Tennessee Shopping Center Market Report
Nashville, TN
Market Overview
Retailers are attracted to Nashville due to above-average household and income growth. Median household incomes in Nashville grew by about 24% since the beginning of 2017, outpacing the national benchmark. The population has grown by more than 113,600 individuals since the onset of the COVID-19 pandemic. New retail projects in the market have been focused on build-to-suit spaces, or they are part of larger mixed-use developments in high-growth population corridors.
Market Performance
Nashville’s retail sector has been thriving over the past two years, with positive net absorption in each of the last nine quarters.
The market’s retail vacancy rate of 3.2% is close to the 15-year low in 2018. The mall vacancy rate is 18.1%, rising in recent years, while all other forms of retail collectively boast about a 2% vacancy rate. Year-over-year rent growth of 4.6% in Nashville outperforms the national benchmark of 3.3%. The asking market rental rate currently averages $27.89. There is about 1.1 million square feet of retail space under construction throughout the market, accounting for approximately 0.9% of the metro’s existing stock. The 12-month sales volume totaled $791 million with an average sale price of $269 per square foot.
Nashville, TN By The Numbers | Last 12 Months | Source: CoStar Group
- Vacancy Rate: 3.2%
- Net Absorption SF: 929K
- Deliveries SF: 886K
- Rent Growth: 4.6%
- Sales Volume: $791M
Memphis, TN
Market Overview
Memphis is situated at the core of the “Mid-South,” a tri-state region encompassing Tennessee, Arkansas, and Mississippi. The greater Memphis area is home to over 1.3 million residents. The global headquarters of FedEx Corporation is in Memphis, making Memphis International Airport one of the busiest cargo airports globally. As of Q4 2023, Memphis has a total employment figure exceeding 662,000, with the trade, transportation, and utilities sector being the largest industry, constituting over 27% of metro employment.
Market Performance
Over the past 12 months, Memphis has seen net absorption of 316,000 square feet, and 263,000 square feet of new space has been delivered.
The vacancy rate in the Memphis retail market is currently at a record low of 3.5%. Over the past 12 months, rents in Memphis have increased by 4.4% to the current rate of $16.19. Transaction volume in Memphis has totaled $352 million over the past year. Retail property in Memphis comes at a substantial discount to national prices, with a market price of $141 per square foot, well below the national average of $250 per square foot.
Memphis, TN By The Numbers | Last 12 Months | Source: CoStar Group
- Vacancy Rate: 3.5%
- Net Absorption SF: 316K
- Deliveries SF: 263K
- Rent Growth: 4.4%
- Sales Volume: $352M
Knoxville, TN
Market Overview
Knoxville, TN, stands as a lively and energetic city located among the foothills of the Great Smoky Mountains. Employment in Knoxville has increased by 2.8% in the past year, while population growth has been nearly flat, with only a 0.1% increase. Over the past three years, rents have seen a cumulative increase of 15.3%. There have been 749 sales during the same period, totaling approximately $904 million.
Market Performance
General Retail is the largest subtype in this market, comprising 34.9 million square feet.
Knoxville’s retail market has a vacancy rate of 2.9%, which has increased by 0.2% over the past 12 months. Over the same period, 291,000 square feet of new space has been delivered, and 189,000 square feet has been absorbed. Rental rates in Knoxville are around $18.03 per square foot, reflecting a 4.8% increase from the previous year. Approximately 224,873 square feet is currently under construction, representing a minor 0.4% expansion of inventory. Over the past 12 months, 212 sales have taken place, averaging $169 per square foot and totaling $200 million.
Knoxville, TN By The Numbers | Last 12 Months | Source: CoStar Group
- Vacancy Rate: 2.9%
- Net Absorption SF: 189K
- Deliveries SF: 291K
- Rent Growth: 4.8%
- Sales Volume: $200M
