Middle Tennessee's business scene and the economy is snapping back in a big way, and, as a result, many people are looking to buy real estate in Nashville. One can look around Music City and expect to see dozens of buildings under construction in addition to well-established enterprises.

Additionally, large corporations and transplants from other major cities are creating tens of thousands of new jobs. According to the Colliers Index Nashville, unemployment numbers are at the lowest they've been in decades. With business booming, it's a fantastic time to invest in commercial real estate in Nashville. Keep reading to learn all about the current state of office-based businesses and industrial developments in Nashville, Tennessee.

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

The Status of Nashville's Industrial Real Estate

There was a strong start in the industrial market in Nashville in 2021, which is a relief for many after facing the severe storms of the previous year that destroyed 3.5 million square feet of existing spaces. Making a comeback posed several challenges as materials were scarce for a while, and stay-at-home mandates caused economic stressors.

These disruptions fueled a short period of high unemployment, but the sector is now much more solid. As the global market recovers, Nashville's industrial scene has experienced growth at unprecedented rates. The Nashville Area Chamber of Commerce has reported that more than 30 current commercial real estate projects have created over 8,800 jobs in Nashville.

About half of those positions are due to the growth in need for more industrial space in Nashville. An estimate of developments in the works is nearly five million square feet, in addition to the 1.8 million square feet to be occupied by a new Amazon Fulfillment Center in Mount Juliet. Significant investments are especially taking place in sectors such as utilities, trade, and transportation.

Recent reports indicate that industrial sales volume reached over $212 million in just the first quarter of 2021, which exceeded totals for the previous three years during the same period. The most significant contributor to these figures was the sale of the Interchange Center II in nearby Antioch that brought in $67 million at an impressive $80 per square foot. With industrial real estate investments being so in-demand, vacancies are limited city-wide, so premium rates are typically needed for start-ups and existing business facilities.

Current Retail and Office Investments are Rising Rapidly

The first quarter of 2021 also saw vast demand increases in Nashville for office and retail investments, with growth continuing for the third year in a row. However, with vacancies currently readily available, competition for tenants and investors is at an all-time high. That being said, this hasn't bolstered prices much, and average rates are running around $70 per square foot.

New projects are being announced routinely, which will continue propelling interest in the office and retail space marketplace. With activity ramping up and property tours rising in frequency, tenants are looking for space options to meet their investment goals.

While vacancies are higher than in the past, more companies are relocating to Nashville, resulting in shortages in available retail and office space soon. Despite a good deal of negative absorption, velocity sees improvements as the year progresses, with rental rates holding firm. Developers remain optimistic about the market as a whole, with new projects slated for the next two years.

While 60 percent of office and retail spaces are located near the downtown area, some investors take advantage of the prime commercial real estate locations in the suburbs. Such projects include Emery Hall's office space in Music Row. Developers will complete just over 2.3 million square feet of new office space by the summer of 2022 within the Nashville Yards downtown and in the West End Broadwest District.

Multi-Family Commercial Property Investments

Another hot way to invest in commercial growth locally is to consider investing funds into multi-family real estate. After all, along with new businesses comes jobs that bring new residents into the community. This enhances the demand for multi-family housing, especially those amenities such as outdoor areas, a fitness center, eco-friendly waste management, etc, and are typically more profitable and less taxing than investing in several single-home properties.

As the economy continues to grow, so will rents and property values appealing to severe commercial investors. To boot, another benefit of investing in these properties is that Tennessee has no state income taxes and is considered affordable compared to other big cities. Furthermore, the weather is mild most of the year, making Nashville a great place to work and live, so the city's population is likely to see solid growth.

Commercial Real Estate Investments Abound in Nashville

Before making any investment in commercial real estate in Nashville or any other city, discussing realistic options with a local agent such as the Ashton Real Estate Group is recommended. We can guide investors to the best properties and explain the most vital commercial sectors to put their money in.

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