Nashville’s workplace market had a constant development pipeline, with house underneath development as a share of complete inventory outpacing the nationwide charge, CommercialEdge information reveals. The metro noticed solely two deliveries, whereas workplace investments confirmed a 31 p.c year-over-year progress, inserting Nashville among the many best-performing metros.
Some notable workplace offers closed within the metro for the reason that begin of the 12 months, whereas the excessive workplace costs pushed Nashville above some vital workplace markets within the South. Moreover, regardless of the rising emptiness charges development throughout gateway and high-volume secondary markets, Nashville’s reveals indicators of enchancment up to now in 2024.
As of August, Nashville’s workplace market had 2.1 million sq. toes of house underway throughout 9 properties, accounting for 3.6 p.c of current inventory. The speed was method above the nationwide determine of 1.0 p.c in addition to these recorded in most related markets, reminiscent of Phoenix (0.4 p.c), Houston (0.7 p.c), Atlanta, (0.9 p.c), Charlotte (1.5 p.c), and San Diego (3.1 p.c). Solely Austin outperformed Nashville, with 4.1 p.c.
Important initiatives added to Nashville’s pipeline
When it comes to house underway, Nashville outperformed Philadelphia’s (2 million sq. toes), Atlanta (1.9 million sq. toes), Houston’s (1.7 million sq. toes) and Charlotte’s (1.1 million sq. toes. The biggest workplace mission at present underway is the Pinnacle Tower at Nashville Yards, a 650,000-square-foot mission that may rise 34 tales at 500 Platform Method, in downtown Nashville. The mission, developed by Southwest Worth Companions, broke floor in 2021 and is predicted to come back on-line in 2025.
In February, Equitable Property Co. bought a 44-acre website for the event of a mixed-use mission that may embrace two medical workplace buildings totaling 400,000 sq. toes, as much as 250,000 sq. toes of retail house, a 240-key resort and 75 townhomes. Section I of the mission dubbed Sewart’s Touchdown is taking form in in Smyrna, Tenn., with supply anticipated within the first quarter of 2025.
Yr-to-date by August, builders broke floor on 352,000 sq. toes of house, whereas solely 202,000 sq. toes of house was delivered throughout two properties.
Delivered properties embrace Academic Media Basis’s new headquarters mission, a 170,000-square-foot five-story workplace constructing at 2000 Reams Fleming Street in Franklin, Tenn., that got here on-line in April, and The Workplace Lofts at Finery, a 49,000-square-foot six-story workplace constructing at 1 Merritt Ave., that opened in February. The property is a part of The Finery mixed-use mission, developed by Hines Pursuits.
As workplace inventories battle with rising emptiness, house owners wish to offload property, with residential conversion and rising development throughout the U.S. Whereas Nashville isn’t among the many nation’s high markets in regard to the conversion potential of its workplace stock, there are some alternatives. The Conversion Feasibility Index, a brand new software developed by CommercialEdge, reveals what the highest markets by with a robust probability of repurposing to residential house, based mostly on property-level scores and buildings classification.
Rising workplace investments
There have been 951,316 sq. toes of house throughout 9 properties that traded for $195 million in Nashville by the primary eight months of the 12 months. The quantity marked a 31 p.c year-over-year progress, placing Nashville forward of comparable metros, reminiscent of Atlanta (29 p.c) and Phoenix (26.7 p.c), however decrease than Charlotte (32.9 p.c).
When it comes to gross sales totals, the metro outperformed Orlando ($126 million) and Charlotte ($149 million), whereas Dallas led with $812 million, adopted by Austin ($644 million).
Notable workplace offers in Nashville embrace the $84.5 million acquisition of Truist Plaza, a 338,000-square-foot workplace constructing at 401 Commerce St. The 13-story property was bought in April by Menlo Equities from vendor Eakin Companions.
One other vital deal was Boyle Funding Co.’s $48.8 million buy of The McEwen Constructing, a 175,262-square-foot, seven-story workplace constructing in Franklin. The 2014-built asset modified palms from vendor KBS and the deal was a part of the client’s enlargement technique within the Cool Springs submarket.
Workplace property in Nashville traded at a mean sale value of $205 per sq. foot, above the nationwide common of $173 per sq. foot. Nashville property had been pricier on common than in Houston ($103 per sq. foot), Dallas ($125 per sq. foot), Charlotte ($133 per sq. foot) and Atlanta ($146 per sq. foot), whereas Austin recorded stayed considerably costlier, with costs at $376 per sq. foot.
Nashville’s workplace emptiness charges are dropping
Nashville’s workplace emptiness has been on a downward trajectory for the reason that begin of the 12 months—from the 17.0 p.c recorded in January, to 16.0 p.c recorded in July. As of August, the metro’s workplace emptiness charge stood at 15.6 p.c, down 60 foundation factors year-over-year. The determine was beneath the nationwide determine of 19.4 p.c, whereas related metros recorded increased values, reminiscent of Orlando (16.8 p.c), Charlotte (18.6 p.c), Atlanta (21.3 p.c) and Dallas (22.9 p.c).
With restricted leasing exercise this 12 months, Oracle’s relocation is probably the most vital leasing occasion. The Austin-based firm plans to maneuver its world headquarters to the town, having already secured a 65-acre website within the East Financial institution part in 2021.
The coworking sector holds regular
The coworking sector in Nashville featured 1.8 million sq. toes of coworking, outpacing Charlotte (1.3 million sq. toes) and Orlando (1.1 million sq. toes) however nonetheless a small footprint in comparison with Houston (4.3 million sq. toes).
Nashville’s coworking house as share of all leasable workplace house reached 3.2 p.c as of August, one of many highest figures amongst related markets and the nationwide determine of 1.8 p.c. The metro outperformed Austin (1.6 p.c), Charlotte (1.7 p.c) and Denver (2.2 p.c), whereas Miami was the one metro outperforming Nashville with 3.7 p.c.
The biggest coworking house operator was Areas, with 218,000 sq. toes within the metro. Espaces was second, with 217,212 sq. toes, Regus third, with 202,940 sq. toes, whereas Serendipity Lab and Expansive adopted, with 90,662 sq. toes and 80,111 sq. toes, respectively.
