Russ: Hi this is Russ Capper and welcome to BusinessMakers USA, coming to you today from Nashville, Tennessee and I’m very pleased to have as my, guest Tony Giarratana of Giarratana Development, LLC; Tony, welcome to the show.
Tony: Thank you Russ, pleasure to be with you.
Russ: You bet. So the Nashville Business Journal recently said if it’s not a tall building or a ground-breaking Tony Giarratana is not interested; is that right?
Tony: I think it’s pretty true, pretty true.
Russ: Man, that’s pretty strong though.
Tony: Well we’ve been blessed over the years to get to work on developments that most of the community thought were – could not be done.
Tony: And we started life building residential downtown where about 99% of the community thought it was not possible; and I say 99% because I was pretty certain my wife thought we could pull this off. So each thing that we’ve done and kind of made a life career out of it is doing a development that we believe firmly in but most of the community thought couldn’t occur; couldn’t be successful here because it had not been done here before. And so I think that’s where the Business Journal headline came from is our history has been projects that have are big and bold and innovative.
Russ: Okay. And isn’t it true for quite some time it was just against the deed restrictions to build residential in downtown Nashville?
Tony: It was, and completely unknown to me at the time, but we had purchased a site to develop a high rise office building and the recession that followed that scuttled that development. And then years later in ’93 we went to see the city to talk about what we might do together to develop that property and the mayor wanted us to develop residential. And so we were enthusiastic to have something to work on, it was a depth of a then recession and so we signed up to do high rise residential. Unbeknownst to us it was a prohibited use.
Russ: Okay, but that didn’t stop you?
Tony: No, we – having the mayor on our side and having the Development Director on our side we were able to go to the 40-member metro council and petition the council to amend the zoning ordinance to permit high rise residential or residential in the CC zone district – the Central Core zone district.
Russ: Okay, really cool, so just so you know, just so our audience knows, you got on our radar at our last market that we were in, Seattle, and we interviewed Jamie Fleming, the Founder and CEO of Studio 216. This cool company, as you know has taken virtual reality, augmented reality, to high levels of commercial success manly featuring commercial projects really before they even come out of the ground. So we’re going to get to that because it’s a cool part, but I just wanted to establish that up. So let’s just – let’s just start here, tell us about Giarratana Development, LLC.
Tony: Well, we’re a small company – a small entrepreneurial company and we, as I mentioned, we really made our mark here in town after a career that spanned Tampa, Florida, Denver, Colorado, New Orleans, Louisiana, some time in Dallas, Texas but in Nashville, Tennessee the first big thing that we did here was introduce residential to the Central Business District with a project called Cumberland that we mentioned earlier.
Tony: We – it was a very difficult, very hard project and we were thrilled to have done it but really didn’t want to do another one. And it was not until our leases of our apartments would expire and our residents would give notice that they were going to leave which prompted me to go see them and say did we do something wrong? Is there something that we could do different to make your experience better here that you would not leave? And they would say Tony, it’s a one year lease. I mean we’re going to go buy something, why don’t you develop something that we can buy?
And really, truly not knowing what that meant we would ask them and say tell me, what would you like me to build that you would buy and they described Viridian. And so we – emboldened by all these real people that we knew telling us that they would buy this if we built it we did Viridian. And Viridian was an out of the park homerun, it won every award known to the industry from Project of the Year with ULI to Multi-family Housing Development of the year somewhere in I think Vegas is where they’re based.
Russ: And that was your second downtown high rise?
Tony: Second downtown high rise and then we bought an old office building – an historic office building – that had been kind of turned into some artsy apartments and we bought it and converted it into condos and kept our sales team busy while we developed Encore.
Well Encore became the first ever high rise residential in the area south of Broadway known as Sobro. And that 333 unit project delivered in the teeth of the great recession in 2008 so that was a great adventure and being older and wiser we knew what to do. I t involves a lot of people; involves entitlements involve a lot of government and quasi-governmental participation and the community and the sun, the moon and the stars all have to align meaning the capital needs to believe that there’s buyers and the lenders need to believe that they can get their loan paid off. All these things need to come together and then you have to deal with the end consumer, whether they’re apartment renters or they’re buyers, and they all have goals and dreams and aspirations that you need to accommodate in order to be successful. So it’s a lot of fun.
Russ: Okay, but isn’t it true that, you know, doing this you can bring one of these things out of the ground, sell it or lease it fully and be down the road 5 years doing great and then all of a sudden the bottom falls out of the economy and you’re out of business?
Tony: Yes, and the bigger the project is – and I appreciate you mentioning that – the bigger the project is, the more susceptible you are to macroeconomic conditions; world affairs, wars. And so a small project you can design it, finance it, build it, sell it all in one cycle. A larger project like 505, which is a vertically integrated, mixed-use development, that project will span several cycles; and it did. We actually bought that land back in July of 1993; they were just developing it. So you can imagine what transpired all that time that we sat on that site. And so you are racing against the clock, time truly is money, and time equates to risk. There’s a saying within the development world that time is not your friend and that’s very true.
Russ: So why do you keep doing bigger and bigger ones?
Tony: Well it’s invigorating. It’s exciting and it’s – you – you know that Burnham line dream no small dreams; I mean why would we want to get up and do the same thing that we did yesterday? It just doesn’t – it wouldn’t drive us and certainly wouldn’t drive us to take the great risks that we take signing on notes and putting capital in the development. We dream big and we execute, we deliver. And so we are blessed in that we get to work on things that excite us, that obviously excite the community and we hope that we have the opportunity to do more of these type of developments.
Russ: Okay, so tell us about 505.
Tony: So it’s 45 stories, it has a high rise and a low rise. They’re very different in that the low rise has 350 apartment units. The high rise is 193 apartment units that will ultimately no doubt be sold as condominiums, but through the construction period – as long as the construction-related financing is in place – it’ll be all rental.
Russ: It seems – and I obviously got to look at it from a VR perspective from Studio 216 – it seems to be an extraordinary design that is unique.
Tony: No it is, it is. We wanted a simple, sleek, elegant silhouette on the skyline. And this was – it sounds easy but our only arguments amongst our team other than vertical transportation was the design and the architects want to add things – appendages – to the building; they want a hole in the building or an element extending out from the building like a transformer and I’d sit there and go what’s wrong with simple? What’s wrong with clean and sleek and elegant? Let’s just do that and so that’s what you see. It’s a very simple, sleek, elegant spire that’s about 524 feet tall and each of the facades has radius to it; both the north, south, east and west has a radius. I was not in favor of the radius and was arguing against the radius at a restaurant near here and my wife walked in to join us – the 8 or 10 if us for dinner and I thought well thank goodness my wife’s here, she’ll support me in this.
And I said honey, we can do a rectilinear building, it’s very economical, all square corners, 90 degrees and it’s going to be a very dramatic building or what Vladimir and the Solomon Cordwell Buenz folks are designing is this radius design building, it’s going to cost more, I don’t know how much more but it’s going to cost more and so which design do you favor? Convinced she was going to go with the more conventional rectilinear building she took the rectilinear building off the table, put it on the floor and said honey, a building this significant, you need to have the radiused edges. So that was the end of my evening, I drank a lot that night, didn’t talk a lot, but that’s how the design came to be. And these are true stories, you can’t make these things up; and we still laugh about it today.
Russ: That’s great. So how did you meet the Studio 216 guys and talk about how you embraced that. I mean a lot of people perhaps have seen the interview, some haven’t, but it’s quite a unique way to present the building very early on.
Tony: Our longtime investment banker was Jones Lang LaSalle, known as JLL. And JLL, David Hendrickson of JLL called me from a meeting – a convention, a gathering, where ever he was – and he said Tony I just saw this technology with one of our former associates Liz O’Connell and it is just amazing this virtual reality thing and do you know about that? And I said well I’ve read about it, I really haven’t seen it. And she asked me David, is there any of your clients that would be interested in something like this? And he goes well I know one, Tony in Nashville.
And that was on a Thursday, on Sunday I’m in Seattle and Monday and Tuesday I’m receiving all these kind of vignettes, these little experiences, on these Oculus and Gear VR and Hallow Lens and all this and with all the people you met; Jamie and Boaz and Aidan and Kyle and all of these people that you met. They presented all this stuff over a couple of days and at the end of 2 days my head is swirling. And they said well Tony we’ve kind of shown you all the things that we do, is there anything that you’d be interested in? And I said are you kidding? I said I want all of it. And they said what? And I said oh, I want all of it. I don’t the thing with the little gadgets that you have to hold in your hand and you have to be a helicopter pilot to fly but all the other stuff, I want that.
And they said well great, when can we start? And I said I would think we just did. And I remember flying back to Nashville, I texted my – or emailed my partners from the plane and I said I don’t know if I just traded in our cow for a bunch of magic beans but I’m blown away and we’re going all in on technology. And they said great, can you tell us about it? And I said not really. And that’s really been my pitch, I really can’t explain what is coming down the pipe but it’s the future and I just saw it and everybody’s going to be doing it. There’s not – everybody’s got to do it, we’re just going to be the first.
Russ: Well I – we were totally impressed with what we saw partly because I’ve been seeing virtual reality for quite some time but I never saw it sort of in a real, commercially viable business. And this is because they are – they are able to demonstrate your property before it even comes out of the ground to somebody that’s interested in investing or in buying or in renting; they can see it.
Tony: Yes, absolutely. And it’s so hard to convey new ideas, particularly to people who have never experienced it before.
Russ: So before I let you go I know that you didn’t just start saying wow, I’m going to develop high rise buildings in downtown Nashville; tell us about your background. How did you get started in this business?
Tony: Well, I don’t want to hurt anybody’s feelings but I was born and raised in Clearwater, Florida, my father was a barber, my mother worked in a bank and they’re both deceased now. But I was going to the University of South Florida and getting a degree in Finance and one day the professor asked everybody what they were going to do after school and just about everybody in the room raised their hand and said they were going to be a banker. And I like the whole banking industry; I love these initial public offerings at these banks that people have created and all the wealth that’s being created, but I didn’t want to be a banker.
And so I remember driving back to Clearwater from Tampa thinking to myself oh my gosh what am I going to do when I grow up? And I went to the beach – I was at the beach almost every day of my life and I’m walking along the beach and I’m looking around and I said you know these guys that are building these high rise hotels and residential buildings, they look like they’re having a good time. I mean, that’s what I’d like to do. And so it was that moment, that professor asking that question and me being reflective about it I decided real estate is what I wanted to do.
Russ: Tony, great story. Thank you so much for sharing your perspective.
Tony: Sure enjoyed it.
Russ: You bet. And that wraps up my discussion with Tony Giarratana, the Founder and Owner of Giarratana Development, LLC and this is BusinessMakers USA.
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