Market Reports

Nashville Attracts Big Brands Like In-N-Out While Carving Out Distinct Pocket Neighborhoods

by John Nelson March 25, 2024

By Katie Lester of Colliers Nashville’s economy experienced some of the healthiest growth in the nation in 2023, with a job growth rate of 3.7 percent, putting it among the top five of the largest 50 metros. Forecasted by Oxford Economics, overall jobs are projected to grow 1.2 percent in 2024 and by 0.8 percent per year in 2025 through 2028, outpacing the U.S. average of 0.5 percent. Nashville also received high marks from the Urban Land Institute, ranking the “No. 1 Market to Watch” in its 2024 Emerging Trends in Real Estate report. This is the third consecutive year that Nashville has earned the top spot in this ranking, a true nod to the confidence and strength of Nashville’s commercial real estate market. The report credits Nashville and other “Supernova” cities as having above-average levels of economic diversity and high-wage jobs that attract investors’ appeal and confidence in sustaining high growth in the coming years. These fundamentals have been a boon to the retail market and have helped attract new-to-market retail brands to Middle Tennessee. Most notably, after a multi-city, multi-state search over the course of two years, In-N-Out Burger picked Middle Tennessee to locate its Eastern Operations Hub, …

March 25, 2024

Industrial Market Reports Southeast Southeast Market Reports Tennessee

The Race Is on to Meet Industrial Demand in Nashville

by John Nelson March 18, 2024

By Jack Armstrong and Joanna Paszek of CBRE The Nashville industrial market remained strong through 2023 despite macroeconomic pressures, fueled by persistent occupier demand and limited availabilities. Occupiers were active in the market with mostly sub-100,000-square-foot requirements, making it vital for owners and developers to consider size segment trends and supply the market based on varying occupier needs. The logistical advantage of Nashville’s geographic location continues to attract occupiers and investors to the market. Three major interstates intersect through the city, and companies can reach 72 percent of the U.S. population within two-day ground delivery. A consistent average of 100 new residents daily and waves of new-to-market companies helped promote a swift post-pandemic economic recovery and illustrate the market’s resilience. An increased presence of electric vehicle (EV) companies is paving the way for significant infrastructure upgrades, bringing high-paying jobs and growing supply-chain demand to support their product distribution. Economic incentives like Tennessee’s FastTrack Program grants for job training and infrastructure development, job tax credits and sales tax exemptions have attracted roughly 2,500 jobs and $2.8 billion of capital investment by EV-related operations to Middle Tennessee since 2020. Together, Nashville’s pro-business environment and status as a place people want to live …

March 18, 2024

Market Reports Office Southeast Southeast Market Reports Tennessee

Nashville’s Office Market Bucks National Trends with Rent Growth, Leasing Velocity

by John Nelson March 11, 2024

By Stewart Lyman and Robby Davis of Stream Realty Partners Contrary to popular belief, the office market is not dying, particularly not in Nashville. While the market is facing headwinds from the interest rate environment and general economic uncertainty, Nashville has shown resiliency, bolstered by the city’s strong population growth, low unemployment rates, and a vibrant, diverse job market. However, while flight-to-quality has been experienced well before the COVID-19 pandemic, the positive performance of top-tier buildings compared to the rest of the market has accelerated coming out of COVID-19. In 2023, Class A Tier I buildings posted 1.17 million square feet of positive absorption compared to negative absorption of 141,900 square feet and negative 32,267 square feet in Class A Tier II and Class B assets, respectively. Top-tier buildings signed some of Nashville’s largest leases in the past year, such as Creative Artists Agency (CAA) for 75,000 square feet at Nashville Yards, Designed Conveyor Systems for 47,000 square feet at McEwen Northside and JE Dunn for 41,000 square feet at Neuhoff. In the urban core, two of the most high-profile new developments are Neuhoff (Germantown) and Nashville Yards (Downtown), both of which are elevating the tenant experience by delivering best-in-class …

March 11, 2024

Industrial Market Reports Southeast Southeast Market Reports Tennessee

Memphis Industrial Market Begins to Normalize After Years of Robust Growth

by John Nelson September 4, 2023

In January of 2023, the Memphis industrial market was coming off multiple years of record-breaking growth. However, mid-year we seem to be trending back to a somewhat normal growth pattern. The Memphis industrial market, which was fueled by the pandemic like many other markets, is finally beginning to normalize. Economic factors also influence the market as well. First and foremost is the uncertainty: uncertainty in interest rates, uncertainty in construction costs and uncertainty in when will we see some signs of stabilization. Many say we need to survive until 2025. Yet, the Memphis industrial market seems to have all the tools to handle this moment, and move forward. Memphis, located on the borders of Tennessee, Arkansas and Mississippi, is known as “America’s Distribution Center” — boasting unparalleled expertise in distribution and logistics. With a central location, Memphis’ transportation infrastructure comprises the four Rs: runway, rail, river and road. Memphis International Airport houses the largest cargo airport in the world with the FedEx worldwide hub. Memphis is one of only three cities in the country that has five of the seven Class I railroads: Union Pacific/Southern Pacific, Burlington Northern Santa Fe (BNSF), CSX Corporation, Norfolk Southern and Canadian National Railroad (CN). …

September 4, 2023

Market Reports Office Southeast Southeast Market Reports Tennessee

Memphis Office Market Remains Steady Despite Sector-Wide Challenges

by John Nelson August 28, 2023

The Memphis office market posted 271,828 square feet of positive absorption in 2022, and that momentum has carried into the first half of 2023. Like most markets, Class A properties accounted for the majority of positive absorption, at 218,851 square feet. This trend has already carried into 2023, as Class A properties lead net absorption totals to begin the year. As a result of a strong year, the vacancy rate has fallen to 12.4 percent market-wide, an 840-basis-point decrease from the height of the pandemic. Additionally, sublease availabilities are less prevalent in Memphis than other comparable office markets. Currently there is 257,681 square feet of sublease space available in the Memphis market, which has a total net rentable area of 21.7 million square feet. The average among similarly sized Southeast markets is 422,624 square feet. There haven’t been substantial space additions to outweigh the below-average leasing activity thus far in 2023. The Memphis unemployment rate continues to trend downward to 3.2 percent in April, slightly lower than Tennessee’s 3.3 percent unemployment rate and the national rate of 3.7 percent. The tight labor market has increased demand in East Memphis, as tenants demand high-quality, highly amenitized buildings to attract and retain …

August 28, 2023

Market Reports Multifamily Southeast Southeast Market Reports Tennessee

Memphis Multifamily Outlook: Prepare Your War Chest

by John Nelson August 21, 2023

It’s no secret: The multifamily real estate market in Memphis has experienced a significant decline in investment sales volume and total transactions over the past year. But with signs of life coming quickly on the horizon, how can you be ready to capitalize? According to CoStar Analytics, the 58.7 percent sales volume decline in Memphis is in line with the national average, but we have seen a larger dip in total transactions. The steep and rapid decline is directly correlated to the Federal Reserve’s ongoing battle of taming inflation. The Fed has increased the benchmark federal funds rate at 10 consecutive meetings. And while there was a pause at the June meeting, more rate hikes are expected this year. What does this mean for investors and operators? The cream will rise to the top. Some investors may default on loans due to floating-rate debt and the rapid rate increases, while others may struggle to refinance or sell without incurring losses as their cheaper rate caps expire. However, those that have executed their business plans effectively and added value to their apartment complexes by raising rents can expect some cushion. Another interesting factor to examine is the vacancy rate, which has …

August 21, 2023

Market Reports Restaurant Retail Southeast Southeast Market Reports Tennessee

Memphis Retail Market Shows Grit With Several Developments in the Works

by John Nelson August 14, 2023

The term “grit” has become synonymous with Memphis. The commercial real estate landscape continues to receive headwinds from interest rates, high inflation, construction prices and geopolitical tensions, but Memphis continues to show grit in the face of these obstacles. Memphis presents a compelling opportunity for retailers seeking expansion. With a low vacancy rate of just 3.5 percent and strong occupancy levels, the city’s retail market is flourishing. The annual rent growth of 3.7 percent aligns with the national average, indicating a stable and promising environment for businesses. Moreover, Memphis offers competitive pricing for retail spaces, with affordable rates and attractive cap rates that surpass those of neighboring markets. This appealing pricing structure, coupled with a surge in transaction activity, has revitalized the market, providing increased liquidity and investment opportunities. The Regional Megasite of West Tennessee is witnessing a remarkable undertaking from Ford Motor Co. in its newly forged partnership with South Korean battery company SK Innovation. The ambitious Blue Oval City project is well underway. Currently valued at $5.6 billion and sprawling across 3,600 acres, the project is expected to generate nearly 6,000 job opportunities with another 30,000 ancillary jobs in the surrounding communities. Anticipated spillover effects from this venture …

August 14, 2023

Market Reports Multifamily Southeast Southeast Market Reports Tennessee

New Developments Fuel the Bright Future of Nashville’s Multifamily Market

by John Nelson March 13, 2023

As someone who has lived here for the past decade, I regularly hear phrases like, “It’s an exciting time to live, work and play in Nashville.” I love hearing those comments and am honored that our team plays a role in the city’s growth. However, is that optimism cooling, or is Nashville uniquely primed for continued success in the multifamily space? Following a white-hot streak of rent growth and transaction velocity during the economy’s resounding pandemic recovery, Nashville joins the rest of the nation in a transitionary period influenced by interest rate hikes and inflation. But for many reasons, our city is better prepared than most. Approximately 130,000 residents have moved to Nashville in the past five years, resulting in some of the highest apartment construction rates in the country. In fact, according to Marcus & Millichap’s Research Services division, Nashville is expected to take over the top spot for inventory growth nationwide in 2023, with roughly three-fourths of the metro’s new construction located in Nashville proper. While those numbers are certainly impressive, Marcus & Millichap’s National Multifamily Index, which ranks major markets based on forward-looking economic indicators, places Nashville in only the No. 28 position for 2023. This is …

March 13, 2023

Market Reports Retail Southeast Southeast Market Reports Tennessee

Nashville’s Retail Growth Underscores the City’s Boomtown Status

by John Nelson March 6, 2023

Nashville’s economy experienced some of the healthiest growth in the nation in 2022, with an annual job growth rate of 5.8 percent, exceeding the U.S. growth rate of 4.1 percent, based on data from Oxford Economics. Nashville also received high marks from the Urban Land Institute and PricewaterhouseCoopers, ranking as the No. 1 Market to Watch in their 2023 Emerging Trends in Real Estate report. The report credited Nashville’s tremendous and sustained population growth, and its economic diversity. Referred to as a “Supernova,” Nashville grew by an average of 5 percent since 2019 — four times faster than the national rate — due to rapid net in-migration. These fundamentals have helped boost the retail market in Nashville over the last several years. Post-pandemic, market-wide retail vacancy decreased to 3.3 percent at the end of 2022, which is two percentage points less than the rate at year-end 2020, but in line with the 15-year record low mark set in 2018. While Nashville’s retail sector took a hit along with others across the nation, it continues to rebound and perform due to a rise in dense communities where developers and owners are being strategic and thoughtful in retail curation. As such, the …

March 6, 2023

Industrial Market Reports Southeast Southeast Market Reports Tennessee

Nashville’s Industrial Market Remains Active Despite Economic Uncertainty

by John Nelson February 27, 2023

Nashville’s industrial market continues to see strong demand going into 2023. In fact, more than 1.7 million square feet of leasing activity was recorded throughout fourth-quarter 2022, bringing the year-to-date transaction volume just shy of an impressive 8.8 million square feet. Even overall vacancy sat at 3 percent during the final quarter of 2022, and while that was a slight increase compared to the previous quarter, it still was 30 basis points below the national vacancy average. Despite a recessionary environment and uncertainty of what’s next in the commercial real estate sector, Nashville’s industrial market is uniquely positioned for the upcoming year. As Nashville’s industrial market still experiences growth, there are several macro-economic trends impacting it that are worth keeping an eye on, such as e-commerce and third-party logistics demand. Interest rates have also risen, making it very tricky to value property and cap rates due to the debt markets. This has triggered limited investment activity from buyers and sellers alike across all property types, including industrial. Industrial developers are also being more cautious as rising interest rates have increased construction costs. Many developers and investors have purchased land or have land under contract, for example, but are waiting for …

February 27, 2023

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