Nashville is soaring to the top of US commercial real estate charts. Long-known as the country music capitol of the world, Nashville has become recognized nationally for much more due to its astounding growth in white-collar jobs, tech jobs, millennial population, creativity, manufacturing job growth and real estate growth. With over 120 cranes visible across its skyline, construction activity has hit new heights. There are over 2 million square feet of office space and roughly 3,800 apartment units underway. Nashville has a rapidly expanding hotel industry to accommodate its rapid growth in tourism, which currently reaches upwards of 12 million visitors per year and fuels over $4.5 billion in revenues per year.
As the city grows into its burgeoning development cycle, employment growth and population growth – specifically millennial – consistently surpass national averages increasing at roughly 1.5% per year. According to the Nashville Area Chamber of Commerce, 37 relocations and 117 expansions were announced in the 2014-2015 fiscal year thus far. This growth in the market will bolster the city’s economy by introducing almost 18,000 new jobs and by feeding it $2,735,799,640 capital investment dollars. 28% of these jobs are created through foreign direct investment. Investors recognize the strength of the city’s diverse economy, which juxtaposes old world of manufacturing alongside the new world industries of healthcare and technology. Some of the more notable projects are: the Bridgestone Americas expansion, which will present a $232-million, 1/2-million-square-foot building and 600 new jobs; the relocation of Nissan North America, which will introduce $160 million, 1.5-million square-feet of space and 1,000+ jobs; and the Under Armour relocation, which will produce a $100-million, 1-million-square-foot building and 1,500 new jobs.
According to the Nashville Chamber of Commerce, the Nashville area’s GDP is increasing at 2.3% on average per year. The U.S. Bureau of Labor Statistics (BLS) attributes Nashville’s greatest employment growth from the Mining, Logging and Construction sector at 9.9%. Despite the sector’s fast growth, construction, specifically, has a shortage in labor supply, causing historically high construction prices. Real estate rents across all asset classes are hitting historic highs due to both demand and the higher construction costs. In part because of construction prices and in part because market demand permits it, generous TI packages and free rent are becoming far and few between. Tenants used to get a free month per year of term, whereas, in today’s market, tenants get around one free month of rent per five years of term.
Nashville’s biggest industry is Education and Health Services. There are 21 accredited four-year and postgraduate institutions in the area and approximately 13 publicly traded healthcare companies. According to the Nashville Health Care Council, Nashville generates $70 billion in global revenue. As a whole, the industry employs roughly 200,000 people directly in the city and another 200,000 people beyond the city. Nashville’s largest employer, Vanderbilt University and Medical Center employs over 20,000 people.
Including the election of its first female mayor, Nashville is boldly breaking past boundaries and records on all frontiers. Nashville has hit an all-time height for the full spectrum of investor interests: from Wall Street institutional investors to international capital investors to private equity. Music City has all reached historically-high rents and historically-low vacancies. The city’s well-established cultural radar and economic drivers have made Nashville an ideal location for corporate expansions and relocations.
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