Multifamily in Nashville is witnessing record-breaking conditions that rival what was seen even before the financial crisis. Average rents rose 1.7 percent to $772 per month between March 2011 and 2012, this after an increase of 1.9 percent a year prior. In tandem with this, the downtown submarket saw its rents increase 4 percent to $1,030 per month, making it one of the hottest urban markets in the South.
Hendricks & Partners reports that vacancy across the metro area decreased from 6.7 percent to 5.1 percent between the first quarters of 2011 to 2012, bringing overall occupancy higher than 2006 levels. Supporting this trend was a rapid decrease in unemployment during the same period—from 8.4 percent to 6.7 percent. This brings overall unemployment in Nashville well below the national average.
A recent decision by General Motors to revamp its Spring Hill site spawned the direct creation of 1,900 jobs in 2011, and Hendricks & Partners notes that the project’s overall impact could translate to 6,000 new positions, either indirectly or through the supply chain. Other companies such as Nissan, Amazon.com and Viacom area also bringing thousands of new jobs to the region.
Further underlying the trends in vacancy is the fact that no new completions were reported during the first quarter of 2012. This comes after a considerable number of new units were brought online during 2010 and 2011, with 831 units being completed in the first quarter of 2011 alone. However, Hendricks & Partners notes that approximately 10,000 units remain in the pipeline and that 400 of these are slated for completion by year’s end.
The Murfreesboro and downtown areas continued to be the submarkets with the lowest vacancies, both posting rates of 3.1 percent. The Antioch area came in with the highest vacancy rate and lowest asking rent for the second year in a row—at 6.2 percent and $676 per month, respectively. Williamson County lags only slightly behind the downtown area in terms of rent—coming in at $1,042 per month and reflecting the growing popularity of towns like Franklin.