Tennessee Multifamily Market Report
Nashville
By the Numbers
- Units Delivered: 1,932 ↓ from Q3 2024
- Units Absorbed: 2,073 ↓ from Q3 2024
- Sales Volume: $99.4M ↓ from Q3 2024
Nashville Demographics
- Unemployment Rate: 2.8%
- Current Population: 2,134,848
- Households: 861,638
- Average Household Income: $84,896
The Nashville metro has been a standout for population growth. The current population is around 2 million, due to a growth rate of 27% since 2010. Residents are drawn here for the variety of employment opportunities, including the presence of firms like Amazon, Mitsubishi Motors, Nissan North America, and Tractor Supply Company. Throughout the past year, the education and health services, government, and manufacturing sectors saw the greatest boost in employment.
Nashville Multifamily Market Performance
Supply has increased in Nashville, with a record 12,000 units added over the past 12 months. Demand has also been increasing as around 11,000 units have been absorbed, but demand has not been able to keep up with the new deliveries. The imbalance between demand and the new supply has led vacancy in Nashville to reach 11.6%, which is 430 basis points above the national average.
The uptick in supply created a split market with Class A recording vacancy and rent growth at 16.9% and -1.3%, while Class C marked these metrics at 6.6% and -0.6%. Once supply pressure decreases in 2025, Class A vacancy is projected to improve.
While the new supply has affected the entire metro, Downtown Nashville has seen the greatest increase in deliveries. There are currently 1,000 units underway in this submarket, which will grow its inventory by 30% upon completion. The Southeast Nashville submarket is also growing at an increased rate with 400 units undergoing construction. This submarket is notable as it has seen negative absorption over the past two years, and will likely continue to see this activity as new units are added.
Knoxville
By the Numbers
- Units Delivered: 867 ↑ from Q3 2024
- Units Absorbed: -68 ↓ from Q3 2024
- Sales Volume: $5.3M ↑ from Q3 2024
Knoxville Demographics
- Unemployment Rate: 3.1%
- Current Population: 946,399
- Households: 377,561
- Average Household Income: $70,829
Knoxville’s population benefits from the University of Tennessee’s location in the Downtown Knoxville submarket, with 32,000 students enrolled here. Over the past three years, the metro’s population has grown by 13,000 residents. The professional and business services sector has seen the most increases in employment, and currently employs around 70,000 residents. This growth can be attributed to the university’s presence, as well as Knox County Schools and Oak Ridge National Laboratory.
Knoxville Multifamily Market Performance
New developments are on the rise to meet population growth in Knoxville. Around 1,900 units have been delivered over the past year, with absorption surpassing demand as 2,000 units were absorbed. However, 1,492 units are currently underway in order to meet residents’ need for housing. Western Knox County will see the most new units as 11% of the area’s inventory is underway.
The rent growth of 1.1% as of Q4 2024 decreased from the highs recorded in 2021 and 2022. The slowdown in rent gains makes Knoxville stand out as an affordable market, with the average asking rent at $1,433 per month. While rents are currently low, rent growth may see an uptick in 2025 with the units underway.
Memphis
By the Numbers
- Units Delivered: 553 ↓ from Q3 2024
- Units Absorbed: 394 ↑ from Q3 2024
- Sales Volume: $30.3M ↓ from Q3 2024
Memphis Demographics
- Unemployment Rate: 4.2%
- Current Population: 1,339,457
- Households: 522,503
- Average Household Income: $65,424
The Memphis metro is home to around 1.3 million residents. The market has seen a decrease in population throughout the past two years, which caused unemployment to rise to 4.4% as of Q3 2024. However, the labor market has grown and added 3,100 jobs in October 2024. This has been the largest employment increase since April 2023.
Memphis Multifamily Market Performance
Apartment demand in Memphis increased throughout 2024 after negative absorption levels in past years. Class B properties have been sought after the most and noted positive absorption levels in Q3 2024, compared to negative absorption from Q3 2023. These positive metrics have decreased Memphis’ vacancy from the 14% high reached in 2023.
Development activity remains high in Memphis with around 1,100 units underway. Northeast Memphis has the most ongoing developments. Lakeland Town Square Phase II is one such example that added 121 units to this submarket, and the Class A facility has an average asking rent of $2,000 per month.
Chattanooga
By the Numbers
- Units Delivered: 503 ↓ from Q3 2024
- Units Absorbed: 452 ↑ from Q3 2024
- Sales Volume: $18M ↓ from Q3 2024
Chattanooga Demographics
- Unemployment Rate: 3.2%
- Current Population: 583,143
- Households: 235,914
- Average Household Income: $74,299
The Chattanooga metro currently has a population over half a million residents. New residents are drawn here by the area’s location on the Appalachian Mountains and its variety of outdoor opportunities. The trade, transportation, and utilities, education and health services, and manufacturing segments create the most job growth, and the area has an average household income of $84.1K.
Chattanooga Multifamily Market Performance
Absorption has increased in Chattanooga, with around 1,000 units absorbed over the past year. Apartment demand has been strongest for the Class A segment, with 820 units absorbed. However, with the 2,000 units delivered, demand has not kept up with new supply. This imbalance pushed the vacancy rate to 11.0% during Q3 2024.
Sales momentum in Chattanooga has begun to slow from the highs recorded in 2021 and 2022. Yet, Class B and C properties have noted increased sales activity, with 85% of all deals belonging to these segments. Smaller properties have also been transacted the most. This is due to five properties with 100 units selling over the past year.
