Multifamily Market Overview

Nashville, TN

Nashville has premiered as one of the most active and best-performing multifamily markets in the U.S. With rent growth well above the national average and a historical supply wave in process; the Southeast metro has proven to be a top-notch metro for national and international investors. Booming with Fortune 500 employers and rapid population growth, consumers are yearning to be in Nashville, bringing the need for housing with them.

Top Employers

• Healthcare: Healthcare, life science, and social sciences take up the majority of civilian employment in Nashville, with 9.6 percent of the workforce working in various capacities in the healthcare and life sciences fields. Vanderbilt University Medical Center is the city’s largest employer, with over 28,000 employees. HCA Healthcare is currently third, with 10,600 employees.

• Advanced Manufacturing: The Nashville market’s advanced manufacturing industry grew by 35 percent between 2010 and 2019. Offering competitive freight transport rates, the city’s CSX rail system connects 20 states, plus the market’s international airport supports ten major air cargo carriers.

• Education: With several mid-sized to large universities within the Nashville metro, education claims 5.7 percent of the city’s workforce. Vanderbilt University is one of the market’s largest employers across all industries.

• Tourism and Hospitality: Millions of consumers flock to Nashville yearly for its live music, professional sports team, and year-round attractions. Being a tourist destination supports a vital tourism and hospitality workforce. The famous Gaylord Opryland Resort and Convention Center employs 2,500 civilians alone.

• Music, Arts, & Entertainment: Known globally as “Music City”, Nashville’s music and entertainment workforce are unrivaled. The country music mecca brings in approximately $15.9B in annual economic impact, more than any other U.S. city by far.

• Business and Corporate Operations: Sixty percent of Nashville’s graduates stay in the area to work, which has secured the city one of the best talent pipelines in the nation. With more and more corporations choosing Nashville as their hub, generations are flocking to the Southeast metro. Nissan North America, Amazon, and General Motors are all Fortune 500 companies headquartered in Nashville and account for over 18,500 jobs.

Vacancy & Rent Fundamentals

2022 has proved to be another year of rocketing rent growth, even as Nashville’s vacancy rises. Year-over-year rent growth is 12.6 percent, which ranks the country music haven as one of the ten largest increases nationally. As the year continues, rent growth is supposed to stabilize at approximately 8.8 percent. Although the market is experiencing a historical development pipeline, vacancies have continued to stay tight, with 7,600 units predicted to be absorbed on a net basis this year. Population and quality job growth continue to bring new residents as they aim to be in the center of the action in Downtown Nashville.

Sales Volume

Investors have poured capital into the Southeast region, especially throughout the Nashville MSA. Transaction activity has remained strong in 2022, with the second quarter of the year reaching nearly $2 billion in sales volume, the largest single quarter for multifamily investment in the market’s history, according to CoStar. Nashville offers traditionally higher yields compared to coastal cities, but this has changed slightly as the influx of investors has compressed cap rates below the national average. New-build properties are averaging $350,00 per unit, with some sales in Downtown Nashville reaching $489,500 per unit. Williamson County is another area receiving lots of attention of national and international investors. The sale of Mandolin at Stream Valley sold for $390,00 per unit at the beginning of the year represents one of the most expensive suburban sales ever.

Construction

Nashville multifamily construction is incredibly active, with the highest percentage of units underway as compared to its existing inventory among the 50 largest markets in the U.S., according to CoStar. Reporting 14.2 percent of existing inventory under construction, the Nashville market is ahead of major metros like Miami, Austin, and Orlando. Downtown is still the place to be, at the heart of the city’s largest office and entertainment hub. Vanderbilt University, Amazon, and Bridgestone Americas have added thousands of jobs to the downtown area, making it a mecca for retail, hospitality, and restaurants, which in turn enhances the multifamily market. Suburbs such as Williamson County and Murfreesboro have also received an influx of development as the submarkets pick up in population and job opportunities.