Nashville’s multifamily market continued its trend of high demand throughout Q1 2022. Vacancy increased slightly by 20 bps to 2.6%, which is an impressive metric to maintain during the historically slow winter months for in-migration. In Q1 2022, Nashville absorbed 1,741 total units, the bulk of which are in the Central and East Nashville submarkets. As Nashville continues to expand with corporate relocations and population growth, many significant mixed-use developments are slated across the Nashville market. To start 2022, MRP Realty broke ground on the Landings at River North which will contain 651 units and (83,000 sf of office and 85,000 sf of retail). This development is one of the first movers across the river and will expand Nashville’s skyline along with GBT, Oracle, and a redesigned Titans stadium. As rapid growth continues in the Central submarket, apartments in suburban areas offer more flexible and affordable options. West Nashville delivered 298 units, Sterling Nashville West, adding to the large pool of new development along Charlotte Ave after the recent popularization of the Nations, Sylvan Park, and West Nashville. Class A garden-style assets provide a blend of amenities and larger unit options to appeal to a wider tenant pool. Inventory in Nashville is expected to double in the next three years as construction delays begin to stabilize.
The effective monthly rental rate for Q4 2021 was posted at $1.63 per square foot (psf), with a rent growth rate of 19.0%. The steep jump in rates is due to the temporary setback from the pandemic. Concessions posted at 6.3% of the average rent for Q4, which is a sharp decline from 2021’s peak of 31.6%. Average rent is at an all-time high due to lack of supply, which affected concession rates for a new and existing products. The combination of low concessions and high rent encourages investors to underwrite record levels of investment sales across the market in urban and suburban assets, totaling more than 954M in sales volume for Q1 2022.
– Cushman Wakefield