Nashville MSA | Housing Permit Activity
0
5,000
10,000
15,000
20,000
2017201620152014201320122011201020092008
New
Hou
sing
Per
mits
One Unit Permit Multi-Unit Permit
Source: U.S. Census Bureau
Multifamily Investment in Nashville tops $1 Billion for Third Consecutive Year
Research & Forecast Report
NASHVILLE | MULTIFAMILY4th Quarter 2016
UNITS UNDER CONSTRUCTIONSUBMARKET UNITS
Central Nashville 4,994
West Nashville 1,502
Far East Nashville 1,425
Franklin/Brentwood 1,193
North Nashville 915
South Nashville 902
East Nashville 845
Murfreesboro/Smyrna 576
Southeast Nashville 244
Sumner County 0
Total 12,596
UNITS COMPLETING IN 12 MOS.SUBMARKET UNITS
Central Nashville 3,177
Franklin/Brentwood 1,193
Far East Nashville 1,065
North Nashville 675
South Nashville 650
West Nashville 581
Murfreesboro/Smyrna 576
East Nashville 245
Southeast Nashville 244
Sumner County 0
Total 8,406
Multifamily Development - Submarket Rankings
Key Takeaways > In 2016, the Nashville Market absorbed 6,289 units, the largest volume in over a decade.
> Total transaction volume for 2016 topped $1.29 billion, with an average cap rate of 6.16%.
> Supply totaled 7,367 units in 2016, and inventory is scheduled to increase 9.4% based on construction activity at the end of 4Q 2016.
> Nashville’s rent growth of 6.5% in 2016 is a 20-year record high, and demand will likely continue to support this growth in the 3.5% to 4.5% range over the next 12 months.
Nashville Multifamily MarketAccording to ULI’s Emerging Trends in Real Estate 2017 Survey, Nashville has transitioned to an upper-tier secondary market, and the increased level of investor interest bode well for Middle Tennessee in 2016. Nashville’s multifamily market experienced another banner year, with investments in apartments topping $1.29 billion in 2016, the third consecutive year exceeding $1 billion.
The combination of steady population growth and net in-migration, a strong and diverse economy, and favorable demographic trends served as a catalyst for demand during 2016. The multifamily market benefitted from these trends, and construction levels remained strong throughout 2016 to accommodate this growth. Nashville delivered 7,367 units in 2016, a multi-decade high.
Growth in Nashville’s employment base and in the population has been a boon to the region’s apartment market, which has led to robust demand and inflated rent growth. Over the next 12 months, new development will come online at some of the highest levels the market has experienced. As such, MPF Research expects occupancy to slip slightly and rent growth to slow from current levels. As supply normalizes, Nashville is expected to be a long-term performer in terms of occupancy and rent growth.
Summary Statistics 4Q 2016 Nashville Multifamily Market
Existing Units 133,911
Quarterly Supply 3,163
Current Occupancy Rate 95.8%
Quarterly Occupancy Change -0.6%
Under Construction (units) 12,596
Monthly Rent $1,104
Rent per Square Foot $1.14
Quarterly Rent Change -0.5%
Annual Rent Change 6.5%
One-Year Forecast
Annual Supply 8,406 unitsAnnual Demand 6,203 unitsAnnual Rent Change 4.0%Occupancy -1.4%
OCCUPANCY
SUBMARKET OCCUPANCY %
North Nashville 97.7%
Southeast Nashville 96.9%
South Nashville 96.7%
Far East Nashville 96.5%
Sumner County 96.1%
East Nashville 96.0%
Murfreesboro/Smyrna 95.3%
Central Nashville 95.0%
Franklin/Brentwood 94.5%
West Nashville 93.8%
MONTHLY RENT
SUBMARKET RATE
Central Nashville $1,589
Franklin/Brentwood $1,387
West Nashville $1,202
Murfreesboro/Smyrna $1,074
South Nashville $1,033
Far East Nashville $1,042
Sumner County $1,023
East Nashville $1,012
North Nashville $957
Southeast Nashville $917
Historical Rental Rates
67
8
910
3
245
1
1. Central Nashville2. East Nashville3. Southeast Nashville4. South Nashville5. West Nashville6. North Nashville7. Sumner County8. Far East Nashville9. Murfreesboro/Smyrna10. Franklin/Brentwood
Submarket Overview - 4Q Rankings
QTRLY RENT CHANGE
SUBMARKET RATE
South Nashville -0.7%
Southeast Nashville -1.3%
Sumner County -0.4%
West Nashville -1.3%
East Nashville 0.3%
North Nashville 0.5%
Far East Nashville 0.1%
Franklin/Brentwood -0.5%
Murfreesboro/Smyrna -0.5%
Central Nashville 0.2%
QTRLY OCCUPANCY CHANGE
SUBMARKET RATE
East Nashville 1.6%
Franklin/Brentwood 0.2%
Southeast Nashville 0.0%
North Nashville -0.3%
Far East Nashville -0.4%
Central Nashville -0.7%
South Nashville -0.7%
Sumner County -1.0%
Murfreesboro/Smyrna -1.4%
West Nashville -2.4%
Source: MPF Research
Historical Occupancy Rates
Source: MPF Research
#1#7#3#6Nation’s Top Cities for Real Estate
Investing in 2017 - PricewaterhouseCoopers (November 2017)
Cities for Job Seekers in 2017 - NerdWallet (December 2016)
2016 Best-Performing Cities - Milken Institute (December 2016)
Hottest Housing Market in U.S. - Freddie Mac (December 2016)
$600
$700
$800
$900
$1000
$1100
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q14
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
2011 2012 2013 2014 2015 2016
93.8%
94.1%
95.0%
95.6%
95.1%
95.7%95.8%
95.1%
94.9%
95.8%
96.0% 96.0%
95.8%
96.1% 96.1%
95.1%
95.5% 95.5%
96.3%
95.2%
96.6%
96.3%
95.8%
96.4%
2 Nashville Research & Forecast Report | 4Q 2016 | Multifamily | Colliers International
2016 NOTABLE INVESTMENT DEALS
PROPERTY BUYER UNITS SALE PRICE PRICE/UNIT
The Landings of Brentwood
Steadfast Apartment REIT 724 $110,000,000 $151,934
One MetroCenter Sherman Residential 320 $67,375,000 $210,547
Bellevue West Oaktree, Bascom Group 560 $63,250,000 $112,946
The Artessa Loma Linda U Endowment 250 $57,500,000 $230,000
Venue at Glenbrook Sentinel Real Estate 312 $52,671,000 $168,817
The Overlook Apartments Passco Companies 452 $51,106,750 $115,280
Grand Oak at Town Park Starlight Investments 300 $49,600,000 $165,333
DEVELOPMENT LEADERS
DEVELOPER UNITS COMPLETED IN THE LAST 12 MOS.
UNITS UNDER CONSTRUCTION
TOTAL UNITS
Lifestyle Communities 403 1,051 1,454
Giarratana Nashville LLC 288 663 951
Bristol Development Group 393 392 785
SWH Residential Partners LLC 194 467 661
The Residential Group LLC 640 0 640
Source: Real Capital Analytics
Cost of Living Index
Source: Nashville Area Chamber of Commerce
Seattle 140.3
San Francisco 176.4
Los Angeles 140.3
Austin 96.0
Tampa 91.6
Chicago 116.2
Indianapolis 91.1
Nashville 95.2
Atlanta 99.9
Raleigh 90.5
Charlotte 96.4
New York City 227.4
Boston 144.3
Source: FRED Economic Data
Employment/Unemployment
Cumulative Monthly Volume ($mil)
0
260
520
780
1040
1300
2013201420152016
DNOSAJJMAMFJ
650
700
750
800
850
900
950
Nov-
16
Aug-
15
May
-16
Feb-
16
Nov-
15
Aug-
15
May
-15
Feb-
15
Nov-
14
Aug-
14
May
-14
Feb-
14
Nov-
13
Aug-
13
May
-13
Feb-
13
Nov-
12
Aug-
12
May
-12
Feb-
12
Non-
Farm
Em
ploy
men
t
0%
2%
4%
6%
8%
10%
12%
Unemploym
ent Rate
Unemployment RateNon-Farm Employment
3 Nashville Research & Forecast Report | 4Q 2016 | Multifamily | Colliers International
Copyright © 2015 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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