The Gulch
A Decade Makes a Difference

[ By Dirk P. Melton ]

Gulch patrons enter Tennessee’s first Urban Outfitters retail store.

Turn back the calendar to 1999. As were many other cities, Nashville, Tenn., was trying to reinvent its downtown, which was dwindling as nearby suburbs flourished. In the urban core, there were few residential options. Since the late 1980s, the city had seen only one tower built in the central business district. Downtown retailers and restaurants struggled to survive in the face of suburban competition.

Adjacent to downtown was a forgotten part of Nashville, neglected for decades. The area known as The Gulch lies cradled between the local interstate loop and the most active rail yard in middle Tennessee. Its name reflects its railroad roots and unique topography, forming a physical depression between the interstate and the central business district.

The word “depression” was appropriate considering the economic hardship The Gulch endured during the decades between World War II and the late 1990s. Properties had fallen into disrepair, railroad environmental contamination remained and there was no infrastructure to support new projects. There were no residences, no commercial space and no retail activity.

One Man’s Brownfield Is Another’s Treasure

Young soldiers boarding trains at Union Station in The Gulch during World War II. ©Speaking of Union Station: An Oral History of a Nashville Landmark

Steve Turner thought so. After a 20-year career in management at Dollar General Corporation, founded by his grandfather in 1939, Turner turned his interests to real estate – and, specifically, to the revitalization of Nashville’s urban core. He was an urban pioneer in the early 1990’s when he rehabilitated a downtown building to become Butler’s Run, a mixed-use project featuring retail, office space and the Turners’ personal residence. “After developing Butler’s Run, I saw in The Gulch an opportunity to create a true urban, mixed-use, mixed-density redevelopment district for Nashville,” Turner said.

Encouraged by his friend Joe Barker, a prominent local real estate attorney, Turner purchased six acres of a former rail yard in The Gulch from CSX Corporation in August 1999. Following this purchase, Turner and Barker formed MarketStreet Enterprises. Shortly thereafter, Turner’s son Jay joined the firm. The trio initiated a series of land acquisitions that would eventually total slightly less than half of the roughly 60 acres that now comprise The Gulch. To this day, MarketStreet continues to strategically acquire Gulch parcels that fit the firm’s investment goals.

So You Caught the Bus – Now What?

The Bohan Building, an old electric company warehouse that was converted to office use in 2001, was the first adaptive reuse project in The Gulch.

With downtown Nashville gaining traction at the turn of the Millennium and a large land portfolio taking shape in The Gulch, MarketStreet reached a decision point. Would The Gulch develop via a large-scale mixed-use project that would be executed simultaneously, or via smaller individual projects developed over the course of many years? After a couple of brief forays into “big solution” schemes, the firm resolved to develop The Gulch over time, requiring an abundance of patience, support and capital.

Given the acreage of The Gulch and the magnitude of the task at hand, getting consensus from both public and private sectors was crucial. The planning and development process in Metropolitan Nashville and Davidson County is administered by several collaborative agencies – primarily the Metropolitan Development & Housing Agency (MDHA), the Metropolitan Planning Department and the Department of Public Works.

The Mayor’s office and the Metropolitan Council also needed to be on board with any public/private partnership. From the private sector, coordination with several dozen landowners in The Gulch other than MarketStreet would be critical to progress. The challenge of remediating contamination and keeping The Gulch clean as growth continued over time required a solid environmental cleanup process. Finally, all of this had to be accomplished while making a reasonable return for MarketStreet’s considerable investment.

Ten Years Worth of Lessons Learned

By 2001, when MarketStreet had achieved critical mass through land acquisitions in The Gulch, the firm embarked on a strategic public/private partnership with the City of Nashville. Among the many initiatives put into play over the years, the following four major themes emerged as key to the success of The Gulch:

Make No Small Plans (a.k.a. Go Big or Go Home)

MarketStreet’s vision for The Gulch would only materialize through comprehensive master planning with the city’s full involvement. Collaboration ensued, during which land plans were drawn up to include the uses, product mix and densities required to energize the neighborhood, along with an analysis of necessary transportation and infrastructure improvements.

“A private developer had never proposed a master plan over a large area of Nashville,” said Rick Bernhardt, executive director of the Metro Nashville Planning Department. “It was clear that MarketStreet was collaborative and committed for the long haul.” In fact, the Planning Department encouraged developers to achieve greater density than was originally envisioned. As a result, the first version of The Gulch master plan, approved in June 2001, called for significant density– over 1,800 residential units, 800,000 square feet of office space, 300,000 square feet of retail and a hotel – totaling over three million square feet.

As real projects took shape over the years, developers achieved far greater densities than originally anticipated. The ICON condominium project, completed last fall, was first planned as a mid-rise, mid-density project, but emerged as a 22-story tower with 418 units – 100+ units per acre. Developers are now completing the fourth iteration of The Gulch master plan, reflecting more than double the density of the 2001 version. Preliminary calculations – showing more than 4,500 residential units, 1.5 million square feet of commercial office space, 500,000 square feet of retail and at least two hotels – total over 6.5 million square feet.

Stakeholders, Put Your Money Where Your Mouth Is

People may debate the definitions of the terms “urban,” mixed-use” and “redevelopment,” but there is consensus that the sum of those words equals “expensive.” The Gulch was no exception, and the public/private partnership demonstrated the considerable trust required to execute such a complex project spanning many years.

In recognition of MarketStreet’s significant capital investment in The Gulch, long-range focus and expertise, housing agency MDHA appointed the firm as the “master developer” of The Gulch in the initial master plan – the first such distinction in Nashville. This opened the door to previously unavailable tools, such as infrastructure improvements and tax increment financing (TIF).

“This was a classic example of the power of a public-private partnership to recycle a great location that was not meeting its potential,” said Phil Ryan, executive director of MDHA. Ryan said that MDHA and the City of Nashville spent seven million dollars in new infrastructure improvements, including the realignment of a major roadway through The Gulch, underground utilities, streetscape improvements, landscaping, lighting and traffic calming. The development agency also used design guidelines and other redevelopment tools to facilitate MarketStreet’s redevelopment efforts.

Individual development projects gained access to TIF funds to facilitate affordable housing in projects. So far about $15 million in TIF funding has been utilized. Among newer developments, the ICON project has 44 affordable units. Velocity, a 264-unit condominium project now under construction and delivering this summer, has 53 affordable units. Combined with affordable apartments at Laurel House, with monthly rents ranging between $500 and $650, such projects continue to provide housing options for downtown residents regardless of income.

Love Thy Neighborhood

Any neighborhood association leader will concur that one of the few things a group of neighbors will agree on is their often negative attitude toward new development. Some mixed-use projects, such as suburban traditional neighborhood developments, are controlled by a single developer. This makes the improvement, regulatory and neighborhood programming processes relatively straightforward. That’s not so in an urban setting.

In The Gulch, dozens of commercial property owners, including some who have owned a stake in the area for decades, had to reach consensus. These “incumbents” are being joined by hundreds of new condo and apartment residents. The Gulch has developed to the point where hot-button issues have evolved from graffiti removal to cleaning up after pets. Dense living environments, when combined with multiple commercial uses, require organization.

MarketStreet spearheaded the effort to establish a Business Improvement District (BID) for The Gulch, with property owners electing to pay an annual assessment to fund improvements and programs for public spaces. In August 2006, Metro Council authorized the formation of the Gulch Business Improvement District (GBID). The Nashville Downtown Partnership, a non-profit organization focused on downtown, administers the day-to-day operations of the GBID. “The GBID brings property owners together to improve the neighborhood in ways that are meaningful and relevant to them,” said Tom Turner, president and CEO of the Nashville Downtown Partnership. “More than anything, it is a stewardship organization, working to ensure that The Gulch remains vital and reaches its fullest potential.”

By charter, the GBID elects a diverse volunteer board of directors including property owners, business owners and tenants, residents and the head of MDHA. Local elected officials serve as ex-officio members. This year, the GBID will focus on neighborhood identification, signage and promotional marketing. “The pride in this neighborhood, which has literally risen from the ashes, is immense,” said David Bohan, president of the GBID and one of the first business owners in the Gulch. “This organization gives those invested a practical avenue to contribute to the continued prosperity of The Gulch.”

Clean is Good. Green is Better. LEED® is Best.

A photograph of a rail yard doesn’t appear in the dictionary next to the word “brownfield,” but it should. Across the country, real estate opportunities exist in prime locations formerly utilized by railroad companies. The more experienced developers become at cleaning up these sites, the greater the opportunities for development. Before The Gulch could consider “greening” future projects, it had to address the cleaning of project sites.

MarketStreet entered into a Voluntary Oversight, Cleanup and Assistance Program (VOAP) with the Tennessee Department of the Environment and Conservation (TDEC) for systematic remediation. Part of the EPA’s Brownfields Revitalization Act, TDEC’s VOAP program assists property owners with clean-up, and this approach has been successful in developing The Gulch. Once a site is cleaned, physical improvements should contribute to the environmental health of the neighborhood. Sustainable efforts in The Gulch are far-reaching, from infrastructure improvements to initiatives for individual buildings.

MarketStreet elected to take the green movement a step further. In 2007 the U.S. Green Building Council (USGBC) began a pilot program called LEED® for Neighborhood Development (LEED ND). LEED ND integrates the principles of smart growth, new urbanism and green building into the first national system for neighborhood design. In February 2009, Nashville Mayor Karl Dean announced that USGBC had designated The Gulch as the first LEED ND Certified Plan in the South, and the fourth Silver Certified Plan in the world.

“Nashville is showing the world that we can be a leader in environmental action, and that we can become the greenest city in the Southeast,” Mayor Dean said on the day of the LEED ND announcement.  “The Gulch is a historic gem in our city; its revitalization is crucial to our very fabric and to enhancing the economic vitality of our downtown.” 

Ten years after it started, The Gulch is on track for almost 900 residential units, 250,000 square feet of office space and 125,000 square feet of retail by the end of 2009. MarketStreet could have developed more density on suburban greenfield sites over the same timeframe with less difficulty and less capital investment. It will take 10 to 20 more years to achieve the development density in the current Gulch master plan. So why bother?

Because it’s worth it, as founder Steve Turner would say. Downtowns nationwide have existing road networks, infrastructure and a critical mass to support developments such as The Gulch. To replace its current density in a suburban or rural setting would require almost 1,000 acres of land, along with roads, infrastructure, utilities and schools. The value proposition exists in avoiding suburban sprawl.

Developments like The Gulch make sense because they do their part to mitigate half a century of sprawl. The Gulch reinforces the premise that the ideal environment for people to live, work and play might be a lot closer than people think.