Canopy South Blog

Now is the Time to Invest in the Nashville Real Estate Market

Posted by Canopy South Capital Management on February 9, 2017 at 8:30 AM

Real Estate Investing in Nashville TN

For those who live and work in Nashville, it comes as no surprise that one of the fastest-growing cities in the country is also one of the top-ranked cities for real estate investing.

In a detailed report, Emerging Trends in Real Estate, issued by PricewaterhouseCoopers and the Urban Land Institute, Nashville ranked as the 6th best city for real estate investing in 2017. Among other things, the latest report cited Music City's “hip factor” as evidenced by the high percentage of college graduates choosing to remain in the area. It also highlights the diverse economy with healthcare, technology, tourism, and education expected to continue creating jobs throughout 2017.

According to the report, “Nashville is an example of a market that has transitioned to an upper-tier secondary market. The increased level of investor interest in Nashville increases the perceived liquidity of the market, which only makes it more attractive to nonlocal investors. Debt and equity capital continues to be available from both local and national sources.”

Nashville continues to benefit from a high quality of living in a low-cost business environment. According to the Metro Government of Nashville and Davidson County, Nashville’s cost of doing business is well below the national average. Not only that, but the state of Tennessee has no personal income tax and the city of Nashville has a low overall tax burden.

Furthermore, In April, the Nashville Business Journal reported that the median sales price for closings in Williamson County stood proud at $433,830 and were the highest of any month on record. Williamson, neighboring nearby Davidson County, is one of the nation’s most affluent places to live. According to the Greater Nashville Association of Realtors, home closings have been on the rise throughout 2016.

Ten-X, an online real estate marketplace, also ranked Nashville as one of the hottest housing markets in the nation. "Driven by significant gains from its key sectors, Nashville has enjoyed strong economic drivers in arenas like education/healthcare services ... A flurry of downtown construction projects has led to a boom in the industry, during which employment grew 6.2 percent—that’s 3 percent higher than last year and 14.3 percent higher than its prior cyclical peak. While the pace of new building has aroused concern that it could lead to overbuilding, local homes have remained affordable, and the area’s population gain at 1.9 percent in recent years is more than double the U.S. rate, trending toward continued growth in its single-family housing market."

Some other important accolades and statistics to consider include:

  • In 2015, Nashville claimed the No. 1 spot on Travel + Leisure's America's Friendliest Cities list.
  • Kiplinger named Nashville one of the top 3 cities for starting a business.
  • In October , the Bureau of Labor Statistics (BLS) reported that local unemployment rate held steady at 3.9%—well below national or statewide unemployment rates.
  • Earlier this year, Nashville claimed one of the top positions on Forbes’ list of the best cities for jobs.
  • The Brookings Institution reported that Nashville ranked No. 1 in employment growth between 2013 and 2015.
  • Freddie Mac named Nashville one of the country’s strongest real estate markets. 

Nashville Commercial Real Estate on the Rise

Developers and investors alike are well aware that Middle Tennessee is home to more than 300 healthcare companies and tens of thousands of auto industry jobs. With bridges to SoBro being built, luxury high-rises under way, and commercial enterprises thriving, commercial real estate is a smart choice for Nashville-area investors.

Fast-growing demographics, robust and varied industrial concentrations, a growing urban environment, a high quality of life paired with a lower cost of doing business makes Nashville and all of Middle Tennessee a huge draw to commercial real estate investors and developers. The secret is out and it’s time to get in!

As evidenced by construction cranes dotting the city’s skyline there is an increasing and ongoing demand for commercial real estate within Nashville.

In a recent research and forecast report, Colliers International reported that “Nashville’s office market is firing on all cylinders, and the technology and healthcare sectors helped fuel this momentum throughout 2015 and will continue to do so in 2016.”

JLL Tennessee, a local subsidiary of a global company that provides commercial real estate strategy, services and support to businesses, organizations and investors reports that “A historically low 4.6 percent occupancy rate (as of Q3) is pushing forward major development activity throughout Nashville. The construction pipeline now tops 10 million square feet, which, if all completed, would grow the market by 30 percent of its currently existing inventory. Year-to-date, $2.6 billion of building permits have been approved by the city and it isn't just limited to local investors. National and international investors are now joining the mix as they hope to cash in on the city's continued boom.”

With commercial occupancy steadily decreasing and holding steady at an all-time low, the report states that lack of inventory bars entry to market which then creates a surge in developer activity. Then, subsequent surges in leasing may trigger even more investor and developer activity. Proposed projects or those under construction would increase the market by a whopping 30% of its existing inventory and in just over 10 years, the Central Business District alone could grow by an additional 5 million square feet. Finally, the JLL analysis sees construction permits as a positive economic indicator of strong, continued growth.

Nashville’s commercial real estate environment and the residential marketplace is thriving and growing. Fueled by the city’s increasing popularity, an ever-expanding business community, and interested developers, Nashville is a strong commercial and residential real estate investment choice.

The Nashville Boom ebook

Topics: Nashville, Nashville real estate

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