One of Nashville’s largest private companies will be vacating about one-sixth of its headquarters, which is one of downtown’s newest and largest office buildings.
Asurion LLC will be marketing three floors of its Gulch headquarters for other companies to potentially occupy, according to an internal email the company sent to employees. The new, $285 million development on Church Street and 11th Avenue North boasts an array of amenities and outdoor space and a location within walking distance of many restaurants and bars.
The three floors will be located within one of the two buildings that make up Asurion’s headquarters — totaling 90,000 square feet of vacated space, said company spokeswoman Bettie Colombo. Asurion will be rearranging where employees sit, condensing them into other floors within the complex.
According to Asurion’s internal memo, the shift stems mainly from the prevalence of the “hybrid” work style that the Covid-19 pandemic spurred at many companies, in which employees are in the office only some days a week. Asurion also is shedding employees locally as part of companywide layoffs that could tally 1,000 people or more, as the Business Journal previously reported.
Asurion’s primary business is selling insurance, protection plans and warranties for a range of electronic devices. The company ranked as the largest private company in Nashville eight years in a row based on its annual revenue, which reached $10.6 billion in 2020 before falling.
Asurion’s headquarters opened in late 2021. On its busiest days, the site is half-full, according to the company memo.
“Our work habits have changed following the pandemic, and many employees have adopted a flexible work style, resulting in 50% occupancy on our most active days. As a result, we have received feedback from employees that the building can feel empty, and they want to sit closer to each other,” reads Asurion’s internal memo, marked as being from the company’s executive leadership team.
“We are doing this for two reasons: to create more density and to better align teams with the new [organizational] structure,” the memo reads. “These changes will help us achieve our intended goal of driving collaboration and relationship-building.”
Asurion leases the headquarters from developer Highwoods Properties Inc. (NYSE: HIW), which began negotiating with the company in 2017. Asurion relocated about 1,600 workers from four Davidson County office locations into the downtown headquarters, and pledged to create 400 additional jobs in exchange for $4.4 million of state incentives.
“Our goal was to encourage collaboration. That goal has not changed,” Colombo said.
Asurion has 14 years remaining on its lease, which pays Highwoods annualized revenue of $25 million, according to the real estate company’s operating statistics.
What Asurion is doing now is called “subleasing,” in which a tenant looks to rent some of its space to others. That rent is often priced lower than market rates, though it at least brings in some revenue for the main tenant (Asurion, in this case.)
Asurion’s move means that two of downtown’s five biggest office buildings will have large chunks of sublease space available, following Bridgestone’s summertime decision to put 162,000 square feet of its 30-story SoBro headquarters up for grabs.
Office vacancy in Nashville rose in the second quarter, spurred by new sublease space coming available, including part of Bridgestone’s building. Almost 25% of all office space in Nashville was available to lease at of June 30, either because it was vacant or through sublease offerings, according to statistics from CBRE Group Inc. (NYSE: CBRE).
“Downsizing and space consolidations will likely continue as companies implement return-to-office plans, with some office footprint reductions ranging between 20% to 50% on average in Nashville,” CBRE analysts wrote in their latest quarterly report.
Asurion aims to have employees settled at their new workspaces by the end of the year, according to the memo.
Is Nashville building too much office space?
© 2022 American City Business Journals. All rights reserved. Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated January 1, 2021) and Privacy Policy and Cookie Statement (updated July 1, 2022). The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of American City Business Journals.
About Author
