Today’s post is written by Ashley Bishop, commercial real estate broker for Southeast Venture. You can contact him at firstname.lastname@example.org or (615) 250-8684. Please join us in welcoming Ashley to the blog; we look forward to seeing him back here soon.
Will Nashville ever see 2007 CRE levels again? I’m optimistic.
As capital markets become more active, so do the rest of the debt markets. We’re seeing increased activity in several CRE sectors, including multifamily, hospitality and retail. Nashville’s population and job growth indicators — which eventually lead to increased CRE demand — look strong.
The Nashville MSA leads Tennessee in population and employment growth. Nashville realized 2.4% population growth between 2004 and 2009, and expects to see another rise of 1.3% between 2009 and 2014. The Nashville Chamber is forecasting a sustainable 2.5% annual growth rate through 2019 in workforce demand in the areas of professional/business and education/healthcare services. These sectors are largely responsible for the post Great Recession CRE growth.
Nashville has also popped-up on the radar for apartment developers. Downtown Nashville has nearly 2,900 planned or developing rental units. Suburban areas like Murfreesboro, Smyrna, Franklin, Mt Juliet and Hendersonville have over 4,000 new rental units in the pipeline.
Franklin and Murfreesboro have realized greater per capita population gains than Nashville, which has spurred heavier development in these areas. Not only is new apartment development flourishing, so is leasing. Absorption of all these apartment units will be a key indicator for continued new development.
Just last week a Nashville Marriott traded for $17.5M. On the same day, a new downtown Homewood Suites was announced to start construction soon. Most of the new hotel growth has been in the Cool Springs area of Franklin, although Nashville and its suburbs have seen more than a dozen new high-quality hotels.
Retail leasing has been active lately too. Vacant spaces in Nashville and surrounding areas are being absorbed much faster than this time last year.
Nashville saw some great days leading up through 2007. New subdivisions and shopping centers were popping up throughout the Nashville MSA. Money was flowing freely and new construction boomed. Though we may not see those levels again, we are seeing continued, sustainable growth. Population is up and new jobs in leading industries are being created. Banks are lending, and new construction has begun on dozens of new CRE projects.
This recession hit many Nashvillians very hard. For those in CRE, it has been a long road of uncertainty. This current level of steady growth gives us hope that brighter days lie ahead.