There are few more controversial topics in Nashville than the rate that the city is expanding and how it is handling this explosive growth. Civic leaders actively encourage development and quote statistics about how many new residents are moving to Music City every day, while neighborhood activists decry the loss of green space and tree canopies and worry about the gentrification of historic districts. It seems like the villain in most scenarios is the “tall skinny” home, a narrow building that can allow real estate developers to sell more square footage to more people on a lot that might have previously housed one family in an older property.
But it’s important to remember that the tall skinny house might be someone’s first home where they will raise their new family, or the first chance for a newcomer to the city to move out of a rental property and put down permanent roots. The family that sold the original building that was torn down to construct two new homes might use that money to send their kids to better schools or start a small business.
Rather than play the “blame game,” it might be more instructive to examine how the whole process of real estate development is managed. Who should determine the proper pace of growth? Should it happen at the Metro government level through codes enforcement and Metro Council edicts? Should neighborhood organizations determine the path forward for residents who haven’t even moved there yet? Would it make sense for the lenders to temper the expansion plans of developers, or should the real estate investors exercise caution to avoid overcrowding?
Landmark Community Bank is very sensitive about their role in this critical aspect of the future of Middle Tennessee. A Memphis-based bank, Landmark expanded to the Nashville, Brentwood and Franklin areas after opening a Music Row branch in 2013. Native Nashvillians John Morrissey and Robin Henderson were the original employees at that branch, and John has moved up to become City Executive for Landmark’s Nashville operations. Landmark’s purchase of Cadence Bank expanded their footprint to include Cool Springs, Franklin and Brentwood, where Amy Delk oversees the Williamson County branches of Landmark as Senior Vice President | Williamson County Executive.
John recognized early on that Landmark’s flexibility as a smaller bank offered competitive advantages that could be beneficial to Middle Tennessee clients. “Real estate development, both residential and commercial, is a focus for Landmark,” he explains. “We’re able to work outside the box with mortgages because we can portfolio them and hold them ourselves instead of selling them. As long as we all agree on the front end that a client fits within our more flexible qualifications, we can promise that they will get a loan at some rate. Most mortgage lenders can’t make that sort of guarantee, but people want to make sure that they can buy that house when they put down an offer.”
Richard Exley is based out of Memphis where he serves as Landmark’s Senior Vice-President and Senior Real Estate Officer, but he is acutely aware of how both private and commercial real estate development can affect a community. After the economic downturn at the end of the past decade, there wasn’t much happening in the building industry from 2008-2012. Richard remembers, “For a while development and construction lending just wasn’t happening because everyone was disposing of assets that they already owed money on, and the developers that were still standing were doing the same thing.” While the banks and the builders were being more cautious with their money, demand was building up in the background. “People were still graduating from college, getting jobs, moving to town and having babies that needed places to live or larger homes.” Richard continues, “The current building boom is like a whiplash to meet pent-up demand. New apartment complexes can add 300 units to the market at one time so it does feel like a flood sometimes. But rental rates have still been going up and up, and hopefully they’ll begin to stabilize after we catch up with the lack of supply.”
It’s not just apartment dwellers who have been affected by the hot market. Richard adds, “The same way that rents have spiked, there still aren’t enough houses available in the neighborhoods where people want to move to. With houses, it’s a little less risky because you only build one at a time. It may not be all boom all the time; in fact it won’t, but the sectors should get back in line. This isn’t a false build-up like 2008; this is all driven by demand.”
John sees the building boom as a potential positive development for future homeowners. “The shortages in inventory are leveling off. I’m still wondering how these young people moving here can afford the rents, but hopefully they’ll come down or at least stabilize. You have to remember that developers will build whatever they can as long as they can get the money to do it. They’ll build on every piece of property they can find.”
Jon Miller is Vice President of Real Estate & Construction at Landmark. He has been responsible for assisting in several large development projects in burgeoning Nashville neighborhoods such as Germantown, East Nashville and The Nations, but he recognizes that not every proposed construction project is appropriate for a given location. “We look at projects on a deal by deal basis and encourage builders to be thoughtful. You have to wonder sometimes if it makes sense for the builder and the bank. Just because an area’s hot, you still have to look at where in the area the development is planned for.”
Richard concurs. “We’ve had discussions as a group about what happens to the people who lived in The Nations who are selling that house. Where do they move to? They probably cannot afford to buy the new house that will be built there. We do offer products designed for lower income borrowers to be able to buy a house. The market, however, dictates the price of the rising products. We can’t always be the mechanism to help people stay in their neighborhood, but we’re proud to at least try to help out with that.”
“Affordable housing is becoming harder to find,” admits Amy. “We’re doing our best to keep up with this growth. We want to invest in Nashville and Williamson County in the right way. We have a focus on the community.”
In the end, Landmark Community Bank wants to help neighborhoods grow in intelligent ways. Richard says, “For example, Sylvan Park has done a good job maintaining their character. They’ve concentrated on keeping the neighborhood how it’s been for decades and still managed to add new homes without becoming a suburb. It’s a hard balance to keep, and people need to remember that by the time a project reaches the bank, it’s already gone through codes approval.”
“We look at projects on a deal by deal basis and encourage builders to be thoughtful.” — Jon Miller, Vice President of Real Estate & Construction at Landmark
It’s the personal touches that differentiate Landmark. John promises, “When people call us, they will know their banker and not just get routed to some call center. We’re not trying to be the biggest retail bank in town, and we want our tellers to know their customers when they walk in. The main thing is that we can do smaller and more flexible deals plus being a full-service bank. We want people to do more than just start a mortgage with Landmark. We want people to use us as their bank as we grow and establish even more relationships with the local community.”
To learn more about Landmark Community Bank and their mortgage and banking options, visit lcbtn.bank.
This article is sponsored by Landmark Community Bank.