Supply Moderates Rent Growth in Nashville
The lack of affordable units and record deliveries are dampening growth, although healthy fundamentals and the potential for economic improvement are drawing developers and investors alike.
By Anca Gagiuc
Nashville rent evolution, click to enlarge
Nashville’s growing population and booming economy, driven by its professional and business services and its leisure and hospitality sectors, are maintaining healthy housing demand. Although rent growth has slowed, the average rent rose 0.5 percent year-over-year through November, trailing the national rate by 200 basis points. The lack of affordable units and record deliveries are dampening growth.
Employment gains are diversified, occurring across all sectors except information. Music City added 29,900 jobs through September, up 3.3 percent year-over-year and well above the 1.9 percent national average. The metro’s business climate and its well-established health-care sector will likely support the trend, with global health technology company Royal Philips announcing the addition of 800 positions to its local team in the upcoming year.
Healthy fundamentals and the potential for economic growth are drawing developers and investors alike. Some $890 million in multifamily assets changed hands through October 2017, marking a slight drop in transaction volume after 2015’s cycle high. Despite a slight deceleration in investment totals, the metro’s per-unit price rose by 23.2 percent year-over-year to $138,145, surpassing the national average for the first time this cycle. Apartment construction is robust, with about 4,150 units delivered in 2017 through November and nearly 12,000 units underway, laying the groundwork for tepid growth.
