Since 2010, vacancy has continued to drop. This quarter is no different and sets the tone for another year of high demand in Nashville. Leasing activity is highest in the Southeast submarket and picking up in the submarkets closest to the core. While pre-leasing on new construction has slowed, industrial demand remains strong.
- Vacancy fell to 4.0 percent, down from 4.4 percent Q4 2016.
- This quarter delivered 678,000 square feet.
- Nashville total availability fell from 7.9 percent in Q4 2016 to 6.7 percent in Q1 2017.
- Overall average rent grew 3.0 percent, landing at $4.47 per square foot.
Rent growth and demand for Nashville are strong. Overall, our sentiment for Nashville’s industrial market is positive. Music City remains a landlord favorable market. By Q4 2017, 3.4 million square feet (100 percent speculative developments) will deliver. For the total 4.5 million square feet under construction, 41.9 percent is pre-leased. Demand has kept pace with speculative projects; however this may shift due to slowing pre-leasing activity.
“While there is always risk in speculative development and potentially overbuilding, the Nashville industrial market continues to see increased demand to absorb the additional supply. With vacancy rates at or below 4%, we remain well below the historically healthy market conditions of 6% – 7% vacancy. Primarily a build-to-suit market for bulk distribution, there have been recent successes in leasing or pre-leasing speculative buildings above 500,000 SF. The “bread and butter” for Nashville, however, has been the need for 25,000 – 300,000 SF spaces. In the next 10 months, we anticipate the delivery of 11 buildings that are in this size range, all of which have significant leasing activity on them currently. We expect a large portion of this new square footage to be pre-leased or well positioned to meet market demand upon completion.” ~ Bo Fulk, Senior Vice President, Industrial and Logistics, JLL Nashville
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