Research & Forecast Report

NASHVILLE | MULTIFAMILY1st Quarter 2017

Source: AXIOMetrics, RCA, CoStar

Market Survey Results and Forecasts

Sequential Month Annual

2Q16 3Q16 4Q16 1Q17 Mar-17 2015 2016 2017F 2018F 2019F 2020F 2021F

Effective Rent Per Unit $1,130 $1,145 $1,129 $1,123 $1,129 $1,065 $1,125 $1,147 $1,177 $1,214 $1,263 $1,300

Per Sq. Ft $1.18 $1.20 $1.18 $1.18 $1.18 $1.11 $1.18 $1.20 $1.23 $1.27 $1.32 $1.36

Effective Rent Growth - Annually 6.7% 5.5% 3.9% 2.4% 2.2% 6.4% 5.6% 1.9% 2.7% 3.1% 4.0% 2.9%

Effective Rent Growth - Quarterly 3.1% 1.3% -1.3% -0.6%

Occupancy Rate 96.6% 96.3% 95.6% 94.9% 95.0% 96.6% 96.2% 95.3% 95.0% 95.4% 95.9% 95.3%

Occupancy Change - Annually 0.1% -0.6% -1.0% -1.4% -1.4% 0.0% -0.4% -0.9% -0.4% 0.4% 0.6% -0.7%

Occupancy Change - Quarterly 0.2% -0.2% -0.8% -0.7%

Economic Concessions

Concession Value $-3.32 $-3.90 $-9.58 $-12.55 $-11.65 $-2.52 $-5.09

As a % of Asking Rent -0.3% -0.3% -0.8% -1.1% -1.0% -0.2% -0.4%

Date Property Name Address City Units Year Built Price Price/Unit

Mar-17 Charlotte at Midtown 2400 Charlotte Avenue Nashville 279 2015 $62,500,000 $224,014

Jan-17 Creekside at Providence 1900 Providence West End Boulevard Mount Juliet 209 2015 $42,200,000 $201,914

Mar-17 Campus Crossings Apartments 285 N Rutherford Bouelvard Murfreesboro 254 2004 $31,300,000 $223,228

Jan-17 Hillwood Pointe 6430 Charlotte Pike Nashville 180 1997 $23,400,000 $130,000

Jan-17 Wycliffe Court 1225 E Northfield Boulevard Murfreesboro 65 1985 $3,100,000 $47,231

RECENT SALES

2 Nashville Research & Forecast Report | 1Q 2017 | Multifamily | Colliers International

SUPPLY AND DEMAND

Market Employment and Permitting

Annual February-17 Annual Forecast

2014 2015 2016 Market National 2017F 2018F 2019F 2020F 2021F

Employment (000s) 880.2 914.6 949.6 965.4 144,271.0 972.7 991.5 1,010.4 1,033.4 1,052.1

Job Gain (000s) 34.1 34.4 35.0 36.4 2,352.0 23.0 18.8 18.9 23.0 18.7

Job Growth (%) 4.0% 3.9% 3.8% 3.9% 1.7% 2.4% 1.9% 1.9% 2.3% 1.8%

Total Residential Permitting 14,829 17,810 18,557 15,782 1,101,437 16,374 13,788 14,400 15,082 14,550

Relative Change 26.9% 20.1% 4.2% -7.7% 0.3% -11.8% -15.8% 4.4% 4.7% -3.5%

Single Family Units Permitted 9,094 10,813 12,014 11,325 702,275

Relative Change 16.9% 18.9% 11.1% 11.7% 9.0%

Multifamily Units Permitted 5,635 6,881 6,395 4,305 368,649

Relative Change 54.8% 22.1% -7.1% -37.2% -12.8%

Multifamily as a % of Total 38.0% 38.6% 34.5% 27.3% 33.5%

Demand/Supply Ratio

Job Gain / Total Residential Units Permitted 2.9 2.3 2.0 2.1 2.1 1.2 1.2 1.4 1.6 1.2

Job Gain / Single Family Units Permitted 4.4 3.8 3.2 3.6 3.7

Job Gain / Multifamily Units Permitted 9.4 6.1 5.1 5.3 5.6

Multifamily Absorption and Supply

Annual 1Q17 Annual Forecast

2014 2015 2016 Market National 2017F 2018F 2019F 2020F 2021F

Total Units Absorbed 2,879 5,631 5,479 5,937 264,921 7,351 4,031 4,137 3,693 1,712

New Supply 3,275 5,410 7,131 7,282 350,515 8,181 5,045 3,360 2,855 3,850

Inventory Growth 2.6% 4.2% 5.3% 5.1% 1.4% 5.8% 3.4% 2.2% 1.8% 2.4%

Nashville’s development pipeline remains among the nation’s most active at the beginning of 2017. Annual completions of about 3,700 units to 5,000 units in eight of the last 10 quarters grew Nashville’s inventory by 3% to 4%. 1Q 2017 marked the metro’s second consecutive quarter of annual inventory growth of over 5%. The highest concentration of construction is in Central Nashville. Permits for 4,897 multifamily units were issued in the 12 months ending February 2017, down -1,498 units from prior year’s sum.

Nashville’s multifamily market is absorbing 3,800 units to 5,500 units annually. The market absorbed 4,723 units in year-ending 1Q 2017. Apartment demand has remained robust, and job growth in the Nashville MSA was 3.9% in February 2017, reflecting 36,400 jobs added over the last 12 months. Axiometrics forecasts Nashville’s job growth to be 1.9% in 2018, equivalent to 18,849 jobs added.

3 Nashville Research & Forecast Report | 1Q 2017 | Multifamily | Colliers International

IDENTIFIED SUPPLY

Submarket Delivery SchedulePipeline Delivery Schedule Pipeline Lease Up Trend

Units Absorbed Asking Rent Effective Rent

Top Submarkets 2015 2016 2017 Total Totals PPM Per Unit PSF Per Unit PSF

Brentwood/Williamson County 649 308 1,263 2,220 459 14 $1,571 $1.70 $1,470 $1.59

Downtown/West End/Green Hills 1,179 2,464 4,722 8,365 1,695 12 $1,921 $2.34 $1,725 $2.09

Murfreesboro Pike/Antioch 84 316 684 1,084 133 9 $1,339 $1.16 $1,276 $1.10

Murfreesboro/Smyrna 1,128 758 706 2,592 792 14 $1,128 $1.11 $1,085 $1.07

NE/Madison/Rivergate/Hendersonville 454 438 800 1,692 305 7 $1,416 $1.66 $1,363 $1.59

Other 1,020 1,308 1,820 4,148 842 16 $1,453 $1.39 $1,384 $1.33

Nashville-Davidson--Murfreesboro--Franklin, TN 4,514 5,592 9,995 20,101 4,226 12 $1,602 $1.80 $1,484 $1.66

*Based on 2017 deliveries *Trend based on a trailing 12 month period

Axiometrics identified 9,995 apartment units scheduled for delivery in 2017, as of April 2017. A total of 1,980 units delivered during 1Q 2017. In comparison, 5,592 units delivered in 2016. Properties that delivered in the last 12 months have an average asking rent of $1,592 per unit, or $1.77 per square foot. Effective rent has averaged $1,483, or $1.65 per square foot, resulting in an average concession value of $-109.28.

Most submarkets recorded strong performances this quarter. One exception was the Central Nashville area, where rents slowed as a large volume of new completions increased competition for renters. During the coming year, demand in Nashville will likely continue to support rent growth in the 3.5% to 4.5% range, as the metro digests record levels of upcoming supply.

4 Nashville Research & Forecast Report | 1Q 2017 | Multifamily | Colliers International

PIPELINE | CENTRAL NASHVILLE

# Property Name Address Developer Units Stories Finish1 10th & Jefferson 941 Jefferson Street Metropolitan Development and Housing Agency 54 4 Jun-17

2 1220 Second Avenue North 1220 2nd Ave North Lifestyle Communities 139 3 Nov-17

3 3rd & Madison 1212 3rd Ave North Grove Park Land/Delray Ventures 101 5 Oct-17

4 505 505 Church Street Giarratana Nashville LLC 350 45 Apr-18

5 Aertson Midtown 905 20th Ave South Buckingham Companies 350 17 Aug-17

6 Broadstone Gulch 777 8th Ave South Alliance Residential Company 238 14 Aug-18

7 Capitol View I 442 11th Ave North Boyle Investment Company/Northwood Ravin LLC 378 6 Dec-18

8 Church Street 1201 Church Street Pollack Shores Real Estate Group 376 5 Apr-18

9 Crescent Music Row 1221 Division Street Crescent Communities 275 5 Jun-17

10 Finery (The) 610 Merritt Avenue Core Development 490 4 Apr-18

11 M Residences 814 19th Ave South Lennar Corp 344 19 Aug-17

12 Millennium Music Row 70 Music Square West The Dinerstein Companies 230 6 Oct-17

13 Olmsted SoBro 501 5th Ave South Llewellyn Development LLC/Cocke Finkelstein Inc 330 6 Jan-18

14 PDG Germantown 1309 3rd Ave North Price Development Group 244 5 Sep-17

15 SkyHouse Nashville 111 17th Ave South Novare Group/Batson-Cook Development Company 352 25 Sep-17

16 Solis North Gulch 600 11th Ave North Terwilliger Pappas 271 5 Mar-18

17 Village 21 1620 21st Ave South GBT Realty Corp 103 4 Apr-17

18 West End Circle Flats 3112 W End Circle GH Investments LLC 30 4 Apr-17

19 LC Sobro 719 3rd Avenue South Lifestyle Communities 600 10 Jul-17

20 River House 13 Middleton Street SWH Residential Partners LLC 245 6 Oct-17

21 EastSide Heights 416 Woodland Street Southeast Venture/Hardaway Group Inc 249 5 Nov-17

5,749

Source: MPF Research

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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