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Over the last ten years, Nashville has emerged not only as a leading destination for travelers, but also as a premier location for businesses and employees looking to relocate. Nashville’s consistent presence on rankings such as “Best Places to Live”1 and “Best Places for Business and Careers”2 is largely driven by its low cost of doing business and affordable, high quality of living. Net migration nearly doubled between 2011 and 2017, and nearly 70% of residents today are below the age of 49.3 Jobs are growing at about twice the national average, with Amazon being just the latest to join the ranks of corporations announcing plans to set foot and expand in Nashville.4

Déjà vu? Nashville vs. Austin

While many investors may wish they had a crystal ball ten years ago to predict that Austin would become what it is today, it’s not too late to try and identify high-potential markets that are experiencing a similar trajectory. In a Cadre study of over 2,000 of the largest counties in the United States, Nashville came closest to resembling what Austin looked like in the past cycle.

In other words, if history is any guide, the characteristics that we believe propelled Austin to its position today are currently being most strongly reflected in Nashville, suggesting that Nashville is positioned to continue experiencing rapid growth and vibrancy. This finding, based on both traditional and “non-traditional” data sources, is bolstered by a fundamental analysis of demographics, employment, and supply-demand trends, substantiating the strength of the Nashville market.

(Read: Finding the Next Austin)

Nashville’s demographics

  • Jobs growth and population growth: Jobs are growing in Nashville at 3.1% year over year, twice the national average.5 Nashville population has grown by 16% since 2012, four times the national average and the fastest of any metro area over 1.5 million in population.6
  • Millenials are moving in: From 2000 to 2017, Nashville’s population has grown from 1.3 million residents to 1.9 million residents. Nearly 70% of residents are below age 49, while 43% are between the ages of 20 and 49.7
  • Educated workforce and high-paying jobs: Of the 941,000 jobs in Nashville, 31% are in management, business and financial operations, healthcare, education, computer science, mathematics, architecture, engineering, science, and legal. 8  With an average annual income of about $73,622, these employees earn a wage that’s 41% higher than the national average.9 10

Live, work, and play in Nashville

  • Nashville’s dense urban core and burgeoning growth can be characterized as a snowball effect. Over the past 10 years, Downtown Nashville has added 8,200 multifamily units alone, or 533% growth over the same period, reflecting a blossoming ecosystem reinforced around population growth and job growth.11
  • A live-work-play approach to commercial development has manifested in a number of mixed-use projects anchored by leading employers. As the  “Country Music Capital of the World” and home to several leading universities, downtown Nashville is producing a deep and qualified labor force and headquarters for major healthcare and other Fortune 500 companies, making this area one of the nation’s leading beneficiaries of corporate relocations and expansions.  Amazon recently pre-leased one million square feet of office space for 5,000 employees at Nashville Yards, a downtown mixed-use development currently under construction.12 Nearby, AllianceBernstein has found a home in Fifth + Broadway, a mixed-use development which, in addition to housing AllianceBernstein’s new global headquarters, will also include 386 residential units, a museum, and 200,000 square feet of entertainment and retail space anchored by a multi-story food hall from The Food Hall Co.13
  • Home prices have increased at a 9.3% compound annual growth rate since 2013, versus 5.8% nationally.14 Similarly, multifamily rent growth averaged 7.1% annually over the past three years, as a ballooning population outpaced new supply. Net multifamily absorption averaged an impressive 5,217 units annually over the past three years, including 2,555 units absorbed annually in the downtown area alone, reflecting the densification of downtown Nashville over recent years.15
  • Office demand has become a natural extension of the flow of businesses expanding into Nashville. Net office absorption has averaged 618,000 square feet per year over the past three years and is expected to reach 1,044,000 square feet in 2020. Rent growth averaged 3.9% annually over the past three years, 4.4% in downtown Nashville specifically.16
  • Hotel demand in Nashville has grown faster than any other top 30 city in the country over the last five years, mirroring the growth in tourist, corporate, and local demand.17 Nashville saw 16 million visitors in the fiscal year 2018-2019, a 7% increase over the previous year, and direct visitor spending in Nashville nearly doubled from between 2009 and 2018.18 Looking ahead, the Nashville International Airport, which is currently undergoing a $1.2 billion expansion, is projected to serve 23 million passengers per year at full capacity—a greater than 50% increase from today’s already robust 15 million visitors.19 Hotels, in addition to experiencing strong rooms performance, are seeing incremental food and beverage and meeting space business, driven by demand from local corporations and from one of the top-performing convention centers in the country seeking event and conference space.

Begin investing in high-potential markets

Nashville fits one of our core investment themes: To identify and invest in markets with outsized growth potential. Interested in becoming a direct real estate investor? We provide accredited investors with direct access to institutionally-underwritten and data-driven commercial real estate investment opportunities. To get started, please request access to the platform.

  1. U.S. News and World Report, Best Places Rankings, 2019, https://realestate.usnews.com/places/tennessee/nashville
  2. Forbes, Best Places for Business and Careers, 2019, https://www.forbes.com/best-places-for-business/list
  3. Nashville Chamber of Commerce, Regional Stats, 2019, https://www.nashvillechamber.com/economic-development/data-reports/regional-stats
  4. U.S. Bureau of Labor Statistics, May 2019
  5. U.S. Bureau of Labor Statistics, May 2019
  6. U.S. Census Bureau, American Community Survey, 2017
  7. Nashville Chamber of Commerce, Regional Stats, 2019, https://www.nashvillechamber.com/economic-development/data-reports/regional-stats
  8. Nashville Chamber of Commerce, Regional Stats, 2019, https://www.nashvillechamber.com/economic-development/data-reports/regional-stats
  9. Nashville Chamber of Commerce, Regional Stats, 2019, https://www.nashvillechamber.com/economic-development/data-reports/regional-stats
  10. Social Security Administration, National Average Wage Index, 2018, https://www.ssa.gov/oact/cola/AWI.html
  11. Axiometrics, Jan 2020
  12. WSJ Property Report, “Nashville’s Runner-Up Prize From Amazon Looks Like a Winner to Property Investors,” Nov 2018, https://www.wsj.com/articles/nashvilles-runner-up-prize-from-amazon-looks-like-a-winner-to-property-investors-1542715201
  13. PR Newswire, Oct 2018, https://www.prnewswire.com/news-releases/alliancebernstein-lands-at-fifth–broadway-300733539.html
  14. Zillow, Jun 2019
  15. Moody’s Analytics REIS, Nashville Report, Apartment, 3rd Quarter 2019
  16. Moody’s Analytics REIS, Nashville Report, Office, 3rd Quarter 2019
  17. Moody’s Analytics REIS, Nashville Report, Office, 3rd Quarter 2019
  18. Visit Music City, Research and Hospitality Stats, Nov 2019, https://www.visitmusiccity.com/research
  19. News Channel 5 Nashville, “BNA Vision Underway Amidst Increased Air Travel,” Jul 2018, https://www.newschannel5.com/news/on-the-rise/bna-vision-underway-despite-increased-air-travel
About the Author
Cadre is a technology-empowered real estate manager built on institutional diligence enhanced by data.
Disclaimer
Educational Communication: The views expressed above are presented only for educational and informational purposes and are subject to change in the future. No specific securities or services are being promoted or offered herein. Performance Not Guaranteed: Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance. Risk of Loss: All securities involve a high degree of risk and may result in partial or total loss of your investment. Cadre makes no representations, express or implied, regarding the accuracy or completeness of this information, and the reader accepts all risks in relying on the above information for any purpose whatsoever. These materials are not intended to provide, and should not be relied upon for investment, accounting, legal or tax advice. Additionally, these materials are not an offer to sell or the solicitation of an offer to buy any securities or other instruments. Actual transactions described herein are for illustrative purposes only, are presented as of underwriting and are not indicative of actual performance, and were selected based on objective, non-performance factors such as asset-type, geography or transaction date, among others. Certain information presented or relied upon in this presentation has been obtained from third party sources believed to be reliable, however, we do not guarantee the accuracy, completeness or fairness of the information presented.

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