Nashville Commercial Real Estate Update: 2021
Though the COVID-19 pandemic interrupted Nashville’s previous rapid growth, the city is bouncing back better than ever before in 2021.
As more and more major companies are relocating or expanding to Nashville, thousands of jobs will be created over the next few years, along with major commercial developments including housing, mixed-use complexes and campuses for corporations like Amazon and Oracle.
In fact, Stessa identified Nashville as the No. 1 city in the nation for economic growth in 2021. The city also ranks ninth for fastest growing in population on US News and World Report’s list of cities with populations greater than 1 million.
And though certain aspects of the commercial real estate market will take longer to recover than others, Nashville’s future is looking brighter than ever for the coming years. Here’s an overview of some of the biggest trends experts are seeing.
Occupancy Rates are Expected to Rebound
During the pandemic, vacancy rates increased across the country as record numbers of Americans started working from home. And though Nashville’s vacancy rates have not yet returned to normal — with only 57% of downtown workers back in the office as of late July — CBRE reported that the second quarter of 2021 marked the first time since the start of the pandemic when Nashville’s office market had a positive total net absorption.
And even in the midst of 2020, commercial building permits reached a record high value of $2.85 billion, a number which is continuing to grow as the fourth quarter of 2020 saw a 47% increase in permits.
City leaders also expect that Nashville’s economy will continue to bounce back quicker than most major cities, because its convention and leisure businesses play such an important role.
Local news station WKRN reported that only 17 restaurants were lost during the pandemic, and by the end of 2021, 95 new restaurants and bars will have opened in the city, along with 28 new hotels.
Job Creation Reaches New Heights
Despite the pandemic, the past five years have represented major economic growth and job creation for the city of Nashville. In that time, the Tennessee Department of Economic and Community development has brought 65 new projects to Davidson County, which came with 19,000 jobs and $2.1 billion in capital investment.
That growth shows no sign of stopping in the coming years. Colliers projects that more than 13,800 jobs will be created through relocations and expansions in the next 10 years.
Additionally, the relocation of Oracle alone is expected to bring 8,500 new jobs and $1.2 billion investment to the region over the next 10 years.
Between these new projects and the gradual return of jobs in entertainment and tourism, Nashville’s unemployment rate has now sunk even lower than its pre-pandemic level.
After hitting a peak of 15.8% in April 2020, unemployment dropped to only 4.9% in June 2021. In fact, Nashville has seen the second fastest employment growth in the nation.
Nashville’s Housing Market is Struggling to Keep Up with Rapid Growth
While job creation on such a massive scale is benefitting most parts of the Nashville economy, the housing market is now seeing unprecedented demand.
Nashville’s rental market has a record high occupancy rate of over 95%, and rent prices are increasing dramatically in response. This is not a new trend for the city post-pandemic, but it’s sped up in 2021, increasing by 3.8% month over month.
There are many large apartment buildings planned for the city in the coming years, but since Nashville’s population is expected to keep growing as well, it’s unclear whether the housing market will be able to catch up with the rising demand anytime soon.
Several Major Projects Suggest a Bright Future for Nashville
From long-planned projects that are finally opening to new deals which will continue to shape the city’s landscape for years into the future, 2021 has been a banner year for Nashville real estate. You can see an overview of the area’s biggest projects on the Nashville Business Journal crane watch map.
A few standouts this year include Fifth and Broadway — which opened in June — Broad West — a mixed-use district including apartments, office space and restaurants — and Nashville Yards — the home of Amazon’s new headquarters, 1,000 new residential units and a promising new entertainment district.
Oracle, which announced its move to Nashville earlier in 2021, also spent $253 million to purchase a massive 68-acre campus in the new River North project, which will be built on the East Bank of the Cumberland River. The campus will include 1.2 million square feet of office space and will create even more jobs and economic investment than the Amazon expansion.
We’re Proud to Play a Role in the Region’s Growth
As a trusted provider of high-quality carpet, floor, and upholstery cleaning services, DPM Care is proud to work in this booming city. We’re grateful for all of our commercial clients who trust us to deliver the best in cleaning and preventative maintenance as they work to shape the city’s future.