Nashville Multifamily Report – Spring 2020
The metro's multifamily market started 2020 in full swing but is slated for short-term softening as the health crisis unfolds.
Nashville’s solid recent economic performance has resulted in growth for its multifamily market, which was underpinned by healthy demand and consistent deliveries. However, since the start of 2020, the rate of completions has tempered, with the market expected to underperform this year. Rents were up by 0.2 percent on a trailing three-month basis as of March, to an average of $1,293, in line with national rates.
Music City gained 17,900 jobs in 2019 for a 1.8 percent expansion, on par with the U.S. rate. The COVID-19 crisis is further impacting the metro due to the global economic slowdown, and, specifically, the decline of the auto industry. The unemployment rate was low in January, but will likely rise; by April 23, some 15 percent of Tennessee’s workforce had filed unemployment claims, with the service industry hit the hardest. Following the damage caused by severe tornadoes in March, construction was deemed an essential service, but the sector is struggling amid social distancing guidelines and supply chain disruptions.
Multifamily sales surpassed $423 million in the first quarter of 2020, following 2019’s $1.5 billion cycle high. The average per-unit price rose by 7.0 percent to $186,626, maintaining its spot above the national average. Meanwhile, developers brought some 1,012 units online. Both metrics are expected to moderate in the short term.