided
    streetscape improvements designed to enhance the marketability and value of this
    new housing. Similar efforts will be required at Rolling Mill Hill.
§   Row 8.9n is a more recent success story on 8th Avenue near Hope Gardens. Delivered
    at year-end 2002, the project contains 29 affordable and market-rate units ranging in
    size from 900 to 1,200 sq. ft. and priced from $109,000 to $159,000—or roughly $121
    to $133 per sq. ft. Similar attention to design treatments as were done in Germantown
    paid off with immediate market acceptance and sale of units at Row 8.9n.

§   Werthan Lofts is the most recently announced project by Werthan Mills LLC, a team
    of developers that have proposed a residential conversion for the Werthan Bag
    Company property in North Nashville. The project will contain 44 loft units reportedly
    priced from $110,000 to $280,000—or roughly $140 per sq. ft. Approximately 40%
    of the units priced at less than $155,000, which qualifies as affordable housing. Pre-
    sales interest is reportedly high.


Downtown Housing: How Other Cities Are Doing (Table 16)
There are several ways to examine market potentials for residential development. One
method includes target marketing, which measures selected “lifestyle clusters” of
households living in specific trade areas with a propensity to live in downtown housing.
Another method is to measure the jobs-to-housing ratio against regional comparisons. As
detailed feasibility for specific housing products at Rolling Mill Hill moves forward, yet
another method is to “income-qualify” potential target households.
For this study, ERA examined the relationship between downtown employment, housing
and population in selected similar cities across the Southeast in order to understand how
Nashville compares to other cities in attracting residents to downtown. ERA profiled
downtown demographics, housing development activity and product mix, and the use of
incentives designed to encourage the development of downtown housing. These findings
are summarized below and highlighted in Table 16:
§   The 3,800 or so residents who live in greater downtown represent only 5.7% of
    downtown’s approximately 67,000 employees, or roughly one resident for every 19
    jobs. As illustrated in the attached table, this is well below other cities in the
    Southeast, such as Chattanooga (1 per 5) and Charlotte (1 per 7).

§   This analysis was utilized to estimate market demand potentials for new housing in
    downtown Nashville and to inform a potential housing program at Rolling Mill Hill, as
    discussed in the next section of this report.

ERA’s survey of selected cities in the Southeast is detailed below for Charlotte,
Chattanooga, Knoxville, Memphis and Raleigh.

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
Charlotte
Charlotte has not had a significant downtown housing market in the past. However, the
city is benefiting from the presence of several major financial institutions that are
committed to increasing the availability of housing in this headquarters city. Notably,
Charlotte’s large downtown employment base is the most similar to Nashville of all the
case studies.
Downtown Demographics

Charlotte has over 60,000 downtown employees, concentrated in the huge headquarters of
Bank of America and NCNB. Employment is forecast to increase to over 83,500 by 2010.
A total of 8,230 people live downtown in 4,575 housing units—an average of 1.8 persons
per household. The downtown population is expected to reach 13,200 by 2010, in 7,400
housing units. Currently the ratio of population-to-jobs is approximately 14%, or 1
resident for every 7 jobs.

Housing Activity
Bank of America’s community development division was involved in the HOPE VI
program of revitalizing 500 public housing units in Charlotte’s First Ward area. While the
redevelopment of this area has boosted the image of downtown housing, the majority of
downtown housing is in the historic and more affluent, Fourth Ward. Also, in the last three
years the Third Ward has witnessed significant housing growth, adding over 1,000 units.
Throughout the Center City area there are now 2,038 units in 31 projects either under
construction or completed since 2000.
Market Issues & Pricing

The market is strong, thanks to an influx of financial services professionals in the banking
industry. These professionals have experience with downtown living, are young and
single, and have above average incomes. Thus, they fit a prime target market. However,
excess surface parking and a general lack of retail and street life detract from downtown’s
overall appeal. Townhouses range in price from $85,000 to $500,000, with the higher-end
homes found in the Fourth Ward. Rents average $900 per month for a one-bedroom
apartment.
There are many factors expected to influence the Charlotte housing market over the next
few years. These factors include a multi-modal transit system, the opening of Johnson and
Wales University, and implementation of the Charlotte 2010 Vision plan.
Incentives & Structuring
The City of Charlotte offers no specific incentives for downtown housing development.
However, the city is historically favorable to the building industry. Bank of America has
brought access to capital financing and has established relationships with national
developers interested in the market.


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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
Chattanooga
Chattanooga is a smaller market than Nashville, but the underlying market characteristics
are similar. Located midway between Atlanta and Nashville along the Tennessee River,
the core downtown area is undergoing major changes. The redevelopment of downtown
Chattanooga began 15 years ago with the implementation of Vision 2000, a public-private
initiative. Moreover, the success of the Tennessee Aquarium and other riverfront projects
has been a catalyst for significant housing and other types of development.

Downtown Demographics
Chattanooga has 47,000 downtown employees, representing net growth of 20% in
downtown employment since 1997. There are currently 4,360 downtown housing units, a
figure that is expected in increase as new projects are completed within the next few years.
Downtown Chattanooga has a population of 9,000, and the ratio of downtown population-
per-job is 19%--or roughly 1 resident for every 5 jobs.

Housing Activity
The core downtown area has had 13 housing projects completed or under development
since 2000. This includes a mix of new construction, historic building rehabs and
conversions. It includes market-rate and affordable, rental and condominium apartment
flats, fee simple townhouses, and single-family houses. Several mixed-developments were
completed that include residential and retail space, and there are other similar projects
under construction. More than 200 units have been built or are under development
downtown, representing an increase of 5% in the downtown housing inventory over the
past two years.

§   Over 50% of the 208 new units are rentals
§   Of the 208 rental units 40%, or 86 units, are conversions or rehabs of historical
    buildings

§   Similarly 42 of the total 96 equity units are conversions or rehabs of historic buildings,
    representing 43% of new for sale development
§   Over 80% of equity units are condominiums or townhouses

Market Issues & Pricing
The middle income market, consisting mostly of two-income families is weak in
downtown Chattanooga. However, the recent opening of two new schools in the
downtown area is expected to lure families back to the city. The high-end market remains
fairly strong. This market consists of empty nesters, and young professionals employed in
the insurance industry and the University of Tennessee, Chattanooga. In addition, the low-
end market is also fairly strong, primarily consisting of service and office workers.




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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
Incentives & Structuring

In 2002 Hamilton County implemented a tax-abatement program for the development of
rental housing. Property taxes are frozen at pre-improved assessment levels for 10, 12 or
14 years. The length of time that a developer can benefit from the program depends if the
development is new construction, renovation, or historic rehabilitation. Following the
abatement period the project jumps to full assessment of property taxes.
A non-profit housing developer has also taken the initiative to promote downtown
residential development. Chattanooga Neighborhood Enterprise (CNE) is responsible for
the development of six of the 13 downtown projects in the last two years. CNE assumes
the risk where a speculative developer could not. CNE receives pass-through CDBG
funding from the City and grant funds as equity. The biggest challenge has been to
structure financing in the absence of comparables for appraisals. They have solved this
problem by packaging risky housing projects with financing for retail or high-end
townhouses, for which there is a proven market. CNE has recently spun-off its own CDFI
to create capital for projects. Also, CNE is now located in the ground floor of the Southern
Railway Building, a three-story project built by the developer, with two floors of
residential units above the office space.


Knoxville
Although Knoxville is the county seat for Knox County, with a downtown population less
than half the size of downtown Nashville, it is still a smaller market. However,
Knoxville’s downtown has captured a greater share of the city’s housing.
Downtown Demographics

Knoxville has a smaller downtown employment base than the other study areas, with only
14,000 employees. There are 846 housing units within the core business district, home to a
population of 1,400. The ratio of population to employment is 10%, or 1 resident per 10
jobs.
Housing Activity
There are six major housing projects completed or under development in the downtown
area. Two of the projects involve the redevelopment of commercial and industrial space
for mixed-use purposes; 84 units have been completed or are underway since the beginning
of 2002. Further, the City of Knoxville is examining conversion opportunities in the
Jackson/Depot area, a warehouse district, into a mixed-use loft community.
Market Issues & Pricing
Like the other study areas, the downtown market consists primarily of empty nesters and
young professionals. A smaller market segment consists of students from the University of
Tennessee, Knoxville. Of the 846 total housing units in Knoxville, 766 are occupied. In
respect to the other study areas, this 10% vacancy rate is relatively high. The lack of
adequate parking is often cited as a deterrent from living downtown. However, a
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                      ERA Project 14981
revitalized Market Square and Tennessee River waterfront have improved entertainment,
recreation and shopping opportunities resulting in a more attractive downtown. Rent in
Knoxville is fairly consistent, averaging slightly more than $1.00 per sq. ft. Also, market
prices for ownership units range from $95-$105 per sq. ft.

Incentives & Structuring
The City of Knoxville is working in conjunction with Knoxville’s Community
Development Corporation to improve the downtown area and to promote the construction
of more housing alternatives. Under the city’s CityLife program, developers can benefit
from a tax freeze, through a payment in lieu of taxes program, a construction loan program,
reduced development fees, and parking assistance. Three projects expected to attract an
additional 200 to 300 new residents to downtown Knoxville have already benefited from
this program.


Memphis
The Memphis market is much larger than Nashville, with the Central Business
Improvement District (CBID) covering 6.5 square miles. This area includes a large
Medical District that enhances the downtown’s overall capture of the city’s population.
The majority of the core downtown units are renter occupied.
Downtown Demographics
Memphis has the largest downtown employment base of all the study areas, with 80,011
employees. A large number of downtown employees are found in the Medical District,
home to five hospitals, employing almost 30,000. There are 11,204 housing units within
the CBID with a population of 21,253. The ratio of population to employment is slightly
less than 27%, or roughly one resident per every 7 jobs.
Housing Activity
The number of downtown housing units is expected to increase significantly in the near
future with 20 new projects, creating over 2,200 rental units and 637 for-sale units.
Once completed, the projects will offer a diverse range of housing opportunities in
downtown Memphis, including affordable and market-rate units, luxury rental and
condominium flats, townhouses, and single family homes. Several mixed-use projects are
also proposed along with the renovation of historic commercial properties. The most
significant development is the Uptown Development Plan, with the construction of 935
new housing units at a variety of income levels, including public housing.
Market Issues & Pricing
Memphis is much like the other study areas, with downtown capturing mostly young
professional and empty nester residents. A significant number of downtown residents are
employed at one of the five hospitals in downtown Memphis, and also in other service
industries. Recently there has been an increase in the low- and moderate-income
population with the development of affordable rental units. Rents range from $450 to
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                      ERA Project 14981
$2,500 a month, reflecting housing opportunities for a wide range of income levels. Most
of the condominium and single family housing is outside the downtown core, with
condominium units typically priced between $100,000 to $$225,000 and most single
family homes priced between $450,000 to $800,000.

Incentives & Structuring
Memphis has one major incentive program in place to facilitate the development of
downtown residential. A PILOT program offers tax break incentives to developers whose
renovation, site improvement, or construction costs are at least 60% of the total project.
The payments are based on a predevelopment assessment, plus 25% of the increase in the
assessment from the date of the PILOT lease. PILOT leases are not to exceed 15 years.
This program has been the most valuable for multi-family projects, with little incentive for
single family development.


Raleigh
The Raleigh market is similar to Nashville, with a comparable number of downtown
residents. Raleigh is the capital of North Carolina, and therefore the downtown
employment base is large and heavily concentrated in the public sector. Further, there is a
lack of rental units in the downtown area as a result of residential development focussing
on the high-end, for-sale market.
Downtown Demographics

There are over 30,000 employees working in downtown Raleigh, with most employed by
the state government. There are currently 2,461 residents living in 1,200 downtown
housing units. The ratio of downtown population-per-job is 8.2%. The downtown
population is forecast to increase, with 11,200 new residents by 2025. Employment
growth, however, is not expected to be as rapid.
Housing Activity

Although there are plans for the redevelopment of rental housing units in Raleigh, the
majority of residential activity has been in the high-end, for-sale market. This has resulted
in a shortage of low-income to moderately priced housing units. Since 2000 there have
been 383 housing units built or currently under development. The most significant of these
developments has been the redevelopment of Halifax Court, which will provide 209 units
upon completion.

§   Only 35 rental units have been built or are under construction
§   Of 383 total housing units, 348 have been condominiums, townhouses, or single family
    homes, representing over 90% of recent construction activity

Market Issues & Pricing
Condominium units and townhouses capture the empty nester and young professional
markets, particularly those employed in the high-tech industry located in the nearby
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
Research Triangle. Residents are attracted by the proximity to restaurants/bars and other
urban activities. Typical ownership units sell for $200 per sq. ft., a reflection of the high-
end market. Rental housing is scarce in Raleigh, with only six available rental units in the
downtown core. This reflects a limited supply of rental units, not resident preference, as
more renters are becoming homeowners. Rents range from $900 to $2,500 a month and
with increased home ownership these rates are dropping.
Incentives & Structuring

Raleigh has created two incentives for downtown housing. First, they have exempted
developers of downtown housing from the city’s parking requirements. Also, they have
created high-density overlay districts to allow developers to build at lower costs per foot.
Despite these efforts, there is little to no incentive for the construction of rental units.


Commercial Office (Tables 17-19)
As a whole, the region’s economy remains strong. While Nashville’s unemployment rate
(3.5%) remains below the national average, a glut of vacant office space is a result of new
supply added during the late 1990s. In fact, year-end 2002 absorption was negative for the
first time in 15 years. Landlords are offering more concessions and sublease space
presents additional competition in the marketplace. New construction deliveries have
declined significantly as compared to the last several years; until the region’s economy
fully recovers, there should be little, if any, new speculative office construction.

Other market trends are summarized below:
§   According to Grubb & Ellis Centennial, Inc., Downtown Nashville contains an office
    inventory of approximately 6.0 million sq. ft. This includes approximately 3.2 million
    sq. ft. of Class A space and 1.7 million sq. ft. of Class B product.
§   Downtown Nashville comprises 24% of the region’s inventory. Notably, downtown’s
    share of the regional office inventory has declined since 1998—from 28% to its
    current level of 24%, with new commercial development in outlying submarkets such
    as around the Airport and in Cool Springs.

             Downtown’s Share of the Region’s Office Inventory
                Declined From 28% in 1998 to 24% in 2002


§   The office vacancy rate has inched up only slightly over the past five years—from
    11.5% in 1998 to 12.7% today. There are 756,000 sq. ft. of vacant office space in the
    CBD. Despite the sputtering national economy, downtown Nashville continues to
    “hold its own” with respect to office demand; however, this has reportedly been aided
    by concessions such as lower rental rates and/or free rent.
§   Net absorption in downtown Nashville has averaged approximately 116,000 sq. ft. per
    year since 1998, or roughly 16% of the region’s average annual absorption of 730,000
    sq. ft. per year over the past five years.
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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
      Downtown Nashville Absorbs 116,000 Sq. Ft. of Office Space
              Each Year—Roughly 16% of the Region


§   The economic boom of the late 1990s resulted in the addition of more than four
    million square feet of new office space across the region since 1998. As economic
    conditions weakened, particularly in 2001 and 2002, vacancy rates climbed. In fact,
    the amount of vacant office space in the metropolitan area jumped by more than
    80%, from 1.9 million sq. ft. in 1998 to 3.6 million sq. ft. in 2002. Today, the
    regional office vacancy rate is 15%.
§   The strongest suburban submarkets include Brentwood and Cool Springs, which have
    absorbed 180,000 sq. ft. and 240,000 sq. ft. of office space per year, respectively, since
    1998. The West End and Belle Meade is another stable submarket, absorbing
    approximately 145,000 sq. ft. of space on an annual basis, with a current vacancy rate
    of only 8%.
§   At current absorption patterns, ERA estimates that approximately six years will be
    required for downtown Nashville’s office market to stabilize (to 95%). This would
    suggest that, at least in the near-term, that opportunities for new office development in
    the CBD (or in nearby locations such as Rolling Mill Hill) are limited.


Hotel/Lodging (Tables 20-29)
§   Nashville contains an inventory of almost 2,200 hotel rooms in full-service facilities.
    These properties include the Sheraton, Doubletree, Renaissance, Loew’s Vanderbilt
    and Hilton Suites Hotel.

§   Market performance over the past five years has weakened with respect to
    roomnight demand—with average annual occupancies declining as new room
    inventory was added to supply. For example, annual occupancies dropped from 73%
    in 1997 to 63% in 2002—a decrease of 3% per year. This may be partially attributable
    to the opening of the Hilton Suites in 2001.

                    New Deliveries, Reduced Demand Have
                    Weakened the Downtown Hotel Market


§   Another measure of the overall health of an area’s hotel market includes changes in
    average daily room rates. Interestingly, among downtown Nashville’s full-service
    lodging properties, average daily rates have actually increased despite weakening
    demand—from $106 per room per night in 1997 to $117 per room per night—
    representing an average annual increase of 2% per year.
§   In addition to the CBD’s full-service hotels, there are six limited service properties
    containing 1,300 hotel rooms in the CBD, near Vanderbilt University or on Music
    Row. These include properties such as Holiday Inn Select, Days Inn, Ramada Inn,

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
    Courtyard and Hampton Inn. The conversion of a former downtown office building at
    4th and Church to a Marriott Courtyard added 192 rooms to the area’s supply.
    However, growth in demand has not kept pace with additions to supply. As a result,
    average annual occupancies in limited-service product have declined rather
    dramatically—from 75% in 1997 to 61% in 2002.
§   Despite declining occupancies, average daily room rates in the downtown’s limited-
    service properties have held steady—increasing from $79 in 1997 to $84 in 2002.

Given current market dynamics and significant difficulties in the capital markets for hotel
development, near-term opportunities for new hotels in downtown Nashville will be
extremely limited. As a rule, the capital markets will require average annual occupancies
of 70% or greater before consideration is given to financing new hotel development. This
would suggest that recent or ongoing public investment in economic “drivers” that
generate visitor and tourism-related traffic to downtown Nashville are critical.




                                                                                         39

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
Demand Analysis & Positioning Strategy
Introduction
This section of the report highlights the findings from ERA’s analysis of development
opportunities for Rolling Mill Hill. Various methodologies were used to estimate
prospective market support for specific uses—housing, office, and supporting uses such as
retail. Using available data gathered and analyzed in previous tasks and selected primary
and secondary research, these findings and recommendations reflect a set of assumptions
that guide what may reasonably occur, and forecasts of demand are intended as a
reasonable, third-party examination of overall redevelopment opportunities.

The feasibility analysis was guided by the following objectives as set forth by MDHA:
§   To examine the overall redevelopment potential of Rolling Mill Hill as a mixed-use
    community;

§   To identify a range of uses that are market supportable and create long-term value,
    such as multi-family and attached single-family residential units, office, retail and
    other supporting uses;

§   To outline the timing and logical phasing of market supportable development strategies
    over a short-term (i.e., within five years) and longer-term development horizon;
§   To assess an appropriate mix and allocation of uses that take into account market
    trends in Nashville, including such factors as net absorption of commercial space,
    housing starts, and other indicators that drive demand for various types of real estate;
    and

§   To consider the site’s locational characteristics, including proximity to downtown, its
    competitive position relative to nearby projects, and its regional identity in the
    marketplace.


Demand Analysis & Positioning Strategy
The following details the various methodologies used in order to estimate potential market
support for specific uses at Rolling Mill Hill.
Office (Tables 31 & 32)
From a regional perspective, future employment levels and market demand for office space
are closely linked. In addition, a critical determinant of both future employment and
market demand is the degree to which a community or specific site is competitive. Factors
defining this competitive positioning include local and regional access, overall physical
characteristics such as highway frontage and visibility, proximity to economic activity such
as job creation, business costs such as property taxes and the like.



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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
As a rule, office uses require access to a qualified labor pool, contemporary
floorplates/building configurations, adequate (and oftentimes the provision of extra)
parking, nearby convenience and supporting retail and services and pedestrian-scale
amenities.

§   In terms of demand modeling, ERA estimates that future employment growth in office-
    using sectors will generate demand for roughly 8.0 million sq. ft. of office space
    across the MSA between 2000-2010.

§   Presuming that downtown Nashville maintains its competitive position (fair share) of
    the region’s office inventory at 24% (and this is uncertain based on a decline in market
    share from 28% in 1997), yields 1.9 million sq. ft. of future demand allocated to the
    CBD. In other words, downtown remains as competitive in 2010 as it is today as
    compared to other office submarkets in the region.
§   It would appear reasonable that Rolling Mill Hill could capture a small increment of
    total demand—say on the order of 3% to 7%—given the site’s advantages as noted
    elsewhere in this report. This capture suggests a planning target of roughly 70,000 sq.
    ft. to 150,000 sq. ft. as a possible office program for Rolling Mill Hill. Depending on
    site configuration, parking requirements and densities, a building prototype could be 2
    to 4 floors with floorplates in the range of 20,000 sq. ft.
Given limited job growth in the near-term as well as a glut of vacant office space in both
the CBD and suburban submarkets, it is highly unlikely that any speculative office
development will move forward in downtown Nashville over the next several years. As
the economy recovers and job growth enhances demand for space, it will initially be
absorbed by either existing vacant and/or available sublease space first; in downtown, that
amounts to almost one million sq. ft.
Furthermore, MDHA estimates that approximately 34 acres of land (currently used as
surface parking lots) ring the edge of the CBD. As economic conditions strengthen, these
sites may be more competitively positioned to attract commercial office development given
their proximity to the CBD. As a result, ERA believes that opportunities for speculative
office development at Rolling Mill Hill are limited.
There may be a play, however, to enhance prospects for limited commercial office
development at Rolling Mill Hill by setting aside that portion of the site with frontage on
the new Gateway Boulevard to attract an owner-user. Brokers indicate that downtown is at
a competitive disadvantage relative to suburban office submarkets in the cost premiums
associated with parking. The provision of free parking and lower land costs as well as
specific locational advantages of Rolling Mill Hill (e.g., easy proximity to CBD, Gateway
Boulevard frontage, visibility, etc.) may be used as bargaining chips to attract an owner-
user.

                 Planning Target-Office: 70,000 to 150,000 Sq. Ft.
                           Oriented to Owner-User(s)


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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                      ERA Project 14981
Housing (Tables 33 & 34)

A critical mass of housing at Rolling Mill Hill is extremely important. It serves to create a
neighborhood, fosters demand for other uses such as convenience and service retail, and
reinforces the importance of proximity to downtown businesses (and the office market)
with a potential supply of labor and consumers with disposable incomes. Importantly,
downtown housing has to successfully compete in the regional marketplace. It cannot,
however, replicate suburban product.

To ensure the overall marketability and success of both rental and for-sale housing at
Rolling Mill Hill, niche opportunities must be created. For example, The Cumberland
offers amenity value with its core downtown location, strong views and some in-house
offerings (e.g., business center). However, The Cumberland does not provide the
characteristics to differentiate it from its counterparts in outlying locations.
By comparison, the rehabilitation of the Bennie Dillon Building offers a unique, high-
quality product with very high finishes (e.g., granite countertops, hardwood and Terrazzo
flooring). This quality level was reflected in very rapid absorption when the project was
delivered and consistently high occupancy levels since despite the lack of amenities in the
surrounding neighborhood.
Moreover, Mercuryview Lofts has raised the threshold of unit quality and achievable rental
rates ($1.45 to $1.84 per sq. ft.) for new housing in downtown Nashville, much as the
significant, earlier success in rents and leasing achieved at the Bennie Dillon Building
($1.41 to $1.82 per sq. ft.). Granted both of these are small projects that have continued
the “incremental” delivery of new residential units to the greater downtown. However,
ERA believes that the precedent has been established for subsequent deliveries at Rolling
Mill Hill and in The Gulch to achieve similar quality levels with respect to architectural
design and unit finishes as well as the ability to command commensurate rental rates (see
pricing strategy below).
Induced Demand Scenario
ERA has estimated potential housing demand at Rolling Mill Hill under an Induced
Demand scenario that relies on a series of critical assumptions, among which include:
§   The creation of a high-quality, mixed-use (primarily residential) neighborhood that
    serves to reinforce the competitive position of Rolling Mill Hill in the marketplace;

§   The successful attraction of new commercial office tenants to the CBD, together with
    other public policy initiatives designed to strengthen downtown’s competitive position
    in the region; and

§   The provision of incentives such as TIF financing which may be critical in funding
    certain elements of the project such as infrastructure.



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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                        ERA Project 14981
Under these assumptions, CBD employment increases from its current share of 10% to
roughly 12.5% of total MSA employment. This would result in several thousand new jobs
in downtown Nashville by 2010 under assumed growth rates.
As a result of these and other public policy initiatives designed to enhance the overall
marketability of downtown Nashville for housing, the model assumes that the share of
employees working and living in downtown doubles from its current level of 5.7%. That
is, instead of one resident for every 19 jobs in downtown Nashville, it produces one
resident for every nine jobs. As a result, Nashville achieves a penetration ratio of
residents-to-employees comparable to selected cities in the Southeast such as Chattanooga
and Charlotte.

§   In terms of demand modeling, this methodology produces a net gain in downtown
    residents of approximately 7,500. Assuming an average household size of 1.7 persons
    per household would generate demand for more than 4,400 new housing units in the
    greater downtown—from “interstate to interstate”.
§   The next step is to estimate the capture of this universe of potential new downtown
    households to Rolling Mill Hill. Of course, the project’s ability to successfully capture
    is based on critical assumptions related to location, visibility, product quality,
    amenities and overall project environment, critical mass and other factors.
§   Under an Induced Demand model, competition for a larger pool of potential downtown
    residents increases from additional sites in play. For example, the creation of public
    policy incentives (not defined here) could be expected to solicit the interest of an
    increasing number of property owners to redevelop specific parcels in various locations
    across the downtown. As a result, the ability of Rolling Mill Hill (and The Gulch
    project) to capture a dominant share may be reduced.
§   The Induced Demand model assumes that Rolling Mill Hill captures from 20% to
    30% of potential downtown residents. In addition, an inflow factor of 5% considers
    other potential demand sources (e.g., households relocating to Nashville from other
    metropolitan areas, from the suburbs to downtown, acquiring second homes and
    households desiring a reverse commute).
§   This analysis results in potential market support for approximately 900 to 1,400
    housing units at Rolling Mill Hill (by 2010) or average annual absorption of roughly
    100 to 200 units per year depending on market conditions.
§   At a minimum, ERA suggests that the unit mix include at least 35% owner-occupied
    units—or roughly 300 to 500 units. This will serve to reinforce Rolling Mill Hill as a
    viable downtown neighborhood.
§   ERA compared the site’s carrying capacity against market potentials assuming a 20%
    allocation to on-site circulation and parking and assumed densities ranging from 20
    units per acre for moderate-density housing to as much as 35 to 50 units per acre for a
    high-density housing product. While this is clearly one of the primary objectives of


                                                                                          43

Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                       ERA Project 14981
    the Phase II master plan, this suggests that the site can accommodate the majority of
    the 900 to 1,400 units identified in the housing demand analysis.



                 Planning Target: 900 to 1,400 New Housing Units
                    Minimum of 35% Owner-Occupied Product


Absorption, Phasing & Pricing Strategy

§   In terms of phasing, the site is of sufficient size and variations in topography may
    enhance the ability to “parcelize” the site and phase development opportunities (and
    product types) in response to changing market conditions. Master planning efforts
    should carefully identify “pad-ready” sites that reflect the ability to phase (i.e.,
    infrastructure to stub) and accommodate development of specific uses.
§   Upon completion of critical infrastructure necessary to deliver pad-ready sites, it is
    likely that the project’s initial phase will encompass multi-family rental housing. (That
    is, for-sale housing is less likely in an untested location). Further, to achieve a critical
    mass of units as well as economies-of-scale (e.g., on-site project management),
    national housing developers would typically seek to develop on the order of 150 to 200
    multi-family units in the project’s initial phase (say 1 to 2 years).
§   Master planning for subsequent phases (say 2 to 4 years) should identify other pad sites
    at Rolling Mill Hill that could accommodate additional large-scale projects (greater
    than 150 units per project) as well as in-fill opportunities for delivery of for-sale units
    (say 25 to 30 units per project). Phasing and siting should carefully consider
    opportunities to accommodate owner-occupied housing in the form of condominium
    flats, lofts and townhouses on the order of 35% of the total (or roughly 300 to 500
    units).

§   Based on ERA’s market analysis, average annual absorption for residential
    development at Rolling Mill Hill is likely to be on the order of 100 to 200 units per
    year depending on market conditions. Of course, this is a substantial jump from
    historic deliveries of new housing in greater downtown. As noted, these estimates
    assume the successful attraction of new commercial office tenants to the CBD, together
    with other public policy initiatives designed to strengthen downtown’s competitive
    position in the region. Public initiatives (e.g., incentive-based) designed to reinforce
    market opportunities for new housing in the areas that comprise the greater downtown
    are considered equally important.

§   Consideration should be given to identifying a location on the site to accommodate a
    high-quality, high-end for-sale product in a later phase. This should be sited to tap the
    site’s advantages, such as commanding views of the CBD skyline as well as the
    Cumberland River.



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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
§   A pricing strategy should be flexible and reflect the mix of rental and for-sale units.
    For rental units, ERA’s survey of competitive and comparable properties located in
    greater downtown indicates an average price in the range of $1.35 per sq. ft. While
    detailed feasibility will be required as specific projects move forward, as a rule, a
    suggested pricing strategy for market-rate, multi-family units should generally fall in
    the range of $1.35 to $1.50 per sq. ft. (in current dollars).
§   ERA also believes that there is a strong opportunity at Rolling Mill Hill to develop
    high-quality, high-end rental units on par with other recent projects in greater
    downtown, including Mercuryview Lofts and the Bennie Dillon conversion. This
    presumes that such units are carefully sited to take advantage of views and on-site
    amenities and offer both high quality interior finishes and design. As noted, these
    projects command monthly rents ranging from $1.40 to $1.85 per sq. ft.—the top end
    of the market—and both projects enjoyed ready market acceptance and immediate
    absorption upon delivery. It is more likely, however, that early-on housing
    development at Rolling Mill Hill—particularly if introduced by a national developer
    with delivery of 150 to 200 units—will command average rents in the $1.35 to $1.50
    per sq. ft. range. Concurrent development of smaller (say 30 units or less), high
    quality rental buildings at higher price points appears to be market supportable.
Retail & Restaurants (Table 35)

For a number of reasons, ERA does not believe that Rolling Mill Hill is an appropriate
location for large-scale destination retail or food and beverage uses. It is unlikely that such
uses could effectively compete with the critical mass of entertainment and dining located
along both Broadway and 2nd Avenue. Moreover, household densities—even with a
significant amount of new housing on-site—are insufficient to support large-scale retail
uses.

However, 1,000+ units of new housing, combined with demand generated by on-site
employment as well as pass-through traffic on Gateway Boulevard and Hermitage Avenue
could be expected to support a small increment of convenience and service retail uses.

§   Based on limited potential capture on the order of 10% to 20% of annual on-site
    household and employee expenditures as well as assumed productivity (i.e., annual
    sales of $200 per sq. ft.), ERA estimates potential market support for roughly 5,000 to
    8,000 sq. ft. of general retail uses. These uses will require a highly visible location on
    the site.
§   Presuming a seasoned restaurant operator(s) on a highly visible corner with excellent
    visibility (e.g., at the intersection of Gateway Boulevard and Hermitage Avenue),
    ERA believes that limited market support exists for a small food & beverage program.
    Based on conservative capture rates as well as assumed sales productivity of $300 per
    sq. ft., we estimate potential market support for roughly 6,000 to 8,000 sq. ft. of food
    & beverage uses. This could be expected to enhance the site’s overall marketability
    for end-user office tenant(s).


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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
§   ERA notes that the retail demand analysis does not consider the impact of potential
    demand created by a destination use in the trolley barns (e.g., arts-related, cultural,
    creative industries, etc.). There does not appear to be a readily apparent “anchor” or
    any supporting uses that could occupy these buildings.

                     Planning Target: 10,000 to 16,000 Sq. Ft. of
                         Supporting Retail & Restaurants


Grocery Store (Table 35)
As the market for downtown housing increases over time and a critical mass of units are
built at Rolling Mill Hill, at The Gulch and on in-fill sites in Rutledge Hill, supporting uses
are likely to follow. Given reported market interest from several grocery stores in scouting
potential sites on the periphery of downtown Nashville, ERA has examined—on a
preliminary basis—potential market support for an urban prototype grocery store.

§   The demand model assumes that a grocery store is able to capture or penetrate a
    minimum of 30% of on-site household expenditures on groceries as well as 15% to
    20% of expenditures from households residing within a three-mile radius of Rolling
    Mill Hill. (This would encompass the area extending from The Gulch to portions to
    East Nashville).
§   Capturing grocery expenditures at annual sales productivity of $550 per sq. ft.
    translates into potential demand for a grocery store in the range of 23,000 to 32,000 sq.
    ft. ERA notes that extensive market research will be required.

             Planning Target-Grocery Store: 23,000 to 32,000 Sq. Ft.
                         Appears Market Supportable


Lodging (Table 36)

As noted in our analysis of hotel market conditions, given current market dynamics and
significant difficulties in the capital markets for hotel development, near-term opportunities
for new hotels in downtown Nashville will be limited. As a rule, the capital markets will
require average annual occupancies of 70% or greater before consideration is given to
financing new hotel development. This would suggest that recent or ongoing public
investment in economic “drivers” that generate visitor and tourism-related traffic to
downtown Nashville are critical.
Current market conditions and locational characteristics suggest that Rolling Mill
Hill is not an appropriate location for hotel development. While an on-site office
program of 70,000 to 150,000 sq. ft. could be expected to generate some incremental
demand for hotel roomnights (estimated at 20 to 40 rooms), this can be adequately met
among currently unoccupied rooms at both full- and limited-service properties in the
downtown hotel inventory.

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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN                         ERA Project 14981
Appendix




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Economics Research Associates/The Walker Collaborative
Rolling Mill Hill Feasibility Study, Nashville, TN       ERA Project 14981
Rolling Mill Hill
      Demographic Profile
                                                                  TABLE 1
                                                    TOTAL POPULATION BY COUNTY
                                                   FOR THE NASHVILLE MSA, 1990-2000
                                                     Rolling Mill Hill Feasibility Study


                                      Total Population            Change      % Change      % of MSA     % of MSA      % of MSA
           COUNTY                    1990          2000          1990-2000    1990-2000     Total 1990   Total 2000   Growth 90-00

Cheatham                               27,100        35,900           8,800         32.5%         2.8%         2.9%          3.6%
Davidson                              510,800       569,900          59,100         11.6%        51.9%        46.3%         24.0%
Dickson                                35,100        43,200           8,100         23.1%         3.6%         3.5%          3.3%
Robertson                              41,500        54,400          12,900         31.1%         4.2%         4.4%          5.2%
Rutherford                            118,600       182,000          63,400         53.5%        12.0%        14.8%         25.7%
Sumner                                103,300       130,400          27,100         26.2%        10.5%        10.6%         11.0%
Williamson                             81,000       126,600          45,600         56.3%         8.2%        10.3%         18.5%
Wilson                                 67,700        88,800          21,100         31.2%         6.9%         7.2%          8.6%
NASHVILLE MSA (1):                    985,000     1,231,300         246,300         25.0%


(1) County totals may not exactly equal MSA due to rounding.


SOURCE: TENNESSEE DEPT. OF LABOR AND WORKFORCE DEVELOPMENT; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                             Population Distribution, 2000




                                     7.2%               2.9%
           10.3%



10.6%




                                                                                                     46.3%



        14.8%

                              4.4%           3.5%




            Cheatham   Davidson   Dickson   Robertson    Rutherford   Sumner   Williamson   Wilson
                                                                  TABLE 2
                                                    TOTAL HOUSEHOLDS BY COUNTY
                                                   FOR THE NASHVILLE MSA, 1990-2000
                                                     Rolling Mill Hill Feasibility Study


                                     Total Households             Change      % Change      % of MSA     % of MSA      % of MSA
           COUNTY                    1990         2000           1990-2000    1990-2000     Total 1990   Total 2000   Growth 90-00

Cheatham                                9,500        12,900           3,400         35.8%         2.5%         2.7%           3.3%
Davidson                              207,500       237,400          29,900         14.4%        55.2%        49.5%          28.8%
Dickson                                13,000        16,500           3,500         26.9%         3.5%         3.4%           3.4%
Robertson                              14,800        19,900           5,100         34.5%         3.9%         4.1%           4.9%
Rutherford                             42,000        66,500          24,500         58.3%        11.2%        13.9%          23.6%
Sumner                                 36,900        49,000          12,100         32.8%         9.8%        10.2%          11.7%
Williamson                             27,900        44,800          16,900         60.6%         7.4%         9.3%          16.3%
Wilson                                 24,100        32,800           8,700         36.1%         6.4%         6.8%           8.4%
NASHVILLE MSA (1):                    375,800       479,600         103,800         27.6%


(1) County totals may not exactly equal MSA due to rounding.


SOURCE: US BUREAU OF THE CENSUS, 1990 & 2000; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                   TABLE 3
                             AGE OF HOUSEHOLDER IN OCCUPIED HOUSING UNITS
                          FOR DAVIDSON COUNTY AND THE NASHVILLE MSA, 1990-2000
                                      Rolling Mill Hill Feasibility Study


                                            Davidson County                                    Nashville MSA
    Age of Householder             1990           2000              %               1990           2000          %

Under 25 (1)                         14,257           16,659            17%           22,521         29,204          30%
25 to 34 Years                       53,591           53,087            -1%           90,017         96,893           8%
35 to 44 Years                       45,803           52,414            14%           88,376        114,196          29%
45 to 54 Years                       29,722           44,377            49%           59,692         97,076          63%
55 to 64 Years (2)                   25,461           28,427            12%           46,486         61,708          33%
65 and Over                          38,696           42,441            10%           68,734         80,492          17%


(1) The future 25 to 34 age cohort is underrepresented by the under 25 figures since many in the group are not
    householders.
(2) The in-coming 55 to 64 year cohort ("empty nesters") is identified by the outline box.


SOURCE: US BUREAU OF THE CENSUS, 1990 & 2000; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                         TABLE 4
                           HOUSEHOLD INCOME BY COUNTY
                         FOR THE NASHVILLE MSA, 1990-2000 (1)
                            Rolling Mill Hill Feasibility Study


                                     Median HH Income (2)            Change      % Change
           COUNTY                     1990         2000             1990-2000    1990-2000

Cheatham                         $      30,778   $     45,836     $     15,058        48.9%
Davidson                                28,377         39,797           11,420        40.2%
Dickson                                 24,419         39,056           14,637        59.9%
Robertson                               28,687         43,174           14,487        50.5%
Rutherford                              30,878         46,312           15,434        50.0%
Sumner                                  31,795         46,030           14,235        44.8%
Williamson                              43,615         69,104           25,489        58.4%
Wilson                                  32,852         50,140           17,288        52.6%
NASHVILLE MSA:                   $      30,223   $     44,223     $     14,000        46.3%


(1) Census income figures reflect income during the year prior to the Census.
(2) Median household income figures have not been adjusted for inflation.


SOURCE: US BUREAU OF THE CENSUS, 1990 & 2000; ECONOMICS RESEARCH
        ASSOCIATES, MARCH 2003.
                         Percent Change in Income by County, 1990-2000


60.0%




55.0%




50.0%




45.0%




40.0%




35.0%




30.0%
        Cheatham   Davidson   Dickson   Robertson   Rutherford   Sumner   Williamson   Wilson   NASHVILLE
                                                                                                  MSA:
                                    TABLE 5
              COMPREHENSIVE DEMOGRAPHIC REPORT, 2001-2006
         0-3 MILE TRADE AREA SURROUNDING DOWNTOWN NASHVILLE
                       Rolling Mill Hill Feasibility Study


                                                                    % CHANGE:
                                      2001               2006        2001-2006

Population
   Population                            70,102            68,811         -1.8%
   Persons in Group Quarters              9,148
Households
   Households                            27,036            27,268          0.9%
   Households In Families                13,251            11,906        -10.2%
   Average Household Size                  2.19              2.12         -3.0%
Race
   White                                 28,108            25,488         -9.3%
   Black                                 37,399            37,786          1.0%
   American Indian/Eskimo/Aleut             192               195          1.8%
   Asian or Pacific Islander              1,548             1,856         19.9%
   Other                                  1,360             1,798         32.2%
   Hispanic Origin                        2,644             3,273         23.8%
Age & Gender
   Population Age <18                    18,575            17,799         -4.2%
   Population Age 65+                     7,075             7,288          3.0%
   Males                                 33,782            33,247         -1.6%
   Females                               36,319            35,564         -2.1%
Income
   Median Household Income        $      22,511      $     25,992         15.5%
   Average Household Income              29,099            35,497         22.0%
   Median Family Income                  27,128            30,951         14.1%
   Average Family Income                 32,813            39,587         20.6%
   Per Capita Income                     11,752            14,674         24.9%
   Median Disposable Income              19,595
   Median Net Worth                      48,251
Housing Units
   Owner-occupied                         8,979             8,967         -0.1%
   Renter-occupied                       18,057            18,301          1.4%
Population by Age
   0-4                                       4,890          4,748         -2.9%
   5-9                                       4,852          4,541         -6.4%
   10 - 14                                   4,538          4,218         -7.0%
   15 - 19                                   7,453          7,482          0.4%
   20 - 24                                   8,364          8,501          1.6%
   25 - 29                                   5,349          5,236         -2.1%
   30 - 34                                   5,172          4,710         -8.9%
   35 - 39                                   5,118          4,391        -14.2%
   40 - 44                                   5,013          4,533         -9.6%
   45 - 49                                   4,332          4,270         -1.4%
   50 - 54                                   3,469          3,637          4.8%
   55 - 59                                   2,404          2,761         14.9%
   60 - 64                                   2,074          2,496         20.3%
   65 - 69                                   1,852          2,049         10.6%
   70 - 74                                   1,762          1,760         -0.1%
   75 - 79                                   1,373          1,311         -4.5%
   80 - 84                                   1,019          1,024          0.5%
   85+                                       1,068          1,144          7.1%
   Median Age                                 31.0           31.6          2.0%
                            TABLE 5 (Continued)
             COMPREHENSIVE DEMOGRAPHIC REPORT, 2001-2006
        0-3 MILE TRADE AREA SURROUNDING DOWNTOWN NASHVILLE
                      Rolling Mill Hill Feasibility Study


                                                                   % CHANGE:
                                     2001               2006        2001-2006

Households with Age of Householder
   Age 15 - 24                              2,823          2,964          5.0%
   Age 25 - 34                              5,781          5,600         -3.1%
   Age 35 - 44                              5,739          5,132        -10.6%
   Age 45 - 54                              4,708          4,841          2.8%
   Age 55 - 64                              2,927          3,459         18.2%
   Age 65 - 74                              2,595          2,769          6.7%
   Age 75+                                  2,461          2,501          1.6%

Households with Household Income
   < $5,000                                 2,602          2,413         -7.3%
   $5,000-$9,999                            5,289          3,835        -27.5%
   $10,000-$12,499                          1,355          1,822         34.5%
   $12,500-$14,999                          1,167          1,437         23.1%
   $15,000-$17,499                          1,181          1,350         14.3%
   $17,500-$19,999                          1,016          1,214         19.4%
   $20,000-$22,499                          1,337          1,111        -16.9%
   $22,500-$24,999                          1,086            978         -9.9%
   $25,000-$27,499                          1,346            940        -30.2%
   $27,500-$29,999                          1,063            943        -11.3%
   $30,000-$32,499                          1,092            861        -21.2%
   $32,500-$34,999                            720            848         17.7%
   $35,000-$37,499                            936            793        -15.3%
   $37,500-$39,999                            717            588        -18.0%
   $40,000-$42,499                            603            672         11.5%
   $42,500-$44,999                            460            565         22.7%
   $45,000-$47,499                            367            533         45.4%
   $47,500-$49,999                            295            454         54.1%
   $50,000-$54,999                            774            761         -1.8%
   $55,000-$59,999                            646            811         25.5%
   $60,000-$74,999                          1,442          1,435         -0.5%
   $75,000-$99,999                            762          1,381         81.3%
   $100,000-$124,999                          488            759         55.5%
   $125,000-$149,999                          118            384        225.7%
   $150,000-$249,999                          132            243         84.1%
   $250,000-$499,999                           40            129        219.0%
   $500,000+                                    -              7          N/A

Household Income of Householders Age <25
   < $15,000                               571               534         -6.5%
   $15,000-$24,999                         599               428        -28.5%
   $25,000-$34,999                         239               224         -6.4%
   $35,000-$49,999                         205               253         23.1%
   $50,000-$74,999                         218               237          8.5%
   $75,000-$99,999                         121               199         64.3%
   $100,000+                                83               170        105.4%
   Median Household Income     $        17,026      $     21,556         26.6%
                           TABLE 5 (Continued)
            COMPREHENSIVE DEMOGRAPHIC REPORT, 2001-2006
       0-3 MILE TRADE AREA SURROUNDING DOWNTOWN NASHVILLE
                     Rolling Mill Hill Feasibility Study


                                                               % CHANGE:
                                   2001             2006        2001-2006

Household Income of Householders Age 25-34
   < $15,000                              546            494         -9.5%
   $15,000-$24,999                      1,043            729        -30.1%
   $25,000-$34,999                        965            821        -14.9%
   $35,000-$49,999                        618            644          4.3%
   $50,000-$74,999                        561            546         -2.5%
   $75,000-$99,999                        148            232         56.6%
   $100,000+                               92            167         82.1%
   Median Household Income    $        22,268   $     24,595         10.4%

Household Income of Householders Age 35-44
   < $15,000                              287            230        -19.8%
   $15,000-$24,999                        748            462        -38.2%
   $25,000-$34,999                      1,190            927        -22.1%
   $35,000-$49,999                      1,041            983         -5.6%
   $50,000-$74,999                        715            670         -6.2%
   $75,000-$99,999                        134            226         68.3%
   $100,000+                              113            181         59.7%
   Median Household Income    $        28,418   $     31,578         11.1%

Household Income of Householders Age 45-54
   < $15,000                              290            279         -3.8%
   $15,000-$24,999                        689            892         29.5%
   $25,000-$34,999                        743            586        -21.1%
   $35,000-$49,999                        808            834          3.3%
   $50,000-$74,999                        706            754          6.8%
   $75,000-$99,999                        163            284         74.7%
   $100,000+                               76            167        119.3%
   Median Household Income    $        27,019   $     29,325          8.5%

Household Income of Householders Age 55-64
   < $15,000                              322            316         -1.9%
   $15,000-$24,999                        511            402        -21.3%
   $25,000-$34,999                        504            499         -1.0%
   $35,000-$49,999                        306            391         27.5%
   $50,000-$74,999                        317            393         24.3%
   $75,000-$99,999                         90            232        156.7%
   $100,000+                              118            218         85.7%
   Median Household Income    $        27,361   $     31,868         16.5%

Household Income of Householders Age 65-74
   < $15,000                              292            284         -2.7%
   $15,000-$24,999                        340            363          6.5%
   $25,000-$34,999                        316            286         -9.7%
   $35,000-$49,999                        236            310         31.0%
   $50,000-$74,999                        199            229         15.3%
   $75,000-$99,999                         49            105        112.5%
   $100,000+                               65            134        106.5%
   Median Household Income    $        18,535   $     24,450         31.9%

Household Income of Householders Age 75+
   < $15,000                              294            276         -6.1%
   $15,000-$24,999                        362            421         16.4%
   $25,000-$34,999                        263            248         -5.6%
   $35,000-$49,999                        163            190         16.8%
   $50,000-$74,999                        147            177         20.3%
   $75,000-$99,999                         56            104         85.0%
   $100,000+                               60            106         76.9%
   Median Household Income    $        17,539   $     20,969         19.6%
                                    TABLE 6
                      GROSS RETAIL SALES BY COUNTY
                     FOR THE NASHVILLE MSA, 1998-2001
                       Rolling Mill Hill Feasibility Study


                                    RETAIL SALES (In $0,000s)                   2000 Sales
        COUNTY             1998         1999       2000            2001           Per HH

Cheatham               $    149.1    $    163.6   $    170.7   $    172.7   $        13,236
Davidson                  8,846.9       9,329.5      9,664.7      9,710.3   $        40,711
Dickson                     451.1         485.7        486.4        499.2   $        29,480
Robertson                   363.8         375.8        394.2        406.6   $        19,811
Rutherford                1,647.8       1,821.7      1,886.0      2,028.0   $        28,361
Sumner                      797.2         885.8        892.5        924.4   $        18,215
Williamson                1,601.2       1,845.9      1,970.9      2,117.5   $        43,993
Wilson                      682.3         766.3        778.2        784.9   $        23,726
NASHVILLE MSA:         $ 14,539.4    $ 15,674.3   $ 16,243.7   $ 16,643.6   $        33,869


                                                                               % of
                           Change: 1998-2001           % of MSA Total       MSA Growth
                            Amt.        %             1998       2001        1990-2000

Cheatham               $    23.6          15.8%         1.0%         1.0%              1.1%
Davidson                   863.4           9.8%        60.8%        58.3%             41.0%
Dickson                     48.1          10.7%         3.1%         3.0%              2.3%
Robertson                   42.9          11.8%         2.5%         2.4%              2.0%
Rutherford                 380.2          23.1%        11.3%        12.2%             18.1%
Sumner                     127.2          16.0%         5.5%         5.6%              6.0%
Williamson                 516.3          32.2%        11.0%        12.7%             24.5%
Wilson                     102.7          15.0%         4.7%         4.7%              4.9%
NASHVILLE MSA:         $ 2,104.2          14.5%



SOURCE: TENNESSEE DEPT. OF LABOR AND WORKFORCE DEVELOPMENT; ECONOMICS
        RESEARCH ASSOCIATES, MARCH 2003.
Rolling Mill Hill
Employment Trends & Projections
                                                                  TABLE 7
                                                    TOTAL EMPLOYMENT BY COUNTY
                                                   FOR THE NASHVILLE MSA, 1990-2000
                                                     Rolling Mill Hill Feasibility Study


                                     Total Employment              Change       Pct. Change        % of MSA         % of MSA      % of MSA
           COUNTY                    1990         2000            1990-2000      1990-2000         Total 1990       Total 2000   Growth 90-00

Cheatham                               13,500        19,300             5,800          43.0%              2.7%            3.0%          4.2%
Davidson                              264,500       296,100            31,600          11.9%             52.6%           46.1%         22.6%
Dickson                                16,100        21,200             5,100          31.7%              3.2%            3.3%          3.7%
Robertson                              20,000        28,400             8,400          42.0%              4.0%            4.4%          6.0%
Rutherford                             61,500        95,000            33,500          54.5%             12.2%           14.8%         24.0%
Sumner                                 51,600        67,700            16,100          31.2%             10.3%           10.5%         11.5%
Williamson                             41,500        67,900            26,400          63.6%              8.3%           10.6%         18.9%
Wilson                                 34,200        46,900            12,700          37.1%              6.8%            7.3%          9.1%
NASHVILLE MSA (1):                    502,900       642,600           139,700          27.8%


(1) Total County employment varies from the total shown on Table 6 since County data are not seasonally adjusted.


SOURCE: TENNESSEE DEPT. OF LABOR AND WORKFORCE DEVELOPMENT; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                    TABLE 8
                           NON-AGRICULTURAL EMPLOYMENT TRENDS & PROJECTIONS
                                     FOR THE NASHVILLE MSA, 1990-2010
                                       Rolling Mill Hill Feasibility Study


                                          TN Dept. of Labor             Woods & Poole, Inc.         CHANGE: 2000-2010
              CATEGORY                    1990         2000              2000        2010             %       Amount
Nashville MSA
   Mining & Construction                   23,800         34,400           55,700       61,000           9.5%       3,273
   Manufacturing                           88,500         96,900          100,000      102,000           2.0%       1,938
   Transp/Comm/Public Utilities            28,700         36,600           40,500       46,500          14.8%       5,422
   Wholesale & Retail Trade               124,200        163,400          196,300      234,100          19.3%      31,465
   Finance/Insurance/Real Estate           31,100         41,700           76,200       86,900          14.0%       5,856
   Services                               136,600        221,600          306,500      401,600          31.0%      68,757
   Government                              69,000         85,900           81,200       91,800          13.1%      11,214
TOTAL - NASHVILLE MSA                     501,900        680,500          856,400    1,023,900          18.8%     127,925
Annual % Change                                -            3.6%               -          2.0%                     (2)

Difference:                                                               175,900
                                                                          (1)

(1) Woods & Poole, Inc. estimates include self employment (i.e., employees that do not contribute to state unemployment
    insurance). Dept. of Labor and Workforce Dev't data include only employment covered by Unemployment Insurance Law.
(2) Estimates for future job growth, by sector, were calculated by applying the Woods & Poole growth rate (2000-2010) to
    the state's Department of Labor 2000 base year employment.


SOURCE: TENNESSEE DEPT. OF LABOR AND WORKFORCE DEVELOPMENT; WOODS & POOLE, INC., 2002; ECONOMICS
      RESEARCH ASSOCIATES, MARCH 2003.
Rolling Mill Hill
 Residential Market Conditions
                                                 TABLE 9
                          BUILDING PERMITS ISSUED FOR NEW HOUSING UNITS
                 IN NASHVILLE-DAVIDSON COUNTY AND DOWNTOWN NASHVILLE, 1996-2003
                                    Rolling Mill Hill Feasibility Study


                     Single-           % of         Multi-       % of                  % of
                     family            Total        family       Total     Other (1)   Total     TOTAL
Nashville-Davidson County
       1996             2,720             96.5%           44        1.6%          55      2.0%     2,819
       1997             2,071             98.1%            8        0.4%          33      1.6%     2,112
       1998             2,288             98.9%            7        0.3%          18      0.8%     2,313
       1999             2,396             98.2%           22        0.9%          22      0.9%     2,440
       2000             2,232             98.3%            6        0.3%          33      1.5%     2,271
       2001             2,768             99.0%           12        0.4%          16      0.6%     2,796
       2002             2,578             98.5%           11        0.4%          27      1.0%     2,616
     2003 (2)             520             98.5%            2        0.4%           6      1.1%       528
TOTAL:                 17,573             98.2%          112        0.6%         210      1.2%    17,895

Annual Average:             2,452                          16                     29               2,497

2-Mile Radius from 2nd Avenue & Broadway
        1996               40       85.1%                   2       4.3%           5     10.6%       47
        1997               33       94.3%                   1       2.9%           1      2.9%       35
        1998               30       85.7%                   3       8.6%           2      5.7%       35
        1999               35       89.7%                   2       5.1%           2      5.1%       39
        2000               37       92.5%                   2       5.0%           1      2.5%       40
        2001               36       94.7%                   -       0.0%           2      5.3%       38
        2002               34       85.0%                   4      10.0%           2      5.0%       40
      2003 (2)              6       75.0%                   -       0.0%           2     25.0%        8
TOTAL:                    251       89.0%                  14       5.0%          17      6.0%      282

Annual Average:                35                            2                     2                 39
As % of County:              1.4%                      12.5%                    8.1%                1.6%


(1) Includes 3- and 4-family dwelling units and duplex units.
(2) Through February 2003.


SOURCE: METRO PLANNING DEPARTMENT; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                             TABLE 10
                                 HOUSING TENURE BY COUNTY
                               FOR THE NASHVILLE MSA, 1990-2010
                                 Rolling Mill Hill Feasibility Study


                                  1990 Households                              2000 Households
        COUNTY            Owner        Renter     % O-O                Owner        Renter     % O-O

Cheatham                     7,910        1,605          83%             10,766       2,112        84%
Davidson                   111,691       95,839          54%            131,384     106,021        55%
Dickson                      9,854        3,165          76%             12,528       3,945        76%
Robertson                   11,085        3,716          75%             15,229       4,677        77%
Rutherford                  27,826       14,292          66%             46,408      20,035        70%
Sumner                      27,641        9,209          75%             36,970      11,971        76%
Williamson                  22,210        5,718          80%             36,437       8,288        81%
Wilson                      19,379        4,691          81%             26,705       6,093        81%
NASHVILLE MSA:             237,596      138,235          63%            316,427     163,142        66%



SOURCE: US BUREAU OF THE CENSUS, 1990 & 2000; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                              TABLE 11
                     AGE OF HOUSING STOCK
          DAVIDSON COUNTY AND NASHVILLE MSA, 1990-2000
                  Rolling Mill Hill Feasibility Study



                                         1990        2000
Units Built in Last 10 Years
           Davidson County                 59,091         40,556
           Nashville MSA                  124,868        131,356
           Davidson County as % of MSA      47.3%          30.9%

Units Built More Than 10 Years Ago
           Davidson County                169,973        212,421
           Nashville MSA                  286,100        377,937
           Davidson County as % of MSA      59.4%          56.2%

Percent Built in Last 10 Years
          Davidson County                   25.8%         16.0%
          Nashville MSA                     30.4%         25.8%



SOURCE: US CENSUS, ECONOMICS RESEARCH ASSOCIATES,
        MARCH 2003.
                                       TABLE 12
                          HOUSING VALUES AND RENTS IN
                DAVIDSON COUNTY AND THE NASHVILLE MSA, 1990-2000
                           Rolling Mill Hill Feasibility Study


                                                                                %
                                                               CHANGE        CHANGE
                                1990             2000         1990 - 2000   1990 - 2000
Median Gross Rents
     Davidson County        $          433   $          530   $        97         22.4%
     Nashville MSA          $          426   $          523   $        97         22.8%


Median Owner-Occupied Home Values
     Davidson County        $     75,600     $   114,200      $    38,600         51.1%
     Nashville MSA          $     75,900     $   120,800      $    44,900         59.2%



SOURCE: US CENSUS, ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                TABLE 12-A
       HOUSING SALE TRENDS, GREATER NASHVILLE MARKET, 2000-2002
                     Rolling Mill Hill Feasibility Study


                           NO. OF           MEDIAN         DAYS ON
           YEAR            SALES             PRICE         MARKET

Single-family
 2000                         20,866    $     129,883              79
 2001                         22,103    $     133,476              89
 2002                         23,340    $     136,144              92
 % Change:                                       4.8%

Condominium Units
 2000                          1,936    $      96,414             N/A
 2001                          2,067    $     108,725             N/A
 2002                          2,393    $     117,327             N/A
 % Change:                                      21.7%


SOURCE: GREATER NASHVILLE ASSOCIATION of REALTORS; ECONOMICS
        RESEARCH ASSOCIATES, MARCH 2003.
                                                       TABLE 13
                              NASHVILLE AREA APARTMENT OCCUPANCIES & RENTS, 1999-2002
                                          Rolling Mill Hill Feasibility Study



     SUBMARKET RANK                       UNITS REPORTING (1)               %                  AVERAGE SIZE (In Sq. Ft.)
       BY SIZE (2002)            1999        2000    2001        2002      DIST.        1999       2000     2001         2002

Nolensville Road                  9,201      7,324     9,685      9,437     15.8%         847           844       841       844
Donelson/Hermitage                6,095      5,494     6,391      6,711     11.3%         880           903       901       908
Hickory Hollow                    6,246      5,312     6,268      6,263     10.5%         884           889       889       890
Bellevue                          5,145      4,465     5,456      5,369      9.0%       1,039         1,033     1,055     1,054
Franklin                          4,991      4,147     4,850      4,993      8.4%       1,014         1,010     1,014     1,014
Briley Parkway                    5,566      4,845     5,469      5,211      8.7%         921           922       910       912
Madison/Rivergate                 4,786      4,799     5,440      4,856      8.1%         927           922       928       934
Murfreesboro                       N/A       2,987     3,626      4,437      7.4%        N/A            835       952       982
Murfreesboro Road                 3,947      3,506     3,946      3,644      6.1%         948           950       947       949
CBD/West End                      3,314      3,604     3,765      3,646      6.1%         911           902       913       909
Hendersonville/Gallatin           2,937      2,589     3,177      3,158      5.3%         923           936       926       938
Charlotte/N. Nashville            1,533      1,736     1,959      1,917      3.2%         965           888       925       901
TOTAL:                           53,761     50,808    60,032     59,641    100.0%         933           920       933       936


                                           OCCUPANCY RATE                   %              RENTAL RATES PER SQ. FT.
                                                                          CHANGE

Nolensville Road                  94.1%      94.7%      94.1%     93.3%     -0.9%   $    0.66     $    0.68 $    0.69 $    0.69
Donelson/Hermitage                94.2%      95.1%      89.3%     91.9%     -2.5%        0.70          0.74      0.73      0.75
Hickory Hollow                    94.9%      95.2%      92.9%     93.7%     -1.2%        0.72          0.73      0.74      0.73
Bellevue                          93.1%      94.1%      91.9%     91.9%     -1.3%        0.75          0.78      0.77      0.77
Franklin                          94.7%      96.7%      94.0%     93.4%     -1.4%        0.79          0.79      0.83      0.82
Briley Parkway                    95.1%      94.9%      94.1%     92.1%     -3.2%        0.61          0.61      0.64      0.64
Madison/Rivergate                 94.8%      96.0%      93.5%     92.3%     -2.7%        0.61          0.62      0.63      0.64
Murfreesboro                        N/A      94.6%      93.6%     91.8%       N/A        N/A           0.80      0.72      0.74
Murfreesboro Road                 91.5%      95.6%      93.6%     93.3%      2.0%        0.65          0.66      0.68      0.67
CBD/West End                      92.7%      97.3%      94.6%     93.4%      0.8%        1.01          0.95      1.01      1.03
Hendersonville/Gallatin           94.6%      95.7%      96.7%     92.2%     -2.5%        0.67          0.67      0.70      0.70
Charlotte/N. Nashville            91.5%      96.9%      94.6%     90.8%     -0.7%        0.65          0.73      0.62      0.67
AVERAGE:                          94.0%      95.4%      93.4%     92.4%     -1.7%   $    0.71     $    0.72 $    0.73 $    0.74
Annual % Change                       -       1.5%      -2.1%     -1.0%                     -          1.4%      1.4%      1.6%

(1) Gross unit inventory varies year-to-year based on survey responses.



SOURCE: GREATER NASHVILLE APARTMENT ASSOCIATION; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                             TABLE 14
   AVERAGE MONTHLY APARTMENT RENTS, BY SUBMARKET, 2000-2002
                 Rolling Mill Hill Feasibility Study


    SUBMARKET RANK                                            % CHANGE:
     BY RENT (2002)           2000        2001        2002     2000-2002

CBD/West End              $     858   $     925   $     939         9.4%
Franklin                        797         843   $     826         3.7%
Bellevue                        804         817   $     807         0.3%
Murfreesboro                    670         685   $     725         8.2%
Donelson/Hermitage              664         660   $     681         2.6%
Hendersonville/Gallatin         631         650   $     661         4.7%
Hickory Hollow                  647         656   $     653         1.0%
Murfreesboro Road               625         640   $     636         1.8%
Charlotte/N. Nashville          583         602   $     601         3.0%
Madison/Rivergate               576         586   $     598         3.8%
Nolensville Road                575         581   $     586         1.8%
Briley Parkway                  567         585   $     583         2.8%


MARKET AVERAGE:           $     662   $     676   $     691         4.4%




SOURCE: GREATER NASHVILLE APARTMENT ASSOCIATION; ECONOMICS
        RESEARCH ASSOCIATES, MARCH 2003.
                                           TABLE 14-A
                  MULTI-FAMILY DEVELOPMENT TRENDS IN GREATER NASHVILLE
                                Rolling Mill Hill Feasibility Study


                                                2001 SPECULATIVE CONSTRUCTION (1)
                                  Potential          Units        Units                             %
         SUBMARKET                 Starts          Underway    Completed    Total                  Dist.

    Murfreesboro                          579              278               633        1,490           38.9%
    Donelson/Hermitage                      -              284               366          650           17.0%
    Hendersonville/Gallatin                 -              364               240          604           15.8%
    Bellevue                                -                -               433          433           11.3%
    Madison/Rivergate                       -               88               240          328            8.6%
(2) CBD/West End                          250                -                 -          250            6.5%
    Nolensville Road                       72                -                 -           72            1.9%
    Franklin                                -                -                 -            -            0.0%
    Hickory Hollow                          -                -                 -            -            0.0%
    Murfreesboro Road                       -                -                 -            -            0.0%
    Charlotte/N. Nashville                  -                -                 -            -            0.0%
    Briley Parkway                          -                -                 -            -            0.0%

TOTAL:                                    901            1,014             1,912        3,827       100.0%

                                                2002 SPECULATIVE CONSTRUCTION (1)
    Donelson/Hermitage                    348            403          284      1,035                    34.7%
(3) CBD/West End                          249             80           32        361                    12.1%
    Madison/Rivergate                     244            148           88        480                    16.1%
    Murfreesboro                            -             75          374        449                    15.0%
    Hendersonville/Gallatin                 -            364            -        364                    12.2%
    Murfreesboro Road                       -            134                     134                     4.5%
    Nolensville Road                       84              -                      84                     2.8%
    Bellevue                                -              -                       -                     0.0%
    Franklin                                -              -                       -                     0.0%
    Hickory Hollow                          -              -                       -                     0.0%
    Charlotte/N. Nashville                  -             80                      80                     2.7%
    Briley Parkway                          -              -                       -                     0.0%

TOTAL:                                    925            1,284               778        2,987           100%


(1) Includes both convention and subsidized units announced, under construction, in site preparation,
    or lease-up.
(2) Includes 250 units proposed by Vanderbilt University and MLP Land Development on Chet Atkins
    Place.
(3) Includes the proposed Kress Lofts (31 units), Laurel House (48 units), and Stahlman Building (170
    units); the Villas at Metro Center (80 subsidized units); and Mercury View (32 units).

SOURCE: GREATER NASHVILLE APARTMENT ASSOCIATION; ECONOMICS RESEARCH
        ASSOCIATES, MARCH 2003.
      Rolling Mill Hill
Competitive/Comparable Housing Survey
                                          TABLE 15
                        SUMMARY OF COMPETITIVE RENTAL INVENTORY
                    IN DOWNTOWN NASHVILLE AND ADJACENT AREAS, 2002
                              Rolling Mill Hill Feasibility Study


                                                ANNUAL AVERAGE
                        Total Units   Vacancy      Turnover   % Working         %
     SUBMARKET          Reporting       Rate         Rate      in CBD          Dist.

Downtown/CBD                    992        5.4%         20.0%          49.0%      47.6%
Germantown                      315                                               15.1%
Rutledge Hill                   309        8.3%                        45.0%      14.8%
Hillsboro Village               285                                               13.7%
Midtown                         151       21.0%         45.0%           5.0%       7.2%
The Gulch                        32        6.3%                        50.0%       1.5%

TOTAL:                        2,084       10.3%         32.5%      37.3%         100.0%
                                                                 (1)

(1) Estimates.


SOURCE: ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
Pg 1 of 3   Table 15
            Competitive Rental Apartment Inventory, Downtown Nashville & Selected Sub-Markets, 2002


                                               Year        Floors      Units          Vacancy        Turnover Downtown                                                                                                                   Utilities/Parking
             Name, Location        Type        Open         Res.    Total Vacant       Rate            Rate   Employment      No.               Bedrooms     Square Feet                Rental Rate              Price per Sq. Ft.            Included                 Amenities
            Downtown
                                                                                                                                                                                                                                                               Contemporary, luxury hi-
             The Cumberland,      Contemp       1998          23      289     25       8.7%            49%       38%                     1 BR                  600            800   $     855    $       1,075   $     1.34   $   1.43     Water, sewer
                                                                                                                                                                                                                                                               rise, security, concierge,
             555 Church Street       HR                                                                                                  2 BR                 1,052      1,152      $    1,155   $       1,300   $     1.10   $   1.13   / parking (garage)
                                                                                                                                                                                                                                                               club, cleaners, fitness, DSL,
                                                                                                                                         3 BR (penthouse)     1,591      2,837      $    1,500   $       3,200   $     1.13   $   1.51                         business
                                                                                                                                      1 *One 4BR townhouse                          $    7,000                   n/a                                           center/conference, city
                                                                                                                                                                                                                                                               views, library, carpeted,
                                                                                                                                                                                                                                                               low-finish kitchen, bath

                                                                                                                                                                                                                                                               10-15' ceilings, historic
             Market Street Apts   Historic      1909            3      74         8    10.8%           15%      25%-33%                  1 BR                  700            700   $     675    $        750    $     0.96   $   1.07         Water           district, waterfront, new
             150 2nd Ave, S.        MR       Rehab: 1986                                                                                 2 BR                 1,050      1,150      $     900    $        975    $     0.85   $   0.86   / parking (surface)   bridge- stadium, NFL, NHL,
                                                                                                                                                                                                                                                               Ryman, TPAC, Banks, Post
                                                                                                                                                                                                                                                               Office, Hotels

                                                                                                                                                                                                                                                               Terrazzo floors, hardwood,
                                 Vintage
             Bennie Dillon by Post              1926           11      86         2    2.3%            n/a       40%                     Efficiency/Studio     500                  $     880                    $     1.76                    Water
                                                                                                                                                                                                                                                               security, fitness, hair
             700 Church Street    HR-Lofts   Rehab: 1999                                                                                 1 BR                  583            773   $     887    $       1,027   $     1.33   $   1.52   / parking (garage)    salon, city views, adjacent
                                                                                                                                      3 2 BR                   890       1,156      $    1,630   $       2,180   $     1.83   $   1.89                         library, hobby rooms,
                                                                                                                                         3 BR loft            1,337                              $       2,385   $     1.78                                    granite counters, corp.
                                                                                                                                                                                                                                                               apts, 16' ceilings, high


             Metro Manor Apts. Contemp          1963           10     170     10       5.9%            n/a       75%                134 Efficiency/Studio      425                  $     454                    $     1.07                 Water, trash       Capital views, rooftop
             500 5th Ave., N         HR      Rehab: 2001                                                                             27 1 BR                   725                  $     540                    $     0.74              Parking ($20/mnth) pool, deck
                                                                                                                                      9 2 BR                   875                  $     687                    $     0.79


             Rhea Building Lofts* Historic      1890            2      10         1    10.0%           n/a        n/a                    1 BR                  900       3,000      $    1,043   $       2,347   $     0.78   $   1.16                         All units different,
             165 2nd Ave.           MR       Rehab: 1995                                                                                 2 BR                         (VIP)                      (VIP)                                                         balconies, carpeted


             Lofts Above Ichiban Historic       1890            1      8          -    0.0%            6%        30%                     1 BR                  750            850   $     940    $       1,200   $     1.25   $   1.41
             107 2nd Ave. N         MR       Rehab: 1982                                                                                 2 BR
                                                                                                                                         3 BR                 1,100                 $    1,356                   $     1.23


             Capitol Towers *     Contemp       1961           12     160   n/a         n/a            n/a        n/a                50 1 BR                   600            860   $     755    $       1,320
             510 Gay Street          HR                                                                                             110 2 BR                  1,050      1,160      $    1,120   $       1,820


             Riverfront Apts.     Contemp       1986            3     145   n/a         n/a            n/a        n/a                    1 BR                                       $     605    $        865                            Parking (covered)     Pool, fitness membership,
             726 1st Avenue, N     MR/TH                                                                                                 2 BR                                                                                                                  riverfront/views, carpet,
                                                                                                                                                                                                                                                               Corporate apts,
                                                                                                                                                                                                                                                               patio/balcony


             The Quarters         Historic      1886            4      32         -    0.0%            10%       60%                     1 BR                  550            725   $     675    $        800    $     1.10   $   1.23         Water           Rooftop deck, riverfront view
             178 2nd Avenue, N. MR-Lofts     Rehab: 1986                                                                                 2 BR                  975            975   $    1,100   $       1,400   $     1.13   $   1.44       surface @
                                                                                                                                                                                                                                            $75/month)


             Union Plaza*         Contemp       1996            2      18   n/a         n/a            n/a        n/a                    1-2 BR                                     $     890    $       1,050                                                 Corporate apts.,
             315 Union Street        HR                                                                                                                                                                                                                        stadium/city views
                                                                                                                                         3 BR                                       $    1,775
            TOTAL - Downtown:                                        992     46               5.4%       20%            49%              Efficiency/Studio    463               -   $    667     $        -      $ 1.41
                                                                                                                                         1-2 BR               804       1,128       $    889     $   1,253       $ 1.10       $ 1.44
                                                                                                                                         3 BR                1,343      2,837       $   1,578                    $ 1.38       $ 1.51
Pg 2 of 3   Table 15 (Continued)
            Competitive Rental Apartment Inventory, Downtown Nashville & Selected Sub-Markets, 2002


                                             Year        Floors        Units          Vacancy        Turnover Downtown                                                                                                      Utilities/Parking
             Name, Location        Type      Open         Res.      Total Vacant       Rate            Rate   Employment     No.             Bedrooms     Square Feet           Rental Rate           Price per Sq. Ft.          Included                 Amenities
            Midtown
             20 & Grand          Contemp                        9      99     21       21.2%           45%        5%               49 1 BR                  650      750    $     975    $    1,075   $   1.43   $   1.50   Parking included    restaurants, security,
             2000 Grand Ave      MR                                                                                                50 2 BR                  900     1,150   $    1,300   $    1,530   $   1.33   $   1.44       (Garage)        corporate


             Wesley Place*       Mixed-Use                      6      45                                                          4 1 BR                                   $     950    $    1,355                                             Vanderbilt, Medical Center,
             2001 Scarritt Pl    MR                                                                                                29 2 BR                 1,144    1,185   $    1,599   $    1,899              $   1.60                       Corporate suites, retail,
                                                                                                                                   12 3 BR                                                                                                      balconies

                                                                                                                                                                                                                                                Historic, hardwood,
             The Blackstone*     Vintage                        6                                                                     1-2 BR                                $     645    $    1,042                                             custom, French doors, 10'
             3300 West End Ave MR                                                                                                                                                                                                               ceilings, security access,
                                                                                                                                                                                                                                                laundry


            TOTAL - Midtown:                                         144     21          21.2%           45%           5%             Efficiency/Studio     -        -      $     -      $     -      $   -      $   -
                                                                                                                                      1-2 BR               775      950     $    968     $   1,251    $ 1.25     $ 1.32
                                                                                                                                      3 BR                  -      1,185    $     -      $   1,899    $   -      $ 1.60




            The Gulch                                                                                                                                                                                                                           Floor to ceiling glass, 12-
             Mercury View Lofts Mixed Use        2002           5      32         2    6.3%            n/a       50%                  1 BR                  970     1,100   $    1,400   $    1,900   $   1.44   $   1.73 Parking               25' ceilings, gated
             1209 Pine Street    Lofts                                                                                                2 BR                 1,200    1,530   $    2,000   $    2,500   $   1.63   $   1.67                       entrance, security, above
                                                                                                                                      3 BR                 1,630      -     $    3,000   $      -     $   1.84   $    -                         dining & shopping


             Laurel Home                     Exp. 2004    n/a        n/a    n/a         n/a            n/a       n/a                           n/a


            TOTAL - The Gulch:                                        32          2           6.3%                     50%            Efficiency/Studio     -        -      $     -      $     -      $   -      $    -
                                                                                                                                      1-2 BR              1,085    1,315    $   1,700    $   2,200    $ 1.57     $ 1.67
                                                                                                                                      3 BR                1,200    1,530    $   2,000    $   2,500    $ 1.63     $ 1.67
Table 15 (Continued)
Competitive Rental Apartment Inventory, Downtown Nashville & Selected Sub-Markets, 2002


                                   Year        Floors      Units            Vacancy   Turnover Downtown                                                                                               Utilities/Parking
 Name, Location          Type      Open         Res.    Total Vacant         Rate       Rate   Employment   No.          Bedrooms     Square Feet           Rental Rate          Price per Sq. Ft.         Included               Amenities
Hillsboro Village                                                                                                 Efficiency/Studio                     $   860     $    870
                                                                                                                                                                                                                          Vintage, 9' ceilings,
  The Gardens of HV Vintage                         4      98     n/a          n/a      n/a       n/a             1 BR                                  $    990    $    1,135                       Parking (deck)       custom moulding,
  2101 Portland Ave MR                                                                                            2 BR                                  $   1,395   $    1,470                                            hardwood, fitness, pool,
                                                                                                                  3 BR                                  $   1,895   $    1,915                                            business center, corporate
                                                                                                                                                                                                                          apts


                     MR/TH
  Village at Vanderbilt                             4     187     n/a          n/a      n/a       n/a             1 BR                                  $    830    $     950    $   0.99   $   1.14 Parking (covered)    Club, fitness, pool, FP,
  403 Village @ Vandy                                                                                             2 BR                1,204             $   1,350                                                         corporate suites, balconies
                                                                                                                  3 BR                1,350             $   1,899


TOTAL - Hillsboro Village:                               285            -      n/a                                Efficiency/Studio
                                                                                                                  1-2 BR               836              $   830     $   1,220    $ 0.99     $ 1.46
                                                                                                                  3 BR                                              $   1,980




Rutledge Hill
  Peabody Quarters   Contemp                        3      24           2      8.3%     n/a       45%             1 BR                  500 (avg)       $    450    $     575    $   0.90   $   1.15 Parking (surface)    Brick Construction
  Almond @ PeabodyMR


TOTAL - Rutledge Hill:                                     24           2      8.3%               45%             Efficiency/Studio
                                                                                                                  1-2 BR               500          -   $   450     $    575     $ 0.90     $ 1.15
                                                                                                                  3 BR




Germantown
                    SFD
  Germantown Partners                   2001        1       6   n/a             %       n/a       n/a             1 BR                  575    1,027    $    695    $    1,395   $   1.21   $   1.36 Parking (surface)
  5th N. @ Madison


TOTAL - Germantown:                                         6   n/a            n/a                1-5%            Efficiency/Studio
                                                                                                                  1-2 BR               575    1,027     $   695     $   1,395    $ 1.21     $ 1.36
                                                                                                                  3 BR




* = Pricing information based on 2000 data w/ 3% growth rate between '00-'02


Source: Economics Research Associates
                                       TABLE 15-A
                      SUMMARY OF RENTAL MARKET CHARACTERISTICS
                             Rolling Mill Hill Feasibility Study


                          SQ. FT.                          RENTAL RATES                 AVG. RENTS
   LOCATION           Low   to    High                    Low   to   High               PER SQ. FT.

Downtown
 1 BR                     676              785        $      787      $    1,101        $         1.23
 2 BR                     999            1,119        $    1,087      $    1,458        $         1.20
 3 BR                   1,464            2,837        $    1,638      $    3,200        $         1.12
Germantown
 1 BR                        575         1,027        $     695       $    1,395        $         1.30
Rutledge Hill
 1 BR                        500           -          $     525       $      575        $         1.05
Hillsboro Village
 1 BR                     700              -          $      910      $    1,043        $         1.39
 2 BR                   1,204              -          $    1,322      $    1,510        $         1.18
 3 BR                   1,350              -          $    1,897      $      -          $         1.41
Midtown
 1 BR                     650              750        $      908      $    1,143        $         1.47
 2 BR                   1,022            1,168        $    1,399      $    1,643        $         1.39
The Gulch
 1 BR                     970            1,100        $    1,100      $    1,900        $         1.45
 2 BR                   1,200            1,530        $    1,700      $    2,500        $         1.54
 3 BR                   1,630              -          $    3,000      $      -          $         1.84

SUMMARY:               (1)
 1 BR                     679              916        $      821      $    1,193        $         1.32
 2 BR                   1,106            1,272        $    1,377      $    1,867        $         1.33
 3 BR                   1,481            2,837        $    2,178      $    3,200        $         1.36
 Overall:                 995            1,290        $    1,305      $    1,588        $         1.35


(1) High achieved rents at Mercury View Lofts skew the average rents. If this project is excluded from
    the analysis, it lowers the average price per sq. ft. as follows: 1 BR=$1.29; 2 BR=$1.26; and
   3 BR=$1.26, producing an overall average of $1.27 per sq. ft.

SOURCE: ECONOMICS RESEARCH ASSOCIATES, UPDATED APRIL 2003.
                                                       TABLE 16
                                         EMPLOYMENT/POPULATION RATIO IN
                                    SELECTED DOWNTOWNS IN THE SOUTHEAST U.S.
                                           Rolling Mill Hill Feasibility Study


                        CBD                                                                    RATIO OF          NO. OF CBD
                      RESIDENT            CBD              HOUSING         POPULATION         POPULATION         RESIDENTS
       CITY          POPULATION        EMPLOYMENT           UNITS           PER UNIT            TO JOBS           PER JOB

Memphis (1)                  21,253            80,011             11,204              1.90             26.6%        1 Per 4
Chattanooga                   9,000            47,000              4,360              2.06             19.1%        1 Per 5
Charlotte                     8,200            60,000              4,575              1.79             13.7%        1 Per 7
Knoxville                     1,400            14,000                846              1.65             10.0%       1 Per 10
Raleigh                       2,461            35,000              1,200              2.05              7.0%       1 Per 14
Average:                                                                                               15.3%       1 Per 7

NASHVILLE (2) (3)              3,800           67,100              2,091              1.82             5.66%       1 Per 18



(1) Center City Commission defines downtown as the 6.5 square mile CBID, which includes the core CBD and adjoining neighbor-
     hoods (e.g., Medical District, Mud Island, etc.).
(2) The Chamber of Commerce defines downtown Nashville as "interstate to interstate" (i.e., I-40 to I-65), which generally
     includes the core CBD and adjoining neighborhoods in this study (Rutledge Hill, Germantown, The Gulch, Hope Gardens, etc.).
(3) Population estimates and housing units provided by MDHA. Unit count includes approximately 330 units proposed or under
    construction (e.g., Stahlman Building, Werthan Lofts, Ireland Street, Laurel House, etc.).


SOURCE: ECONOMICS RESEARCH ASSOCIATES, UPDATED APRIL 2003.
              Employment/Population Ratio in Selected Downtowns in the Southeastern U.S.



30.0%
               26.6%



25.0%



                                   19.1%
20.0%


                                                     13.7%

15.0%


                                                                        10.0%


10.0%

                                                                                           5.66%


5.0%




0.0%
        Memphis (1)        Chattanooga         Charlotte          Knoxville
Rolling Mill Hill
    Office Market Conditions
                                  TABLE 17
       NASHVILLE OFFICE MARKET TRENDS, BY SUBMARKET, 1998-2002
                      Rolling Mill Hill Feasibility Study


                   In Sq. Ft. (000s)                         In Sq. Ft. (000s)
              RENTABLE         VACANT        VACANCY      NET AB-        ANNUAL
                SPACE           SPACE          RATE      SORPTION        GROWTH
Central Business District
   1998           5,593.0            640.8      11.5%          77.1             -
   1999           5,629.0            597.8      10.6%          73.5         36.0
   2000           6,004.1            648.1      10.8%         378.3        375.1
   2001           5,970.1            814.2      13.6%          (7.3)       (34.1)
   2002           5,970.1            755.7      12.7%          59.5             -
% Change:            6.7%           17.9%       10.5%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                        116.2

West End/Belle Meade
   1998           3,083.9           342.5        11.1%         77.6             -
   1999           3,075.4           318.8        10.4%         23.8         (8.5)
   2000           3,685.8           201.9         5.5%        728.0        610.4
   2001           3,685.8           221.4         6.0%        (22.4)            -
   2002           3,685.8           299.5         8.1%        (78.1)            -
% Change:          19.5%           -12.5%       -26.8%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                        145.8

Green Hills/Music Row
   1998            1,692.0          23.3         1.4%          29.6             -
   1999            1,697.3         116.4         6.9%         (93.1)         5.3
   2000            1,697.3         126.2         7.4%          (9.8)            -
   2001            1,570.9         125.3         8.0%          14.6       (126.4)
   2002            1,705.9         142.5         8.4%         132.4        135.0
% Change:             0.8%        512.6%       507.6%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                         14.7

Airport/Southeast
    1998            4,331.3         420.4        9.7%         143.9             -
    1999            4,469.6         537.5       12.0%          15.0        138.3
    2000            4,997.1         742.4       14.9%         322.8        527.5
    2001            5,305.2         758.8       14.3%          13.3        308.1
    2002            5,589.0       1,114.1       19.9%         (75.1)       283.8
% Change:            29.0%        165.0%       105.4%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                         84.0
                          TABLE 17 (Continued)
       NASHVILLE OFFICE MARKET TRENDS, BY SUBMARKET, 1998-2002
                     Rolling Mill Hill Feasibility Study


                  In Sq. Ft. (000s)                    In Sq. Ft. (000s)
               RENTABLE       VACANT    VACANCY      NET AB-       ANNUAL
                SPACE          SPACE      RATE      SORPTION       GROWTH
Brentwood
   1998           3,287.9       205.8       6.3%         329.6           -
   1999           3,499.9       286.2       8.2%         209.1       212.1
   2000           3,721.3       221.1       5.9%         286.5       221.4
   2001           4,307.6       454.5      10.6%         245.5       586.3
   2002           4,333.6       608.4      14.0%        (127.0)       26.0
% Change:           31.8%      195.7%     124.3%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                   188.8

Cool Springs
   1998             890.7       230.7       25.9%        277.0           -
   1999           1,273.2       155.2       12.2%        371.3       382.4
   2000           1,443.2       140.1        9.7%        261.8       170.0
   2001           1,890.9       418.9       22.2%        168.9       447.8
   2002           1,929.4       359.8       18.6%         94.2        38.5
% Change:         116.6%        55.9%      -28.0%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                   234.6

MetroCenter
   1998           1,034.7        81.0       7.8%         (36.1)          -
   1999             867.1       145.6      16.8%         (74.1)     (167.6)
   2000           1,001.6       122.7      12.2%          42.0       134.5
   2001           1,001.6       241.5      24.1%        (122.8)          -
   2002           1,001.6       281.1      28.1%         (39.6)          -
% Change:           -3.2%      246.9%     258.4%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                   (46.1)

Rivergate/North Nashville
    1998           302.8         24.3       8.0%          22.1           -
    1999           377.9         63.7      16.9%         (39.4)       75.1
    2000           316.4         66.0      20.8%          (3.9)      (61.5)
    2001           316.4         39.1      12.4%          26.8           -
    2002           316.4         28.8       9.1%          10.4           -
% Change:           4.5%        18.5%      13.4%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                     3.2


SOURCE: GRUBB & ELLIS CENTENNIAL, INC.; ECONOMICS RESEARCH
        ASSOCIATES, MARCH 2003.
                                  TABLE 18
               SUMMARY CHARACTERISTICS, ALL SUBMARKETS
                   NASHVILLE OFFICE MARKET, 1998-2002
                      Rolling Mill Hill Feasibility Study


                 In Sq. Ft. (000s)                       In Sq. Ft. (000s)
             RENTABLE        VACANT       VACANCY     NET AB-        ANNUAL
               SPACE          SPACE         RATE     SORPTION        GROWTH
All Submarkets
    1998        20,251.3        1,975.0       9.8%         934.9         -
    1999        20,778.5        2,317.9      11.2%         417.3       672.9
    2000        22,866.8        2,268.4       9.9%       2,005.7     1,977.5
    2001        24,047.4        3,073.7      12.8%         316.6     1,181.6
    2002        24,531.7        3,589.8      14.6%         (23.4)      483.3
% Change:         21.1%           81.8%      50.0%

AVERAGE ANNUAL ABSORPTION - 1998-2002:                    730.2



Downtown (As % of Region)
   1998           27.6%          32.4%                     8.3%
   1999           27.1%          25.8%                    17.6%
   2000           26.3%          28.6%                    18.9%
   2001           24.8%          26.5%                      N/A
   2002           24.3%          21.1%                      N/A
% Change:        -11.9%         -35.1%

AS % OF AVERAGE ANNUAL ABSORPTION - 1998-2002:            15.9%



SOURCE: GRUBB & ELLIS CENTENNIAL, INC.; ECONOMICS RESEARCH
      ASSOCIATES, MARCH 2003.
                             -
                                 50.0
                                        100.0
                                                150.0
                                                        200.0
                                                                250.0




                    (50.0)
Central Business
    District



  West End/Belle
     Meade



Green Hills/Music
      Row




Airport/Southeast




      Brentwood




    Cool Springs




    MetroCenter
                                                                        Nashville Office Market Average Annual Absorption (in '000s), 1998 - 2002




 Rivergate/North
    Nashville
                                          TABLE 19
                 DOWNTOWN NASHVILLE OFFICE MARKET, BY BUILDING CLASS, 2002
                              Rolling Mill Hill Feasibility Study



                                             IN SQ. FT. (000s)
                     RENTABLE                 VACANT        VACANCY      2002 NET      NO. OF
                      SPACE       % DIST.      SPACE           RATE     ABSORPTION    BUILDINGS

   Class A              3,234.2      54.2%       341.9          10.6%          20.8           12
   Class B              1,727.3      28.9%       160.2           9.3%          21.3           19
   Class C              1,008.6      16.9%       253.6          25.1%          17.4           19
TOTAL:                  5,970.1     100.0%       755.7          12.7%          59.5           50



SOURCE: GRUBB & ELLIS CENTENNIAL, INC.; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
Rolling Mill Hill
    Hotel Market Conditions
                                                          TABLE 20
                                           ANNUAL PERFORMANCE INDICATORS
                            FULL-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                              Rolling Mill Hill Feasibility Study


                                                                                                                               AVG. ANN'L
                                                                                                                                GROWTH
                                                    1997         1998         1999        2000         2001         2002       1997 - 2002

   Available Roomnights (Supply)                    666,125   666,125   666,125   696,485   786,575   786,575                         3.4%
   Occupied Roomnights (Demand)                     483,407   462,035   461,223   470,706   511,445   492,917                         0.4%
   Annual Occupancy                                   72.6%     69.4%     69.2%     67.6%     65.0%     62.7%                       (2.9%)
   Average Daily Rate                             $ 106.15 $ 112.30 $ 113.34 $ 116.26 $ 116.28 $ 117.29                               2.0%
   Revenue/Available Room                         $   77.03 $   77.89 $   78.48 $   78.58 $   75.61 $   73.50                       (0.9%)

YEAR-TO-YEAR % GROWTH
  Annual Occupancy                                         -       (4.4%)       (0.2%)      (2.4%)       (3.8%)       (3.6%)
  Average Daily Rate                                       -         5.8%         0.9%        2.6%         0.0%         0.9%
  Revenue/Available Room                                   -         1.1%         0.7%        0.1%       (3.8%)       (2.8%)

                     FACILITY                      ROOMS          %
   Sheraton Hotel Downtown Nashville                   476         22.1%
   Doubletree Downtown Nashville                       338         15.7%
   Renaissance Hotel Downtown Nashville                673         31.2%
   Loew's Vanderbilt Hotel Nashville                   338         15.7%
   Hilton Suites Downtown Nashville                    330         15.3%
   TOTAL ROOM INVENTORY:                             2,155        100.0%

(1) Revenue per available room is the best measure of year-to-year growth because it considers simultaneous changes in both room rate
    and annual occupancy levels.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                TABLE 21
                                   AVAILABLE ROOMNIGHTS (SUPPLY)
                   FULL-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                    Rolling Mill Hill Feasibility Study


                                                                                      Avg. Ann'l
                      1997      1998       1999       2000       2001       2002       Growth

January                56,575     56,575    56,575     56,575     66,805     66,805          3.4%
February               51,100     51,100    51,100     51,100     60,340     60,340          3.4%
March                  56,575     56,575    56,575     56,575     66,805     66,805          3.4%
April                  54,750     54,750    54,750     54,750     64,650     64,650          3.4%
May                    56,575     56,575    56,575     56,575     66,805     66,805          3.4%
June                   54,750     54,750    54,750     54,750     64,650     64,650          3.4%
July                   56,575     56,575    56,575     56,575     66,805     66,805          3.4%
August                 56,575     56,575    56,575     56,575     66,805     66,805          3.4%
September              54,750     54,750    54,750     54,750     64,650     64,650          3.4%
October                56,575     56,575    56,575     66,805     66,805     66,805          3.4%
November               54,750     54,750    54,750     64,650     64,650     64,650          3.4%
December               56,575     56,575    56,575     66,805     66,805     66,805          3.4%
Annual:               666,125    666,125   666,125    696,485    786,575    786,575          3.4%
Annual % Change:            -       0.0%      0.0%       4.6%      12.9%       0.0%


(1) Supply equals 2155 rooms.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                TABLE 22
                                   OCCUPIED ROOMNIGHTS (DEMAND)
                   FULL-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                    Rolling Mill Hill Feasibility Study


                                                                                      Avg. Ann'l
                      1997      1998       1999       2000       2001       2002       Growth

January                39,127     34,858    33,840     31,853     35,380     31,976        (4.0%)
February               40,962     38,494    35,484     38,083     41,616     37,117        (2.0%)
March                  39,610     45,492    43,566     45,408     48,098     45,179          2.7%
April                  45,771     37,497    36,722     39,047     42,451     45,558        (0.1%)
May                    41,813     37,190    41,206     38,924     48,039     43,407          0.8%
June                   43,177     35,255    38,381     39,335     47,128     43,055        (0.1%)
July                   42,117     38,587    39,686     36,761     42,667     38,078        (2.0%)
August                 37,355     38,773    38,219     37,496     43,156     39,183          1.0%
September              43,185     40,137    42,811     38,976     39,016     40,260        (1.4%)
October                44,040     47,578    46,280     50,172     46,776     52,971          3.8%
November               38,608     39,825    36,871     43,406     40,287     44,952          3.1%
December               27,642     28,349    28,157     31,245     36,831     31,181          2.4%
Annual:               483,407    462,035   461,223    470,706    511,445    492,917          0.4%
Annual % Change:            -      -4.4%     -0.2%       2.1%       8.7%      -3.6%


(1) Supply equals 2155 rooms.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                      TABLE 23
                                                  ROOM REVENUE
                         FULL-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                          Rolling Mill Hill Feasibility Study


                                                                                                   Avg. Ann'l
                       1997         1998        1999         2000          2001         2002        Growth

January          $ 3,652,824    $  3,419,111 $ 3,505,622 $ 3,330,069 $ 3,810,948 $ 3,431,716            (1.2%)
February            4,325,160      4,348,387    3,933,977    4,409,018    4,942,071    4,269,553        (0.3%)
March               4,129,461      5,329,655    5,157,311    5,750,352    6,117,921    5,403,132          5.5%
April               5,135,027      4,285,781    4,155,699    4,647,893    5,039,203    5,580,193          1.7%
May                 4,602,767      4,376,003    4,947,323    4,746,693    5,817,697    5,401,622          3.3%
June                4,785,276      3,957,501    4,244,375    4,580,627    5,518,644    5,010,242          0.9%
July                4,481,884      4,360,451    4,257,895    4,123,842    4,901,875    4,564,504          0.4%
August              3,934,538      4,232,887    4,166,573    4,011,012    4,605,175    4,272,679          1.7%
September           4,979,898      4,618,408    5,065,806    4,371,523    4,494,750    4,727,255        (1.0%)
October             4,909,731      5,681,440    5,650,915    6,025,032    5,783,917    6,443,968          5.6%
November            4,017,095      4,382,294    4,109,110    5,117,165    4,434,486    5,421,983          6.2%
December            2,359,745      2,894,664    3,080,605    3,613,261    4,004,547    3,287,862          6.9%
Annual:          $ 51,313,406   $ 51,886,582 $ 52,275,211 $ 54,726,487 $ 59,471,234 $ 57,814,709          2.4%
Annual % Change:            -           1.1%         0.7%         4.7%         8.7%        -2.8%


(1) Supply equals 2155 rooms.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                TABLE 24
                                   ANNUAL OCCUPANCIES BY MONTH
                   FULL-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                    Rolling Mill Hill Feasibility Study


                                                                                      Avg. Ann'l
                      1997       1998      1999       2000       2001       2002       Growth

January                  69.2%     61.6%     59.8%      56.3%      53.0%      47.9%         -7.1%
February                 80.2%     75.3%     69.4%      74.5%      69.0%      61.5%         -5.2%
March                    70.0%     80.4%     77.0%      80.3%      72.0%      67.6%         -0.7%
April                    83.6%     68.5%     67.1%      71.3%      65.7%      70.5%         -3.4%
May                      73.9%     65.7%     72.8%      68.8%      71.9%      65.0%         -2.5%
June                     78.9%     64.4%     70.1%      71.8%      72.9%      66.6%         -3.3%
July                     74.4%     68.2%     70.1%      65.0%      63.9%      57.0%         -5.2%
August                   66.0%     68.5%     67.6%      66.3%      64.6%      58.7%         -2.3%
September                78.9%     73.3%     78.2%      71.2%      60.3%      62.3%         -4.6%
October                  77.8%     84.1%     81.8%      75.1%      70.0%      79.3%          0.4%
November                 70.5%     72.7%     67.3%      67.1%      62.3%      69.5%         -0.3%
December                 48.9%     50.1%     49.8%      46.8%      55.1%      46.7%         -0.9%
Annual:                  72.6%     69.4%     69.2%      67.6%      65.0%      62.7%         -2.9%
Annual % Change:             -     -4.4%     -0.2%      -2.4%      -3.8%      -3.6%


(1) Supply equals 2155 rooms.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                    Annual Change in Market Characteristics
         Full-Service Hotels In/Around Downtown Nashville, 1998-2002

25%




20%




15%




10%




 5%




 0%




-5%




-10%
       1998             1999          2000            2001                2002
               Room Revenue          Demand            Roomnight Supply
                                          Seasonality of Demand
                      Full-Service Hotels In/Around Downtown Nashville, 1998-2002
             60,000




             50,000




             40,000
Roomnights




             30,000




             20,000




             10,000




                  -
                     y

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                                                         TABLE 25
                                           ANNUAL PERFORMANCE INDICATORS
                          LIMITED-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                             Rolling Mill Hill Feasibility Study


                                                                                                                               AVG. ANN'L
                                                                                                                                GROWTH
                                                    1997         1998         1999        2000         2001         2002       1997 - 2002

   Available Roomnights (Supply)                    375,585   416,673   466,980   477,420   477,420   477,420                         4.9%
   Occupied Roomnights (Demand)                     282,284   294,112   313,372   332,916   297,466   290,247                         0.6%
   Annual Occupancy                                   75.2%     70.6%     67.1%     69.7%     62.3%     60.8%                       (4.2%)
   Average Daily Rate                             $   79.44 $   87.20 $   88.15 $   88.06 $   87.28 $   83.99                         1.1%
   Revenue/Available Room                         $   59.71 $   61.55 $   59.15 $   61.40 $   54.38 $   51.06                       (3.1%)

YEAR-TO-YEAR % GROWTH
  Annual Occupancy                                         -       (6.1%)       (4.9%)        3.9%      (10.6%)       (2.4%)
  Average Daily Rate                                       -         9.8%         1.1%      (0.1%)       (0.9%)       (3.8%)
  Revenue/Available Room                                   -         3.1%       (3.9%)        3.8%      (11.4%)       (6.1%)

                     FACILITY                      ROOMS          %
   Holiday Inn Select - Vanderbilt                     300         22.9%
   Days Inn - Music Row                                151         11.5%
   Ramada Inn - Nashville                              285         21.8%
   Courtyard Nashville - West End                      223         17.0%
   Hampton Inn Suites - Vanderbilt                     157         12.0%
   Courtyard Nashville - Downtown                      192         14.7%
   TOTAL ROOM INVENTORY:                             1,308        100.0%

(1) Revenue per available room is the best measure of year-to-year growth because it considers simultaneous changes in both room rate
    and annual occupancy levels.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                TABLE 26
                                   AVAILABLE ROOMNIGHTS (SUPPLY)
                 LIMITED-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                    Rolling Mill Hill Feasibility Study


                                                                                      Avg. Ann'l
                      1997      1998       1999       2000       2001      2002        Growth

January                31,899    31,899     37,851     40,548     40,548     40,548          4.9%
February               28,812    28,812     34,188     36,624     36,624     36,624          4.9%
March                  31,899    31,899     37,851     40,548     40,548     40,548          4.9%
April                  30,870    30,870     36,630     39,240     39,240     39,240          4.9%
May                    31,899    31,899     40,548     40,548     40,548     40,548          4.9%
June                   30,870    36,630     39,240     39,240     39,240     39,240          4.9%
July                   31,899    37,851     40,548     40,548     40,548     40,548          4.9%
August                 31,899    37,851     40,548     40,548     40,548     40,548          4.9%
September              30,870    36,630     39,240     39,240     39,240     39,240          4.9%
October                31,899    37,851     40,548     40,548     40,548     40,548          4.9%
November               30,870    36,630     39,240     39,240     39,240     39,240          4.9%
December               31,899    37,851     40,548     40,548     40,548     40,548          4.9%
Annual:               375,585   416,673    466,980    477,420    477,420    477,420          4.9%
Annual % Change:            -     10.9%      12.1%       2.2%       0.0%       0.0%


(1) Supply equals 1308 rooms.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                TABLE 27
                                   OCCUPIED ROOMNIGHTS (DEMAND)
                 LIMITED-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                    Rolling Mill Hill Feasibility Study


                                                                                      Avg. Ann'l
                      1997      1998       1999       2000       2001      2002        Growth

January                19,118    19,368     20,989     22,607     21,538     17,660        (1.6%)
February               20,341    20,384     23,326     25,673     22,731     20,187        (0.2%)
March                  23,593    25,753     28,255     32,140     28,922     25,772          1.8%
April                  26,121    23,514     25,898     29,876     26,232     27,552          1.1%
May                    25,168    23,385     27,979     29,476     27,378     27,068          1.5%
June                   25,160    26,696     26,421     30,888     27,780     26,449          1.0%
July                   26,768    25,604     28,258     26,562     26,758     24,965        (1.4%)
August                 24,440    26,115     25,626     27,808     24,415     24,139        (0.2%)
September              23,935    26,197     26,743     27,900     22,664     23,756        (0.2%)
October                26,827    30,846     32,363     32,285     26,976     29,772          2.1%
November               23,301    26,174     25,786     28,188     24,022     24,834          1.3%
December               17,512    20,076     21,728     19,513     18,050     18,093          0.7%
Annual:               282,284   294,112    313,372    332,916    297,466    290,247          0.6%
Annual % Change:            -      4.2%       6.5%       6.2%     -10.6%      -2.4%


(1) Supply equals 1308 rooms.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                      TABLE 28
                                                  ROOM REVENUE
                       LIMITED-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                          Rolling Mill Hill Feasibility Study


                                                                                                   Avg. Ann'l
                       1997         1998        1999         2000          2001         2002        Growth

January          $ 1,393,733    $  1,570,351 $ 1,787,317 $ 1,955,795 $ 1,801,429 $ 1,396,485              0.0%
February            1,558,441      1,700,313    2,040,364    2,299,850    1,927,446    1,689,630          1.6%
March               1,816,584      2,245,597    2,562,585    2,963,540    2,709,920    2,186,952          3.8%
April               2,078,690      2,009,917    2,237,301    2,626,519    2,289,315    2,382,429          2.8%
May                 2,032,036      2,072,774    2,436,498    2,646,142    2,461,127    2,397,301          3.4%
June                2,054,764      2,375,835    2,454,249    2,757,710    2,554,866    2,303,231          2.3%
July                2,128,973      2,217,531    2,444,692    2,398,507    2,332,692    2,075,343        (0.5%)
August              1,953,860      2,294,641    2,241,540    2,309,156    2,089,649    1,924,679        (0.3%)
September           1,922,714      2,306,234    2,354,951    2,383,777    2,008,132    1,914,015        (0.1%)
October             2,215,427      2,772,224    2,918,239    2,870,994    2,337,973    2,543,390          2.8%
November            1,914,899      2,348,072    2,255,369    2,467,825    1,996,373    2,168,591          2.5%
December            1,355,911      1,733,149    1,890,302    1,636,003    1,453,771    1,395,679          0.6%
Annual:          $ 22,426,032   $ 25,646,638 $ 27,623,407 $ 29,315,818 $ 25,962,693 $ 24,377,725          1.7%
Annual % Change:            -          14.4%         7.7%         6.1%       -11.4%        -6.1%


(1) Supply equals 1308 rooms.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                TABLE 29
                                   ANNUAL OCCUPANCIES BY MONTH
                 LIMITED-SERVICE HOTELS IN/AROUND DOWNTOWN NASHVILLE, 1997-2002 (1)
                                    Rolling Mill Hill Feasibility Study


                                                                                      Avg. Ann'l
                      1997       1998      1999       2000       2001      2002        Growth

January                  59.9%     60.7%     55.5%      55.8%      53.1%      43.6%         -6.2%
February                 70.6%     70.7%     68.2%      70.1%      62.1%      55.1%         -4.8%
March                    74.0%     80.7%     74.6%      79.3%      71.3%      63.6%         -3.0%
April                    84.6%     76.2%     70.7%      76.1%      66.9%      70.2%         -3.7%
May                      78.9%     73.3%     69.0%      72.7%      67.5%      66.8%         -3.3%
June                     81.5%     72.9%     67.3%      78.7%      70.8%      67.4%         -3.7%
July                     83.9%     67.6%     69.7%      65.5%      66.0%      61.6%         -6.0%
August                   76.6%     69.0%     63.2%      68.6%      60.2%      59.5%         -4.9%
September                77.5%     71.5%     68.2%      71.1%      57.8%      60.5%         -4.8%
October                  84.1%     81.5%     79.8%      79.6%      66.5%      73.4%         -2.7%
November                 75.5%     71.5%     65.7%      71.8%      61.2%      63.3%         -3.5%
December                 54.9%     53.0%     53.6%      48.1%      44.5%      44.6%         -4.1%
Annual:                  75.2%     70.6%     67.1%      69.7%      62.3%      60.8%         -4.2%
Annual % Change:             -     -6.1%     -4.9%       3.9%     -10.6%      -2.4%


(1) Supply equals 1308 rooms.


SOURCE: SMITH TRAVEL RESEARCH; ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                          Seasonality of Demand
                      Limited-Service Hotels In/Around Downtown Nashville, 1998-2002
             35,000



             30,000



             25,000
Roomnights




             20,000



             15,000



             10,000



              5,000



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Rolling Mill Hill
    Consumer Expenditures
                                          TABLE 30
                   ANNUAL HOUSEHOLD CONSUMER EXPENDITURES, 2002
                0-3 MILE TRADE AREA SURROUNDING DOWNTOWN NASHVILLE
                              Rolling Mill Hill Feasibility Study


Demographic Profile (2001)
   Population                                 70,102
   Households                                 27,036
   Median Household Income            $       22,511
   Average Household Income           $       29,099

Consumer Retail Expenditures
                                          Annual             Per             %
                                           Total          Household     Distribution
Food & Beverage
   Food At Home                       $    64,224,819 $         2,376            61.7%
   Food Away From Home                     34,051,000           1,259            32.7%
   Alcoholic Beverages                      5,880,839             218             5.6%
Subtotal - Food & Beverage:           $   104,156,658 $         3,853            44.3%

Apparel & Accessories
   All Apparel                        $    39,633,258 $         1,466            78.0%
   Footwear                                 7,739,483             286            15.2%
   Watches & Jewelry                        3,442,457             127             6.8%
Subtotal - Apparel:                   $    50,815,198 $         1,880            21.6%

Leisure & Entertainment
    Entertainment                     $    36,296,834 $         1,343            74.4%
    Pets & Supplies                         3,537,439             131             7.3%
    Sporting Goods                          2,635,576              97             5.4%
    Toys & Hobbies                          2,928,292             108             6.0%
    Video Rental                              891,664              33             1.8%
    Musical Instruments/Accessories           415,384              15             0.9%
    Reading Materials                       2,077,243              77             4.3%
Subtotal - Entertainment:             $    48,782,432 $         1,804            20.7%

Household Furnishings
   Any Household Furnishings          $    27,382,019 $         1,013            87.2%
   All Appliances                           2,598,008              96             8.3%
   Kitchen/Dining Room Furniture              925,218              34             2.9%
   Home Electronics                           491,159              18             1.6%
Subtotal - Home Furnishings:          $    31,396,404 $         1,161            13.4%


TOTAL ANNUAL HH EXPENDITURES:         $   235,150,692 $         8,698          100.0%




SOURCE: ESRI BUSINESS SYSTEMS, INC.; ECONOMICS RESEARCH ASSOCIATES,
        MARCH 2003.
             Annual Household Consumer Expenditures, 2002
                     Rolling Mill Hill Feasibility Study




                          Household Furnishings
                                  13%

Leisure & Entertainment                                Food & Beverage
          21%                                                44%




                               Apparel & Accessories
                                       22%
Rolling Mill Hill
        Demand Models
                                                   TABLE 31
                           NON-AGRICULTURAL EMPLOYMENT TRENDS & PROJECTIONS
                                     FOR THE NASHVILLE MSA, 1990-2010
                                       Rolling Mill Hill Feasibility Study




                                          TN Dept. of Labor              Woods & Poole              CHANGE: 2000-2010
               CATEGORY                   1990         2000             2000       2010               %       Amount

   Construction                            23,800        34,400          55,700        61,000            9.5%         3,273
   Manufacturing                           88,500        96,900         100,000       102,000            2.0%         1,938
   Transp/Comm/Public Utilities            28,700        36,600          40,500        46,500           14.8%         5,422
   Wholesale & Retail Trade               124,200       163,400         196,300       234,100           19.3%       31,465
   Finance/Insurance/Real Estate           31,100        41,700          76,200        86,900           14.0%         5,856
   Services                               136,600       221,600         306,500       401,600           31.0%       68,757
   Government                              69,000        85,900          81,200        91,800           13.1%       11,214
TOTAL - NASHVILLE MSA:                    501,900       680,500         856,400     1,023,900           19.6%      127,925
Annual % Change                                -           3.6%              -          19.6%                       (2)

Difference:                                                             175,900
                                                                         (1)


(1) This includes part-time and self employment (i.e., employees that do not contribute to state unemployment insurance).
(2) Estimates for future job growth, by sector, were calculated by applying the Woods & Poole growth rate (2000-2010) to
    the state's Department of Labor 2000 base year employment.

SOURCE: TENNESSEE DEPARTMENT OF LABOR & WORKFORCE DEVELOPMENT; WOODS & POOLE, INC.;
      ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                           TABLE 32
                                 OFFICE DEMAND ANALYSIS
                  FOR THE NASHVILLE MSA & DOWNTOWN NASHVILLE, 2000-2010
                               Rolling Mill Hill Feasibility Study


                                                        SQ. FT.          DEMAND FOR NEW SPACE
                                           % OF            PER                   (In Sq. Ft.)
                                          OFFICE        OFFICE            Actual            Estimates
              CATEGORY                    USERS           USER          1990-2000           2000-2010
DEMAND ANALYSIS                                            (1)
   Construction                                 10%            175          185,500             57,282
   Manufacturing                                20%            175          294,000             67,830
   Transp/Comm/Public Utilities                 50%            200          790,000            542,222
   Wholesale & Retail Trade                     15%            175        1,029,000            825,948
   Finance/Insurance/Real Estate                80%            250        2,120,000          1,171,102
   Services                                     25%            225        4,781,250          3,867,607
   Government                                   50%            175        1,478,750            981,185
TOTAL DEMAND:                                   36%            196       10,679,000          7,513,000
                                                Estimates                                   Rounded
Plus
   Vacancy Adjustment (Rounded)                             (2)             267,000             188,000
   Cumulative Replacement Demand (Rounded)                  (3)             534,000             376,000

TOTAL OFFICE SPACE DEMAND (IN SQ. FT.):                                  11,480,000           8,077,000
Average Annual                                                            1,148,000             807,700


FAIR SHARE ANALYSIS
Allocation to Downtown Nashville
    Current Fair Share                                      (4)                                  24.3%
    Total Demand (In 000s Sq. Ft.)                                                           1,966,000
                                                                                            Rounded
Capture to Rolling Mill Hill
   Say                                                                         3.5%                7.5%
                                                                             68,800 to          147,500


(1) Reflects office-using employees in each employment sector requiring office space.
(2) This allows for a 2.5% "frictional" vacancy rate in new space delivered to the market.
(3) This represents new space required by existing businesses to replace obsolete or otherwise un-
    usable space. This is assumed to represent 5% of total demand.
(4) This represents Downtown Nashville's fair share of office space demanded by future employment
    growth (see Table 18). This analysis assumes that the CBD's fair share is held constant over
    time (i.e., Downtown remains as competitive in 2010 as it is today as compared to other office
    submarkets in Davidson County).

SOURCE: ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                               TABLE 34
           EMPLOYMENT-BASED HOUSING DEMAND ANALYSIS
               FOR DOWNTOWN NASHVILLE, 2002-2010
                       "INDUCED" SCENARIO
                   Rolling Mill Hill Feasibility Study


                                                 2002                 2010
Office Employment
Regional Office Inventory (Sq. Ft.)            24,531,694
CBD Office Inventory (Sq. Ft.)                  5,970,068
     CBD as % of Region                             24.3%

MSA Employment                                    680,500              808,425
CBD Employment                          (1)        67,100              101,100
   As % of MSA                          (2)          9.9%                12.5%

Downtown Housing Potentials
Induced Demand Analysis
    Current Share Doubles @                                              11.2%
Total - Downtown Residents:                                             11,321
    Less Existing Residents                                              3,757
Net Gain - Residents:                                                    7,564
    Assumed Persons Per HH                                                1.70
Net Gain - Downtown Housing Units:                                       4,450

Project Capture
    Say                                 (3)         20.0%    to          30.0%
    Plus Inflow @                       (4)          5.0%                 5.0%
Supportable Units (Rounded):                          900                1,400




(1) As estimated by the Nashville Downtown Partnership.
(2) Assumes downtown's share of regional employment increases as a
    result of a targeted economic development/tenant recruitment strategy
    and other public policy initiatives designed to reinforce downtown Nashville
    as the region's primary employment center.
(3) Under an Induced Scenario, competition for a larger pool of potential
    downtown residents increases from additional sites in play, thus reducing
    project capture.
(4) Includes other market segments (e.g., households relocating to Nashville
    from other metropolitan areas with downtown/urban housing).

SOURCE: NASHVILLE DOWNTOWN PARTNERSHIP; MDHA; ECONOMICS
      RESEARCH ASSOCIATES, MARCH 2003.
                                       TABLE 35
                         POTENTIAL RETAIL EXPENDITURES
                          AND SUPPORTABLE SPACE, 2010
                           Rolling Mill Hill Feasibility Study

                                                            Induced Scenario @
                                                        20% Capture    30% Capture
RESIDENT EXPENDITURE POTENTIALS
On-site Households
    Total                                                         900            1,400

Average HH Income (In Current $)             (1)        $      73,140    $      73,140

Household Expenditure Potentials (As % of Household Income)
(1) General Retail                         12.9% $     8,493,278         $   13,211,766
    Food & Beverage                         6.6%       4,314,909              6,712,081
    Groceries                               9.6%       6,322,839              9,835,527

Resident Expenditure Potentials:                        $   19,131,026   $   29,759,373

On-site Employees
    Sq. Ft.                                                    68,800          147,500
    No. of Employees @                            200             344              738
                                          sq. ft. per

Annual Employee Expenditure Potentials
   General Retail                                       $          750   $         750
   Food & Beverage                                               1,500           1,500

Employee Expenditure Potentials:                        $     774,000    $    1,659,375

SUPPORTABLE SPACE: GENERAL RETAIL
Households
   On-site                                              $    8,493,278 $     13,211,766
   Estimated Capture Rate @                                      10.0%            10.0%
Captured Expenditures:                                  $      849,328 $      1,321,177
   Required Productivity          (2)                   $          200 $            200
Subtotal - Households:                                           4,247            6,606

Employees
    On-site                                             $     258,000 $        553,125
    Estimated Capture Rate @                                    20.0%            20.0%
Captured Expenditures:                                  $      51,600 $        110,625
    Required Productivity                    (2)        $         200 $            200
Subtotal - Employees:                                             258              553

Plus Inflow @                                (3)                 5.0%             7.5%

Supportable Space - General Retail:                              4,730           7,696
Pg. 2 of 2                                      TABLE 35 (Continued)
                                         POTENTIAL RETAIL EXPENDITURES
                                          AND SUPPORTABLE SPACE, 2010
                                          Rolling Mill Hill Feasibility Study

                                                                               Induced Scenario @
                                                                           20% Capture    30% Capture
             SUPPORTABLE SPACE: FOOD & BEVERAGE
             Households
                 On-site                                               $       4,314,909 $        6,712,081
                 Estimated Capture Rate @                                           5.0%               7.5%
             Captured Expenditures:                                    $         215,745 $          503,406
                 Required Productivity          (2)                    $             300 $              300
             Subtotal - Households:                                                  719              1,678

             Trade Area Households
  27,036         0-3 Miles                                             $      34,051,000 $       34,051,000
                 Estimated Capture Rate @                                           3.5%               3.5%
             Captured Expenditures:                                    $       1,191,785 $        1,191,785
                 Required Productivity                                 $             300 $              300
             Subtotal - Households:                                                3,973              3,973

             Employees
                 On-site                                               $         516,000 $        1,106,250
                 Estimated Capture Rate @                                          20.0%              25.0%
             Captured Expenditures:                                    $         103,200 $          276,563
                 Required Productivity                        (2)      $             300 $              300
             Subtotal - Employees:                                                   344                922

             Plus Inflow @                                    (3)                  20.0%              25.0%

             Supportable Space - Food & Beverage:                                  6,043              8,216

             SUPPORTABLE SPACE: GROCERIES
             Households
                 On-site                                               $       6,322,839 $        9,835,527
                 Estimated Capture Rate @                                          30.0%              30.0%
             Captured Expenditures:                                    $       1,896,852 $        2,950,658
                 Required Productivity                        (2)      $             550 $              550
             Subtotal - Households:                                                3,449              5,365

         Trade Area Households (Within 3 Miles)
             Total Households                                                     27,036             27,036
$ 26,375     Total Expenditures                                        $      68,493,566 $       68,493,566
             Estimated Capture Rate @                                              15.0%              20.0%
         Captured Expenditures:                                        $      10,274,035 $       13,698,713
             Required Productivity                            (2)      $             550 $              550
         Subtotal - Employees:                                                    18,680             24,907

             Plus Inflow @                                    (3)                   5.0%               7.5%

             Supportable Space - Groceries:                                       23,235             32,542

             (1) Assumes current average household incomes of $60,000 grown at 2% per year.
             (2) Required productivity is the estimated minimum annual performance (in sales per sq. ft.)
                 required by all general retail and restaurant tenants.
             (3) Represents potential expenditures from other market segments to Rolling Mill Hill, such
                 as pass-through traffic on the Franklin Connector, business visitors to on-site
                 employees, etc.

             SOURCE: ECONOMICS RESEARCH ASSOCIATES, MARCH 2003.
                                                  TABLE 36
                                 INCREMENTAL HOTEL ROOMNIGHT DEMAND
                                      Rolling Mill Hill Feasibility Study


                                                                                  Incremental Room Demand @
                                                                                 3.5% Capture    7.5% Capture

New Office Square Footage                                                                68,800        147,500
    Employment @                          200 Sq. Ft. Per Employee                          344            738
    Annual Visitors (240 Workdays) @    20.0%                                            16,512         35,400
    % of Hotel Stays                    50.0%                                             8,256         17,700
    Length of Stay                        1.5 nights                                     12,384         26,550
    Party Size                                                                             1.25           1.25
    Annual Roomnights Generated                                                           9,907         21,240
Subtotal-Rooms Demanded by Office Employees:                   (1)                           19             41



POTENTIAL HOTEL DEMAND:
    Gross Potential Room Demand                                                              19             41
    Less Existing Room Demand to Achieve 70% Occupancy                (2)                  (101)          (101)
Net Potential Room Demand:                                                                  (82)           (60)


(1) Assumes occupancy of 70% over 365 days.
(2) Represents existing excess/vacant rooms available for occupancy levels to increase to 70%.

SOURCE: ECONOMICS RESEARCH ASSOCIATES, MARCH 2003
                                      TABLE 37
                                PROGRAM SUMMARY
                          Rolling Mill Hill Feasibility Study

                                                         INDUCED SCENARIO @
                 LAND USE                              20% Capture 30% Capture

Site Information
     Size (Gross Acres)                                           34.0             34.0
     Allocation to Circulation/Parking @     20.0%                 6.8              6.8
Net Usable Land Area (NULA):                                      27.2             27.2

Housing
TOTAL HOUSING UNITS - MARKET:                                     900            1,400

Moderate-Density Housing                      (1)
    NULA Allocation @                                           35.0%            25.0%
    Acres                                                          9.5              6.8
    Density (Units Per Acre)                                        20               20
Subtotal - Units:                                                 190              136

High-Density Housing                          (2)
    NULA Allocation @                                           65.0%            75.0%
    Acres                                                        17.7             20.4
    Density (Units Per Acre)                                       35               50
Subtotal - Units:                                                 619            1,020

CARRYING CAPACITY (UNITS):                                        809            1,156

Commercial (Retail & Office)
General Retail                                (3)                4,700           7,700

Food & Beverage                                                  6,000           8,200

Grocery Store (Urban Prototype)                                 23,000          33,000

Office                                                          68,800         147,500

TOTAL COMMERCIAL (Sq. Ft.):                                  102,500           196,400

(1) Moderate-density housing prototype could include low-rise condominium flats,
    garden apartments (3 to 4 floors), and/or stacked townhouses. Assumes an
    average unit size of 1,200 sq. ft.
(2) High-density housing prototype could include mid-rise buildings (4 to 8 floors),
    and high-rise, high-end tower(s) of up to 15 floors in selected locations of the
    site. Assumes an average unit size of 1,200 sq. ft.
(3) Includes demand generated only by on-site residents and office employees.
    Does not include potential demand created by a destination use in the
    trolley barns (e.g., arts-related, cultural, creative industries, etc.)..

SOURCE: ECONOMICS RESEARCH ASSOCIATES, APRIL 2003.

				
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