I continue to hear the remark from people in the wake of the recession that they are glad that they live in Nashville. Indeed Nashville has fared better than most cities around the country during this and previous recessions, and I too am glad that my family and I live in Nashville. It’s a great city with great people and a lot of opportunity; we are blessed. But I also want to keep in mind that “better” is a relative term, and that the particular nature of this most recent recession strangely left some sectors of business still thriving and some completely annihilated. For those of you who got the short end of the stick in this recession, who lost jobs, businesses, your home, I know that “better” offered little consolation, and I want to acknowledge your pain and suffering through those hard times.
That said, Nashville continues on a steady course forward in the right direction economically. Drilling down a little, what are some particulars on where Nashville is today? Some sectors are completely out of the recession, some are still on the way out and making steady, incremental progress. As a whole, if you want a black and white, broad-sweeping summary statement from a local commercial real estate broker- for what it’s worth- I would characterize it that Nashville is 70-80% out of the recession and will be by and large completely out by the end of this year.
Here are some particulars for you. Nashville added 14,000 new jobs in the past year – driven by 45 corporate relocations and 106 expansions by companies already here. Among these deals were expansions by Amazon.com, HCA Inc., General Motors, Service Source, Aegis Sciences Corp., Viacom and Jostens. The Nashville office market ended the fourth quarter of 2012 with an overall vacancy rate of 10.6%, down slightly from last quarter. Overall rental rates ended Q4 2012 at $19.42 per square foot (psf), a $0.15 psf increase over the previous quarter.
According to a study by Randall Gross / Development Economics, who projects office, retail, hotel and residential demand for areas located within the inner-interstate loop, the demand for additional office space is projected to be between 294,000 to 445,000 sf between 2013 and 2017. The study suggests information and media technologies, professional and technical services, and management services will be the strongest demand drivers.
While 2013 may get off to a relatively slow and gradual start coming as it does at the tail end of the slowest economic recovery on record, I believe the stage has been set for a significant up-turn in the market by year-end, setting the stage for a strong rebound, locally and nationally, in 2014 and beyond.
Jody F. Elder, CCIM
Cushman & Wakefield | Cornerstone