2022 Office Space Report: Nashville, TN
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Nashville, Tennessee is among the fastest growing cities in the southern United States for businesses. As a result, businesses are opening in Nashville to meet the need.
The rapid growth of the city has also had a huge impact on the labor market as well as on industries within itself.
The average rent for commercial Class A office space in Tennessee is $32.84 a square foot.
However, in Nashville, Class A office space rents for $37.76 a square foot.
In this Nashville office space report, we’ll look at how these trends are playing out in the office sector, as well as how CRE investors can best respond.
Nashville Office Space Highlights
Nashville office space data demonstrates that the city of Nashville is growing at an unprecedented rate.
Some highlights include:
- Population in Nashville grew an astounding 20% in the past decade.
- The growth in population and the increase in companies moving to Nashville stems from lower taxes and a lower cost of living.
- It costs more to rent office space in Nashville than it does in the rest of the state.
Compared to other cities within the state of Tennessee, Nashville demands much higher office rents. The population itself is also increasing at a faster rate.
The Pacing of Office Space Rents in Nashville
The current vacancy rate for office spaces in the U.S. averages 15.4%. This is quite a bit higher than the vacancy rate in Nashville.
Some things to consider include:
- The average asking rent for office space in Nashville is $31.54 a square foot.
- Nashville currently has a 12.01% vacancy rate of leasable office spaces.
- On a year-to-year basis, the YOY average asking rate changed by just 0.22%.
Despite record growth, the prices demanded for asking rents for office spaces grew only slightly.
However, given how much the COVID-19 pandemic impacted the office sectors in cities across the U.S., this modest increase is a positive sign when many cities face negative declines.
Long-Term Changes in Nashville Office Space Rent
Nashville is an attractive market for business and commercial real estate investors due to its low cost of living, stable economy, and growing population.
Over the long term, this trend is expected to continue.
Short-Term Changes in Nashville Office Space Rent
The Nashville office space market is strong. As the city continues to grow and attract more businesses, rents continue to go up.
Investors looking to capitalize on this trend should look for office space in high-traffic areas like downtown or the surrounding neighborhoods of Green Hills and West Nashville.
Office Space Sales in Nashville
There have been many significant changes within the office market sector in Nashville.
Some of the key acquisitions and sales have included:
Notable Acquisitions So Far
In January 2022, Forstone Capital acquired 4 parcels of commercial real estate property in Nashville. It purchased the former location of Ray Batts for $10 million.
It purchased another East Nashville property for $10 million, too.
In April 2022, KBS acquired UBS Tower, a 29-story, 605,000 square-foot Class A office building located at 315 Deaderick Street in Nashville, Tennessee.
KBS plans to add electric car charging stations and verify the building with UL Healthy Buildings.
In July 2022, Elmington Capital acquired Class A office with a $29 million loan.
The 180,000-square-foot asset sits on an 18.7-acres at 455 Duke Drive. Part of the financing will be used to pay for tenant improvements and other costs associated with stabilizing the property.
In May 2022, Metro purchased an office building near the former Hickory Hollow Mall for $20 million.
The office building is to be redeveloped in a revitalization plan by Mayor John Cooper.
Notable Sales So Far
In January 2022, a collective sold $14.52 million in commercial real estate to The Mainland Companies. This includes buildings on the southern fringe of downtown Nashville.
In March 2022, the L&C Tower sold for $50.5 million. L&C Tower was the first modern skyscraper to be located in Nashville. The Florida-based real estate firm plans to renovate the building.
In March 2022, Lincoln Property Co. spent $45 million on a 2.16-acre plot of land at 810 Lea Avenue.
Market Forecast for the Rest of 2022
The outlook for the Nashville office space market for 2022 is strong. While there may be some slight rent fluctuations, the office space market will get stronger as Nashville continues to attract businesses looking to relocate.
While there may be some growth and slight changes in pricing, it will be relatively minor.
By 2023, the office space market in Nashville is expected to continue to be very strong.
General Investor Activity: Where is the most money flowing?
Nashville is a thriving city with a great deal to offer investors. It has a growing population and an expanding economy.
It also has a high demand for commercial real estate. Many companies choose to locate their offices in Nashville.
The Nashville CRE market is booming. In fact, the trend of companies moving to or expanding in Nashville because of its business-friendly climate shows no signs of slowing down.
The latest Forbes ranking of the best cities for business ranks Nashville in the top 15, thanks to its rapid economic growth, low costs, and reputation
Takeaways for Office Space Investors
Investors should focus on Nashville office space as an investment opportunity.
With record growth, the office real estate sector in Nashville is very attractive. Investors should look for higher-quality space in a vibrant downtown area.
Downtown Nashville has a lot of new office construction, but most of it is very high-end.
For investors looking for a more affordable option, there are plenty of Class B properties available.
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