If it answers the question Where?, it's an adverb. Like this,
Adverb Test Q: Where is his hiding place? A: It's nearby. (Adverb)
It it modifies a noun, then it's an adjective. Like this,
Adjective Test Q: What kind of hiding place? A: A hiding place that is nearby. Note, the entire phrase 'that is nearby' functions as an attributive adjective, b