5 Trends in Nashville’s Commercial Real Estate Market
From hot new developments to company relocations and the increasing need for multifamily housing, Nashville’s commercial real estate market is flourishing in 2022. And a few key commercial trends in the Nashville metro paint a vivid picture as to why:
- Growing Demand for Multifamily Real Estate
- Companies & Industries Moving to Music City
- Expanding Office Spaces
- Warehouse Spaces Springing Up
- The Unsuspecting Money-Maker: Self Storage
Growing Demand for Multifamily Real Estate
With an average of 82 people moving to Nashville daily, commercial multifamily properties are responding to the growing population rate. At the end of 2021, there were 57 active multifamily properties under construction, bringing nearly 14,000 new units to the metro.
This is a significant number when looking at other markets; in fact, Nashville’s apartment construction rate is one of the most aggressive in the nation, following only the cities of Charlotte and Austin.
The bottom line? Nashville is a great place to live, and it is a great place to invest in multifamily property! With a current total asset value of $30.1 billion, Nashville’s multifamily real estate market averages a sale price of $198,000 per unit.
Companies & Industries Moving to Music City
Companies like Oracle, Amazon, AllianceBernstein, and others deciding to move their operations to Music City only confirm the area’s fertile soil – and perk of no state income-tax – for businesses and workers alike to put down roots. Enticing performance indicators include positive net absorption, increasing asking rents, and declining vacancy rates.
In Q1 of 2021, new leasing activity in Nashville totaled nearly 500,000 square feet. Additionally, 2.5 million square feet of new office construction is underway, not to mention 5.8 million square feet of industrial construction.
Several promising industries expected to trend upward and bring more business to the metro include professional and business services, information, financial services, leisure and hospitality, and trade and transportation.
Expanding Office Spaces
In the post-pandemic world, one would think the wide acceptance of work-from-home and hybrid job models would mean companies downsizing their office spaces. However, 60% of business professionals are expecting commercial real estate tenants to expand in the near future, if they haven’t already.
In addition to a stronger focus on health and safety, many businesses are more open to collaborative and interactive spaces within their office. Larger spaces with flexible layouts – and better ventilation systems – are now considered a selling point to attract new employees.
Warehouse Spaces Springing Up
In October of 2021, the NashvillePost reported an already tense battle between logistics providers, retailers, and manufacturers for more warehouse space in and around the metro. The need for space has been fueled by consumers’ surge of online orders as a result of the COVID-19 pandemic.
A few examples include Beckwith Farms Building 7 (609,600 SF), Speedway Industrial Park Building 9 (400,960 SF), and 710 Myatt Drive (130,000 SF). In West Davidson County, logistics company Prologis is building a 1.2 million SF warehouse space.
Neighboring towns and cities outside of Nashville are absorbing some of the growth, as well. La Vergne offers affordability and lots of space to companies like Sinomax, one of the largest health and wellness product suppliers worldwide, and printing plants like Ingram’s Lightning Source.
The Unsuspecting Money-Maker: Self Storage
With Nashville’s single family homes and multifamily rentals exploding in the last 10 years, self-storage real estate has been bursting at the seams, as well. More than 4.8 million SF of new storage space has been constructed or converted since the 2010s.
And this particular industry in Nashville is an unsuspecting money-maker. Recently, Inside Self-Storage reported KKR – a global investment firm – purchased Melrose Self Storage located at 700 Inverness Avenue in Nashville, nestled between the Melrose and Wedgewood-Houston neighborhoods, for $21.85 million.