Metro has finalized the financial details of its East Bank development project with Boston-based The Fallon Co., setting the stage for significant revenue through a 99-year lease agreement. The deal involves Fallon developing 30 acres for mixed-use purposes around a $2.1 billion domed stadium for the Tennessee Titans. Initial rent estimates for residential buildings developed by Fallon are pegged at $560,000 annually, subject to a 2.5% increase each year, based on the development of a 2-acre site valued at $7 million per acre.
The ambitious project plans include at least five residential buildings with a total of 1,550 units and up to three hotels, all incorporating retail space. This arrangement predicts Metro's annual income from the apartment buildings alone could start at $2.8 million, with the first revenue expected several years from now. Fallon is also committed to providing 300 affordable housing units within two years of site availability and a minimum of 1,250 units within nine years.
An interesting aspect of the agreement includes a “participation rent” clause, where Metro would earn between 0.75% and 1% from the sale or refinancing of any completed building, potentially adding $1.8 million to Metro's coffers from a building valued at $240 million.
The East Bank's infrastructure development, integral to the project, is set to cost over $147 million, with significant contributions from Fallon and the Tennessee Performing Arts Center (TPAC), which is relocating to the East Bank. Fallon's contributions extend to constructing part of the new East Bank Boulevard and financing major updates to the Seigenthaler Pedestrian Bridge and creating the Cumberland Walk. This comprehensive development aims to transform the East Bank into a bustling hub of residential, commercial, and cultural activity, enhancing the area with new roads, pedestrian paths, and improved public transport options.
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