City ranks as top secondary market for industrial absorption and boasts second lowest suburban office vacancy rate
Nashville, Tenn., March 1, 2016 – Nashville is on the list of cities to keep an eye on in 2016 in both the office and industrial arenas. The city has attracted a steady stream of relocations and boasts one of the nation’s highest millennial attraction ratings, on top of its stable investment market.
Nationally, the U.S. industrial market remains a favorable investment target for institutional capital seeking strong long-term fundamentals. According to CBRE Research, Nashville is following the national industrial trends: consecutive positive net absorption, rising rents, speculative development and investor interest. Nashville was highlighted as the top secondary market in CBRE’s U.S. Industrial & Logistics Q4 2015 Marketview, posting 4.2 million sq. ft. of absorption. Within the industrial sector, warehouse remains the strongest asset type, with a 15.4% return for 2015. Las Vegas, Austin, Nashville and Oakland are currently the clear leaders in return performance.
Secondary markets with favorable space that are well located along key supply chain transportation networks are welcoming industrial tenants. According to the report, Nashville fits the mold and boasts a No. 3 ranking among markets with high institutional return rates on industrial assets.
On the office side, Nashville was one of only six metros where investors had high expectations for rent growth in the central business district. The suburbs faired well also, with Nashville posting suburban rent growth above 5% from the previous year, according to the CBRE U.S. Office Q4 2015 Marketview. Investors’ and tenants’ faith in Nashville is a result of the city’s overall stability, attraction and its top national ranking related to office vacancy. Nashville’s suburban office market boasts the second lowest vacancy rate, tied with San Jose, and the city’s metro as a whole comes in as the fifth lowest office vacancy market.
“The demand for space is likely to hit a new never seen before peak in the near term, as we get close to 0% vacancy in some submarkets. The rent growth and low vacancy phenomenon should not yield for at least two years in Nashville,” said Harrison Johnson, CBRE Nashville’s Senior Vice President for Tenant Representation.
CBRE Economic Advisors expect the momentum to continue in Nashville and throughout the South, noting the region should expect a boom in office-using job growth.
“The office and industrial sectors are experiencing unprecedented leasing velocity, absorption and rent growth,” said Douglass Johnson, CBRE Nashville’s Senior Vice President in Investment Properties. “Investors are captivated with the Nashville’s growth as they are being priced out of larger gateway markets – seeking better risk adjusted yields in favored secondary markets. The Nashville industrial markets continue to benefit from a consumption zone of 38 million, which will continue to drive e-commerce tenants to middle Tennessee.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.