Slower Growth Ahead for Nashville
Asking rates are expected to rise more gradually in the face of robust development—mostly comprising upscale projects—with the average rent reaching $1,216 as of August.
Nashville has seen dramatic changes over the past decade, its strong employment and population growth placing the metro among the country’s fastest-growing economies. Growth is decelerating, but rates continue to advance despite strong development, with the average rent reaching $1,216 as of August. However, as the bulk of the current development pipeline consists of upscale projects, rents at the upper end of the spectrum are likely to contract further, dampening overall growth.
Economic growth remains relatively strong but is spotty, with three employment sectors contracting by a total of 4,800 jobs. Professional and business services led gains by adding 8,700 positions, up 5.4 percent year-over-year through June. This is mainly due to corporate expansions and relocations—Philips signed a new lease for 107,700 square feet at Bank of America Plaza and AllianceBernstein is relocating its New York headquarters to Nashville, along with 1,050 employees.
Some $541 million in multifamily assets traded in 2018 through July. More than three-quarters of sold communities were value-add, which has pulled down the average per-unit price to $121,299. As the 4,000 units delivered by August and another 10,000 underway are bound to keep demand in check, we expect the average Nashville rent to rise 1.8 percent this year.