Tenants and investors alike always are on the prowl for the next office market hotspots, those hidden gems that haven’t yet registered on the national commercial real estate scene but are poised for dynamic futures while currently offering, among other things, below-average rents and discounted sales pricing.
A new report from JLL, entitled “Office Perspective: The NERDS,” identifies five such future hotspots – and Nashville is one of them. (“NERDS” stands for Nashville, East Bay, Raleigh-Durham, Denver and Salt Lake City.)
JLL named the five metro areas because they have rents and vacancy levels below the national average, absorption rates above the national average, and employment and demographic movements growing or forecast to grow at 1.5 to two times the overall U.S. rate. Also, the areas possess a significant availability of millennial talent, a cluster of universities, and a higher combined tech, education, healthcare and energy component than most other U.S. markets.
One of the benefits of Nashville for office occupiers is that asking rents, despite rising by more than 6 percent over the past year to $21.37 per square foot, are nearly 30 percent lower than the U.S. average. For investors, the metro area offers discounted sales pricing (currently averaging in the low-$200s per square foot for core space), offering them good access to a high-growth and in-demand secondary market.
For a detailed breakdown of why Nashville is one of the next office hotspots, read “Office Perspective: The NERDS.”