According to the National Association of Realtors, Nashville boasts one of the top ten commercial real estate markets of 2021. Furthermore, as the economy continues to recover from the pandemic and vaccination rates continue to climb, commercial transaction rates are predicted to increase further as we move into 2022.

Nashville offers a quality of life unparalleled by so many other cities, and its robust economy has helped it greatly in weathering the pandemic storm. The city has emerged stronger than ever and presents an abundance of growth opportunities in both the residential and commercial sectors.

Commercial real estate is thriving in Nashville, so, what commercial real estate trends can we expect for Music city as we head into 2022?

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Gradual Return to Physical Office Spaces

Office spaces were largely abandoned during the pandemic, with a dramatic shift towards remote-working causing much upheaval as businesses clambered to support the change with new technologies.

Remote-working is a trend that many experts predict will remain long after the pandemic threat diminishes. That said, there is already a gradual return to office spaces as the vaccination has rolled out. Many businesses are expected to shrink their commercial footprints to save costs and accommodate a new, varied work structure to include remote-working.

According to reports from PwC, however, 60 percent of business professionals agree that commercial tenants will focus on expanding their office spaces to accommodate new ways of interacting and collaborating while adhering to social distancing guidelines.

Either way, a return to the office calls for a heightened focus on health and safety, including capacity considerations and touchless technologies to reduce the risk of disease transmission. Cities like Nashville will see a dramatic increase in the adoption of high-tech access control solutions from leading access control companies and manufacturers. These technological advancements will also naturally add to the number of new commercial real estate security technologies being installed as companies shift towards touchless tech and improved crowd control measures.

Low Mortgage Interest Rates Predicted to Remain So Until 2022

The Federal Reserve has recently announced that the benchmark interest rates are to stay anchored at close to zero, and that they will likely remain so for the foreseeable future.

This announcement, issued in September 2021, will continue to bolster an already strong real estate market for many parts of the country, including Nashville. While investment loans typically attract higher interest rates, the overall cost of a commercial loan should still be less when the starting rate is lower.

Increased Demand for Warehouse Space

Since the pandemic began, the U.S. has witnessed a colossal boom in the eCommerce sector, and there is no sign of it slowing. The sector climbed to a 42 percent year-on-year increase in Q2, up considerably from 14.8 percent in Q1. This trend towards online shopping has put significant pressure upon the sector when it comes to retailers, wholesalers, and logistics businesses meeting customer needs and fulfilling orders.

Warehouse rental rates are already at record highs for the Nashville industrial real estate market. The lease asking rate in Q3 2021 was $6.16 per sq ft, representing a 12 percent year-on-year increase. Development projects that convert retail spaces into industrial real estate will likely increase in Nashville into 2022 to meet the increased demands for warehouse spaces.

Multifamily Real Estate Demands Climbing

Demand is soaring when it comes to buying multifamily commercial real estate after those that retreated to family homes during the lockdowns now look to return to their own rental.

Nashville is seeing one of the most aggressive increases in apartment construction rates in the country, as well as the fastest pace for Nashville's own apartment market history. This pace is in addition to its already solid apartment inventory growth over the past decade, trailing behind only Charlotte and Austin.

As the economy recovers and unemployment decreases, more renters have the opportunity to live independently. Nashville is set to continue developing commercial multifamily properties to cater to this demand. National commercial real estate firms are even expanding into Nashville to get in on the sector boom.

Nashville Is Becoming a Recognized Tech Hub

The demand for commercial real estate continues to increase in the U.S. despite the pandemic conditions, and shifts in trends require new approaches regarding the design of commercial spaces. With its red-hot commercial property market, Nashville is operating at the cutting edge of these developments. It is also fast becoming a recognized technology hub, with tech giants such as Oracle and Amazon opting to host their operational centers in the city.

Strong demands for housing, eCommerce growth, and remote-working flexibilities are keeping the Nashville commercial real estate sector busy and growing. The city of music is set to remain a key player in commercial development and trend-setting for the foreseeable future.

Photo by iStrfry , Marcus on Unsplash

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.