Nashville 2Q23
Multifamily Market Report

$1,653

average rent

94.3%

average occupancy rate

$473M

ytd sales volume

1.1%

YoY rent change

-2.5 POINTS

yoy occupancy change

14 YTD

individual transactions

Supply & Demand

2Q23

2,577 Units

QUARTERLY DEMAND
YTD: 4,816

3,052 Units

QUARTERLY COMPLETIONS
YTD: 6,259

Annual Demand vs Completions

2018
6,141
6,855
2019
5,170
4,159
2020
3,327
5,321
2021
11,135
6,315
2022
3,177
8,045
2023 YTD
4,816
6,259
  • Planned
    Completions
  • Pre-Planned
    Demand

Demand Trends

  • In Q2 2023, the Nashville apartment market experienced positive net absorption of over 2,577 units, highlighting the strength of the apartment market demand.
  • Nine out of 10 submarkets posted positive net absorption, with Central Nashville leading in absorbed units with 1,410.

Completion Trends

  • Q2 2023 saw Nashville’s apartment inventory expand by 3,052 units. The Central Nashville submarket contributed 1,518 of these units, reflecting its significant role in the overall growth.
  • In the past year, completions have been primarily concentrated in the Central Nashville submarket, accounting for 15.1% of the market’s total new inventory. With numerous large-scale office projects in the works, long-term demand looks set to be able to absorb the large pipeline of new units in this area.

Demand Outlook

  • Over the next four quarters, the anticipated absorption of 12,127 units in Nashville is expected fall just short of the 13,000 units expected to deliver during this timeframe.
  • Central Nashville is poised to be a major demand hotspot, with projections indicating that it will contribute to 26.2% of the overall absorption in the coming year.

New Supply Outlook

  • The Nashville apartment market is on the brink of a significant expansion in its inventory, with an sizable increase of 13,064 units expected in the next year.
  • The Central Nashville submarket is expected to lead in contributing new supply, with a projected addition of 3,728 units.

Occupancy & Rent Trends

RENT VS OWN
MONTHLY PAYMENT

$2,539

Average Monthly Mortgage Payment

$1,653

Average Monthly Rent

Occupancy trends

With an overall occupancy rate of 94.3% in 2Q 2023, Nashville’s apartment market noted a decline of 250 basis points compared to the previous year. When looking at product classes, Class C assets were at the forefront, reaching 95.0% occupancy, with Class B and Class A following closely at 94.1% and 93.8%, respectively.

Examining the submarket level, Sumner County and Murfreesboro/Smyrna fared well, both posting 2nd quarter occupancy rates exceeding 95.0%. In contrast, East Nashville and Southeast Nashville reported the weakest rates, hovering at 93.0% and 93.1%. Looking forward, Nashville’s robust construction pipeline may cause some short-term shifts in occupancy. However, Nashville’s apartment market is anticipated to sustain an occupancy rate close to 94% in the coming year.

RENTAL TRENDS

In the year-ending 2nd quarter of 2023, the Nashville multifamily market experienced modest overall rent growth of 1.1%, bolstered by a 0.9% increase from the previous quarter to recover from earlier quarterly rent reductions. Among submarkets, North Nashville led the way with strong 4.7% year-over-year growth, while Central Nashville and East Nashville lagged, with declines of -1.3% and -0.2%, respectively. Overall, average rents reached $1,852 per month.

Among the different product classes, Class C units exhibited the strongest rent growth with a 2.0% annual increase, followed by Class B units at 1.4%. Class A units, however, experienced a negligible change, showing a slight 0.1% annual decline. Despite this, there remains robust demand for luxury properties, as evidenced by a notable 0.8% quarterly increase in Class A rents during the 2nd quarter.

Submarket Rent & Occupancy

SubmarketAverage OccupancyAnnual Occupancy ChangeAverage Monthly RentAnnual Rent Change
Central Nashville93.6%-2.2%$2,149-1.3%
East Nashville93.0%-3.1%$1,500-0.2%
Franklin/Brentwood94.7%-1.8%$1,8620.2%
Hermitage/Mount Juliet/Lebanon94.9%-2.3%$1,5421.0%
Murfreesboro/Smyrna95.1%-2.4%$1,5062.7%
Nashville-Davidson--Murfreesboro--Franklin, TN94.3%-2.5%$1,6531.1%
North Nashville94.7%-2.6%$1,4624.7%
South Nashville93.9%-2.7%$1,49300.0%
Southeast Nashville93.1%-4.2%$1,4463.7%
Sumner County95.1%-2.1%$1,5160.8%
West Nashville94.6%-2.0%$1,7742.5%
Nashville-Davidson--Murfreesboro--Franklin, TN94.3%-2.5%$1,6531.1%

Units by Submarket Delivering in 2023

29,243

Units Under Construction

13,064

Units UC Delivering In the Next 4 Quarters

Percentage of Units Under Construction

Central Nashville - 10,885
0%
East Nashville - 1,706
0%
Franklin/Brentwood - 2,842
0%
Hermitage/Mount Juliet/Lebanon - 2,409
0%
Murfreesboro/Smyrna - 1,472
0%
North Nashville - 4,300
0%
South Nashville - 1,004
0%
Southeast Nashville - 2,213
0%
Sumner County - 861
0%
West Nashville - 1,551
0%

Percentage of Units Delivering Next 4Q

Central Nashville - 3,728
0%
East Nashville - 708
0%
Franklin/Brentwood - 1,668
0%
Hermitage/Mount Juliet/Lebanon - 1,297
0%
Murfreesboro/Smyrna - 566
0%
North Nashville - 1,760
0%
South Nashville - 678
0%
Southeast Nashville - 1,515
0%
Sumner County - 384
0%
West Nashville - 760
0%

Sales Activity

In the first half of 2023, Nashville’s apartment market experienced a contraction in transaction activity, with data from MSCI Real Capital Analytics revealing a total trade volume of $473.0 million across 14 properties. This represents a significant 71.1% decrease compared to the previous year, yet despite this decline, the transactions saw a notable 4.5% increase in the average price per unit, reaching $256,200, compared to the same period last year. Even with the lower transaction levels, Nashville continues to attract investors, thanks to its relative affordability and robust economic standing, underpinned by high-growth industries that draw a young adult population. The market’s future outlook remains bright, and Nashville’s resilience and growth potential are likely to keep investor interest alive and strong.

  1. Weinstein Properties
  2. Cortland
  3. American Landmark
  4. Sunroad Enterprises
  5. OpenPath Investments
  1. Wood Partners
  2. Embrey Development
  3. The Connor Group
  4. CA Ventures
  5. Crescent Communities

TRANSACTION VOLUME


YTD Transaction Volume


Y-O-Y Change


Individual Transaction Count


Price Per Unit


Annual Price Change

* Trailing 4Q average PPU

* Preliminary Data from RCA – Individual transaction $2.5M +

Economy

In May 2023, the Nashville area witnessed exceptional job growth, adding a staggering 44,400 jobs compared to the same period in 2022, reflecting a substantial 4.0% increase in employment. Consequently, the unemployment rate reached an impressive 2.7%, well below the national average of 3.4%. Among the various employment sectors, the professional and business services sector experienced the most significant job gains, with an impressive addition of 10,900 positions, representing a substantial 5.6% expansion. Additionally, the Education and health services sector also saw remarkable growth, with a 5.2% expansion and the addition of 8,500 jobs. These positive indicators underscore the region’s robust economic dynamics and promising employment prospects.

44.4k

May Annual Jobs Created

4.0%

May 23 Employment growth

2.7%

May 23 Unemployment rate
3.4% us may rate

Top 5 Employment Sector Annual Change

Professional & Business Services

Professional & Business Services

Change from May 2022 to May 2023:
10,900

Percent Change:
5.6%

Education & Health Services

Education & Health Services

Change from May 2022 to May 2023:
8,500

Percent Change:
5.2%

Leisure & Hospitality

Leisure & Hospitality

Change from May 2022 to May 2023:
6,100

Percent Change:
5.40%

Trade, Transportation & Utilities

Trade, Transportation & Utilities

Change from May 2022 to May 2023:
6,000

Percent Change:
2.7%

Government

Government

Change from May 2022 to May 2023:
3,200

Percent Change:
2.6%

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SectorChange from May 2022 to May 2023 Percent Change
Professional and business services10,900 5.6%
Education and health services8,500 5.2%
Leisure and hospitality6,100 5.0%
Trade, transportation, and utilities6,000 2.7%
Government3,200 2.6%
Mining, logging, and construction2,800 4.9%
Manufacturing2,200 2.6%
Other services1,700 3.7%
Financial activities1,600 2.1%
Information1,400 4.5%

Major Economic Developments

silhouette of person at airport concourse

BNA New Horizon Plan

$1.4B Capital Invesment

1,000+ New Jobs Created

Two Concourses Expansion Plans

Nashville International Airport Location

2028 Timeline

low angle view high rise buildings

Nashville Yards

$1B Mega Mixed-Use Development

3M SF of Class A Office Space

5k New Jobs Created by Anchor Tenant Amazon

2k Residential Units

Downtown Nashville Location

Late 2023 Completion

person sitting on gaming chair while playing video game

Digital Game Studio Coming to Nashville

150 New Jobs Created

Tech Job Sector

$100k+ Average Salary

Iron Galaxy Studios Company

Downtown Nashville Location

Market Outlook

Nashville’s near-future outlook hinges on its expansive construction activity, with the market’s growing population base has displaying remarkable capacity for absorption of apartment units. As of Q2 2023, a robust 29,200 apartment units were under construction, placing Nashville’s share of relative inventory at 16.3%, the third largest nationally behind Huntsville, AL, and Boise, ID. This surge in development raises questions about the depth of demand, especially at higher price points. Notably, Central Nashville, with 3,728 units slated for completion over the next four quarters, may see near-term supply and demand imbalance. However, the market’s sustained job and population growth in recent years lends confidence to the outlook. The one-year forecast paints an optimistic picture, with demand expected to stabilize fundamentals even amid supply pressures, though some submarkets may experience periodic fluctuations in performance.

Sources: RealPage; BLS; MSCI; Nashville Business Journal; Greater Nashville Regional Council

To Gain Further Insights Into The Nashville Market Please Reach Out To Our Team

Alex Blagojevich

Alex Blagojevich

Executive Managing Director & Founding Partner

Image of Michael Sullivan

Michael Sullivan

Executive Managing Director & Founding Partner

Image of Brett

Brett Meinzer

Managing Director