Nashville’s Real Estate Costs Endanger Indy Venues That Fostered Its Reputation

'It's like Times Square. You're giving way to people who have to sell beer to make their rent or to make their stockholders happy.'

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Nashville’s reputation as a music capital derives in many ways from the legendary performers who got their start at the city’s smaller independent venues like The Bluebird Cafe, the 90-seat songwriters’ showcase where both Garth Brooks and Taylor Swift were discovered, or Exit/In, the 500-capacity club where Jimmy Buffett once successfully auditioned.

Today, many of these clubs are facing the repercussions of an economic sea change that could not only destroy the independence of such venues, but also take Nashville’s reputation as a world famous music incubator along with it.

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“Small, original, independent artists who are based here are having a really hard time, and the independent stages and venues that host them are experiencing a really challenging time as well,” said Chris Cobb, president of Music Venue Alliance Nashville (MVAN), an organization consisting of 15 independent live music and performance venues in Nashville, including The Bluebird Cafe and Exit/In. “I would call that segment of the ecosystem endangered.”

This could partly be viewed as Nashville becoming a victim of its own success, as its ascent as a party destination has not strengthened its legendary status as a place to nurture and discover new talent.

“We’re at a crossroads as a city. We fell in love with ourselves,” said Tom Morales, the majority owner of Acme Feed & Seed, a Nashville restaurant and music venue, and the founder of Dancin’ in the District, a weekly live music event that helped revitalize the now-popular Lower Broadway in the early 1990s. “When we became the ‘it’ city, we were advertising to the world, saying, ‘Come here and have a party,’ and it wasn’t to come here and discover music. And the real estate value has just skyrocketed. It’s like Times Square. You’re giving way to people who have to sell beer to make their rent or to make their stockholders happy.”

The Bluebird Cafe in Nashville.
The Bluebird Cafe. Photo: Robert Alexander/Getty Images

In recent years, corporate dollars have been chipping away at the independent status of the sort of venues that give new talent a chance. Concert promotion/venue operation behemoth Live Nation has partnered with some smaller venues. Others have been confronted by steep rent increases, which force them out in favor of deep-pocketed interests. While this has sometimes led to larger locations and upgraded facilities, the cost of these improvements and the bottom-line mentality of corporate ownership mean that venues could be less likely to take chances on artists who are anything less than guaranteed draws.

Morales notes that a welcoming atmosphere for new performers was once the norm throughout Nashville’s independent venues.

“When I was growing up in Nashville, Lower Broad was a discovery platform,” said Morales. “If you could get on a stage in one of the honky-tonks, every record label had an A&R person in there, and you might get signed to a record deal. Outside of the jukebox, Lower Broad was the biggest discovery platform there was.”

But as the city loses some truly independent venues — such as Douglas Corner Cafe, which closed in May 2020 after 33 years of appearances by the likes of then up-and-coming songwriters such as Trisha Yearwood and Brooks — those breakthrough opportunities are falling by the wayside.

“We’re the only ones still not basically programming cover bands,” said Morales. “People still can take the stage [at Acme] and play their own music — pursue a dream. We’re one of the very few places that are still incubating and breaking new music.”

Venue owners are hardly the only ones who recognize the potential loss to the city if independent venues don’t survive.

“When you think about the tremendous growth and development going on in Nashville, some of these small music venues [are being] pushed out of their spots,” said Jeff Hite, chief economic development officer for the Nashville Area Chamber of Commerce. “These venues are very important to the music industry in Nashville. This is where these musicians hone their skills and really grow up, so they’re critical to the development of artists in the city.”

Cobb notes that the corporate acquisitions of independent venues in Nashville has led to more demanding programming schedules and a loss of the freewheeling environments new artists could thrive in.

“We’ve seen more takeovers of venues than actual losses,” Cobb said. “Longtime independent venues are having their buildings purchased out from under them. Then the owners and/or operators of those venues are being kicked out by developers. That then changes the programming with more of a focus on national acts, as opposed to a focus on what they could do for the local community.”

One such venue invoked by both Cobb and Hite is Mercy Lounge, a longtime beacon for local musicians that closed in May 2022.

Mercy Lounge opened in 2003 as a 500-capacity space, and evolved over the years to become a three-stage establishment that also included the 1,500-capacity Cannery Ballroom — named for the locale’s address, 1 Cannery Row — and a third, smaller space called The High Watt. While the venue ultimately welcomed the likes of Snoop Dogg, the White Stripes and Lizzo, it also hosted free showcase nights where local acts were introduced to new audiences, as well as other charity and community events.

According to the Nashville Scene, the beginning of the end for Mercy Lounge came in 2019, when Manhattan-based Thor Equities and Nashville real estate investor and manager  DZL bought the property on which the club and other businesses sat for $32 million. DZL bought out Thor’s stake the following year, and when it came time for the club’s owner, Todd Ohlhauser, to negotiate a new lease, he told the Scene, “We just weren’t able to reach an agreement on a long-term extension.”

DZL has since extensively renovated the venue, including adding a fourth room as a private events space, and dubbed the complex Cannery Hall upon its January 2024 opening. While there are some Nashville-based acts in the mix, a quick perusal of its calendar shows that all three public performance rooms now feature experienced or buzzy acts from around the country, and that there are no open mic nights or new artist showcases on its schedule.

(Commercial Observer reached out to Cannery Hall and DZL for comment, but did not hear back by deadline.)

Discussions of the status of independent venues in Nashville are more than just cultural.

The Nashville Area Chamber of Commerce conducted a thorough study of the local music industry in an extremely well-researched and finely detailed report in 2020, and used the 15 MVAN members for the section containing its conclusions about Nashville’s independent music industry.

In 2019, these venues brought in revenue totaling $31.8 million, and employed 279 people full time in the process. The report attributed to these clubs an economic impact of $49.6 million for Nashville’s Davidson County that year, plus $5.8 million in tax payments.

The report then spells out the massive losses these venues and the region suffered as a result of the pandemic. The clubs’ total revenues dropped by 72 percent in 2020 to just $8.9 million — a loss of $22.6 million — and eliminated over 73 percent of their full-time positions. The regional impact included losses of $17.1 million in lost wages, $4.2 million in tax revenue and $24.8 million from the county’s GDP.

One result of these types of losses from independent music venues nationwide was the implementation of the Save Our Stages Act, federal legislation that provided grants to struggling venues. While the act helped many venues in the short term, Cobb believes that the long-term effect was dire.

“That act put a big target out there,” said Cobb. “While we were struggling to figure out how to not lose our leases, our livelihoods and our businesses, you had a lot of people during COVID who ended up with a whole lot of cash, and a handful of those folks saw an opportunity to buy these things up. I would call it predatory behavior, myself. It’s a real estate play in the long run.”

The issues facing Nashville’s independent venues closely echo what’s happening in clubs nationwide. Costs of running these operations are skyrocketing at a time when larger entities, particularly Live Nation, are increasing their footprint in live music by expanding into smaller venues.

According to a 2022 article by Axios, Live Nation has formed partnerships with theaters and even clubs in Nashville like Marathon Music Works, with a capacity of 1,800; Brooklyn Bowl Nashville, which holds 1,200 people; and even the Basement East, with a capacity under 600, indicating that the company is seeking a foothold at every capacity level.

The Marathon Music Works association shows just how much the atmosphere for independent clubs has changed in the city.

“I opened Marathon Music Works in 2011 with a couple hundred thousand dollars,” said Cobb, who is no longer associated with the venue. “Those days are assuredly 100 percent over.”

Cobb was also the longtime owner of Exit/In until the building the club was housed in was purchased in 2021 by AJ Capital Partners, a Nashville-based real estate investment manager with a $5.3 billion portfolio and numerous Nashville holdings. AJ Capital now owns and runs Exit/In.

But even pervasive corporate ownership may not mean the end of all opportunities for newer performers.

Country star Eric Church partnered with AJ Capital to develop his new six-floor honky-tonk bar, restaurant and music venue called Chief’s, which opened in April. Church opened Chief’s with a 19-show residency, with tickets ranging from $99 to $499.

Still, Chief’s musical lineup does include several up-and-coming local artists — some with regular weekly afternoon gigs — mixed in with national acts.

Asked about the club’s booking philosophy, Chief’s general manager Heather Otto notes that the club’s booking originates with Church.

“He’s been intimately involved in every detail,” Otto said in an email to Commercial Observer through a representative. “From design to the acts who appear on stage.”

And in a rare piece of potential good news for independent venues, assistance might be on the way in the form of grants from the state.

MVAN was involved in helping draft a bill in the Tennessee legislature designed to create a live music fund that, according to Billboard, will “one day provide grants to live music and performance venues, promoters and performers.” But, while the bill passed the Tennessee statehouse and has been signed by Gov. Bill Lee, sources of the actual funding are still in question.

And even with this sort of assistance, the economic climate, particularly land and leasing costs, have created an environment where any individual owner with less than canyon-deep pockets has little chance of opening a truly independent venue in Nashville.

“The cost of owning and developing real estate in Davidson County, particularly in the downtown quarter, is insane,” said Steve Moore, a Nashville music industry veteran who has served as CEO of the Country Music Association (CMA) and executive director of the Starwood Amphitheater, and is a partner in Acme. “Unless you own the dirt and the building, it’s very difficult to try to negotiate a reasonable lease for any sizable space that makes any sense. The overhead is just too ominous. Most places that were grandfathered into a lease are going away.”

Unsurprisingly, this fate seems different for venues on the other side of the economic divide.

The Pinnacle is a 4,500-capacity music venue that will be part of a massive new $1 billion-plus de facto neighborhood called Nashville Yards, which will also feature residential, office, two hotels, outdoor space and retail. The complex is being developed by Southwest Value Partners, and the venue will be run by AEG — the second-largest operator of music venues in the U.S. after Live Nation.

“What differentiates our venue is that we were not trying to do the same thing again as everybody else. This [fills] a specific gap in a market,” said Joe Bucher, managing director and partner for design, visioning and development strategy at Southwest Value Partners.

“You’ve got a bunch of clubs that hold a thousand people or less scattered throughout the city. Then you have a classic venue like the Ryman Auditorium, which is super famous and holds about 2,000 people. After that, you’re jumping up to outdoor amphitheaters at 6,000 or 7,000 people, and then arenas and stadiums. We don’t have a venue anywhere close to the 4,000-person range.”

The Pinnacle rendering.
The Pinnacle. RENDERING: Courtesy Southwest Va

Of course, any major metropolitan area that aspires to be a music hub should have venues of all sizes in order to attract performers at all levels. But this includes having stages where new performers can showcase their talent, as it’s hard to call yourself a true music city without it.

For all the independent venues losing their homey touch to wealthy owners and extensive renovations, one venue that hopefully doesn’t have to worry about it is The Bluebird Cafe.

Founded by Amy Kurland in 1982, the venue was sold to the nonprofit Nashville Songwriters Association International (NSAI) in 2008.

Unlike so many Nashville clubs, The Bluebird Cafe hasn’t changed its essence. It’s still a 90-capacity club that hosts two shows a night, seven nights a week; still hosts many of the best songwriters in Nashville; and also offers open mic nights where young talent just might get discovered.

Erika Wollam Nichols began waitressing at The Bluebird in 1984, and has served as the club’s COO since 2008. In a 2017 interview with Garden & Gun magazine, Nichols perfectly articulated the importance of grassroots venues such as The Bluebird for a legendary music city like Nashville.

“I kind of dig my heels in — we’re not changing this, we’re not getting bigger, we’re not trying to buy another place or add a top floor or have a green room,” Nichols told the magazine. “There are things that are just really precious the way they are. Could we make more money if we had a bigger room? Probably, for six months, but something inevitably would be lost.”