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An ordinance approving a lease agreement between the Metropolitan Government of Nashville and Davidson County and Hessel Properties, GP for use of 74,374 square feet of office space located at 1283 Murfreesboro Pike (Parcel No. 12000015500)(Proposal No.2026M-015AG-001).
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WHEREAS, Hessel Properties, GP owns certain real property located at 1283 Murfreesboro Pike (Parcel No. 12000015500); and,
WHEREAS, the Metropolitan Government of Nashville and Davidson County (“Metro”) has determined that the building located at 1283 Murfreesboro Pike is needed for office space for Metro employees; and,
WHEREAS, Metro and Hessel Properties, GP have negotiated the lease agreement attached hereto and incorporated herein; and,
WHEREAS, it is to the benefit of the citizens of The Metropolitan Government of Nashville and Davidson County that this lease agreement be approved.
NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
Section 1. That the Lease Agreement between The Metropolitan Government of Nashville and Davidson County and Hessel Properties, GP attached hereto, is hereby approved and the Director of Public Property Administration, or his designee, is hereby authorized to execute the same.
Section 2. That any amendment to this lease agreement shall be approved by resolution of the Metropolitan Council receiving at least twenty-one (21) affirmative votes.
Section 3. This ordinance shall take effect from and after its final passage, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.
Agenda Analysis
Analysis
This ordinance approves a lease agreement between the Metropolitan Government (“Metro”) and Hessel Properties, GP (“Hessel”) for use of office space located at 1283 Murfreesboro Pike.
The agreement provides for Metro to lease 74,374 square feet of office space of an approximately 78,500 square foot building located at 1283 Murfreesboro Pike. Metro will use the 1st, 2nd, 3rd, 4th, and 5th floors as well as exclusive use of the parking areas contiguous with the building. The term of the lease would be 10 years upon filing with the Metropolitan Clerk. Metro would possess two options to extend the contract by five years. The lease shall commence once the building is clean, code-compliant and market-ready, with all building systems in good working order, suitable for use by Metro. Under the terms of the lease Metro will receive a $1,200,000 improvement allowance for interior improvements. This improvement allowance is separate from the requirement to deliver the building in suitable condition.
Rent payments will be made in monthly installments on the first day of the month. Rent for the premises will be as follows:
|
Lease Year |
Rent per square foot |
Total Annual Rent |
Percent Increase from prior Lease year |
|
Year 1 |
$21.53 |
$1,601,272.22 |
-- |
|
Year 2 |
$22.17 |
$1,648,871.58 |
3.0% |
|
Year 3 |
$22.84 |
$1,698,702.16 |
3.0% |
|
Year 4 |
$23.52 |
$1,749,276.48 |
3.0% |
|
Year 5 |
$24.23 |
$1,802,082.02 |
3.0% |
|
Year 6 |
$24.96 |
$1,856,375.04 |
3.0% |
|
Year 7 |
$25.71 |
$1,912,155.54 |
3.0% |
|
Year 8 |
$26.48 |
$1,969,423.52 |
3.0% |
|
Year 9 |
$27.27 |
$2,028,178.98 |
3.0% |
|
Year 10 |
$28.09 |
$2,089,165.66 |
3.0% |
The office space will be used for day-to-day operation of the Metro Government including but not limited to the Metro Nashville Police Department. Metro will be responsible for operating expenses as calculated by Hessel, including charges such as real estate taxes, special assessments, administrative fees, repairs, and maintenance associated with the property.
Hessel will be responsible for upkeep of the premises, as well as all utility costs. Metro will be responsible for maintaining a gymnasium and all related equipment.
Future amendments to this lease may be approved by resolution.
Fiscal Note: The rental rate for use of 74,374 square feet of office space located at 1283 Murfreesboro Pike is $1,601,272.22 per year or $21.53 per square foot for the first year. The rental rate will increase at approximately 3% each year from second year to the tenth year. According to the appraisal, the market rent is $25.00 per square foot or $1,859,350 per year effective July 24, 2025. Metro will receive $1,200,000 improvement allowance for interior improvements. Hessel Properties, GP will provide improvements on the property required to deliver in the condition as defined under Section 19 of the lease agreement and will not be charged against the tenant allowance improvement amount. Metro will pay for Hessel Properties, GP’s operating expenses, to operate and maintain the property as an additional rent but the amount is listed in the agreement.