residential report: july 2016 - nashvilledowntown.com · realtors mid-year report states that sales...

1 Greater Nashville Association of Realtors, “Middle Tennessee Home Sales Gain in June Amid Tight Inventory,” July 7, 2016 2 Freeman Webb, “Second Quarter Nashville Regional Apartment Survey,” 2Q 2016 3 Freddie Mac, “99 of Top 100 Housing Metros Improve Year Over Year,” June 29, 2016

RESIDENTIAL REPORT: JULY 2016

Demand high, housing prices escalate with product delivery imminent

NASHVILLE DOWNTOWN PARTNERSHIP 150 4th Avenue North, G-150 Nashville, Tennessee 37219 615-743-3090 www.nashvilledowntown.com

Strong, unparalleled demand for downtown living and a lag in

housing inventory delivery have resulted in a continuing increase

in rental rates and condo prices. Rental occupancy remained at

97% and above for the fifth consecutive year. Housing prices

have increased significantly over the past 36 months, as

inventory remains at a mere 2.6-month supply of resale units.

Significant rental product delivery is expected over the next

several years, and close to 1,000 rental units will open this year,

beginning to quench some of the pent-up demand. With only 71

purchase units in the pipeline to deliver in 2017, and another 169

units in speculative projects, demand for purchase units

continues to build as prices of existing units escalate. Unless

existing rental product or projects under construction convert,

there will be no short-term relief for buyers. Area job growth

compounded with growing preferences for urban living options

will continue the momentum for downtown housing demand for

the foreseeable future.

Nashville Housing Market: The Greater Nashville Association of

Realtors mid-year report states that sales gained in June amid

tight inventory. June sales are up 1.7% compared with a year

ago. Second quarter numbers are also up 5.3% compared with

second quarter numbers from 2015, and year-to-date sales are

up 7.2% compared with numbers from mid-year 2015.1 Also,

according to a report released by Freeman Webb, rental

demand is expected to outpace supply in the Nashville MSA

through 2017.2

Nashville is ranked the nation’s strongest housing market by

Freddie Mac, according to a recently published press release. A

Multi-Indicator Market Index is used to compare the top one-

hundred housing metros. Nashville ranked #8 at the end of 2015.

The ranking is based on payment-to-income ratios, job growth,

on-time mortgage payments and purchase applications.3

RESIDENTIAL REPORT: JULY 2016 DOWNTOWN NASHVILLE

3http://www.forbes.com/sites/joelkotkin/2016/05/10/the-best-cities-for-jobs-2016/#79f664eb6e40 4 http://www.brookings.edu/research/reports2/2016/01/metro-monitor#V0G34980 5 http://www.businessinsider.com/the-13-hottest-us-cities-for-2016-2015-12 6 http://realestate.usnews.com/places/tennessee/nashville 7 http://www.kauffman.org/microsites/kauffman-index/reports/growth-entrepreneurship, 2016 8 https://smartasset.com/mortgage/the-top-ten-cities-for-creatives-in-2016 9 http://www.axiometrics.com/company/pressreleases/axiometrics-apartment-annual-effective-rent-growth-keeps-

moderating-in-second-quarter

A study conducted by Forbes ranked Nashville as the 4th best big city for jobs in 2016. The

rankings are based on research of 421 U.S. MSAs based on employment data from the Bureau

of Labor Statistics from 2004 through 2015.3 Nashville also ranks among the top 10 cities for

growth and prosperity, according to the Brookings Institute. The Nashville MSA ranked 5th for

growth and 10th for prosperity among the 100 largest U.S. metros over the last five years.4

Nashville is on Business Insider's list of the hottest American cities for 2016. In choosing these

cities, the group looked at job growth, population growth, affordability, livability, and the

health and well-being of the city's residents. Each city was also ranked on its “coolness”

factor.5 U.S. News touted Nashville as one of the best places to live based on quality of life

and the job market in each city, as well as the value of living there and people's desire to live

there. Of the 100 cities analyzed, Nashville ranks 22nd with an overall score of 6.8 out of 10.6

Nashville has also received national acclaim in areas other than job growth and housing

market strength. Nashville was ranked the 5th top city for start-up growth, ahead of San

Francisco and Boston. Nashville’s ranking jumped 4 places from 2015. Rankings were

determined by employment and revenue growth at companies in particular areas.7 Two

years in a row, Smart Asset has ranked Nashville as one of the “Top Ten Cities for Creatives.”8

According to 2Q data released by Axiometrics, a Dallas-based research firm, Nashville ranks

#8 among major metro areas in annual effective rent growth, which is a key indicator of a

healthy apartment market. The national annual effective rent growth is 3.7% and occupancy

is 95.2%. Currently Nashville’s annual effective rent growth is 6.3% and the region’s occupancy

rate is 96.1%.9


Peer City Comparison

Downtown Nashville’s population and residential units continue to trail peer

cities with the exception of Indianapolis, with over 9,600 residents and 6,012

units projected by the end of 2016. Lack of residential zoning until the mid-

1990’s put downtown Nashville behind in urban residential development.

Figure 1 Year-End Projections–Downtown Residents*

2015 2016 2017

Nashville 8,313 9,619 12,402

Austin 11,899 14,001 14,001

Charlotte 12,600 14,089 18,707

Indianapolis 7,756 8,688 10,508

Memphis 24,367 24,630 25,660

Figure 2 Year-End Projections–Downtown Housing Units*

2015 2016 2017

Nashville 4,890 6,012 7,751

Austin 7,547 8,987 8,987

Charlotte 8,182 9,155 13,175

Indianapolis 4,483 5,022 6,074

Memphis 14,548 14,740 15,490

Nashville’s downtown population will grow 16% by the end of 2016, and is

expected to grow another 29% by the end of 2017. Although downtown

Nashville trails all but one of its peer cities in both housing units and residents,

it has the second strongest planned residential population growth over the

next 18 months. Charlotte comes in first with 33% planned population growth,

and leads all cities with planned residential unit growth of 44% from year-end

2016 to year-end 2017. Although Austin has led population growth in past

years, it will grow 18% by the end of 2016, and not show any additional growth

through 2017(fig. 1-2).

All peer cities have high rental occupancy rates, with Nashville and Charlotte

both at 97%. Although downtown Indianapolis is approximately 5.5 square

miles, its downtown organization has started tracking stats of its downtown

Square Mile (downtown core), which is more comparable to downtown

Nashville, Austin and Charlotte in land area comparisons (fig.3-4).

Figure 3 Rental Occupancy Rate*

2016

Nashville 97%

Austin 94%

Charlotte 97%

Indianapolis 94%

Memphis 95%

Figure 4 Land Area Comparisons*

Square Miles Acres Density per Acre

Nashville 1.8 1,180 8.7

Austin 1 640 21.8

Charlotte 2 1,300 10.8

Indianapolis 1 640 13.5

Memphis 6.5 4,160 5.9 *Information provided by Downtown Austin Alliance, Charlotte City Center, Indianapolis Downtown Inc. and

Downtown Memphis Commission (June 2016)


Downtown Nashville’s rental occupancy is 97%, and has remained above 95% for the past seven

years (fig. 6). It has also consistently held higher rental occupancy rates than its peer cities. A survey

of property managers conducted in June 2016 evaluated over 2,250 units in 30 properties. Twelve

of the properties are 100% occupied and income-restricted projects have waiting lists. Earlier this

year it was announced that Peabody Quarters, located in Rutledge Hill/SoBro, is being converted

to a Guest House. The 23 rental units at this property have been taken out of the overall rental

inventory. This occupancy rate also does not include for-sale properties that have been rented out

by their owners. Terra House Apartments was not included in the study because it was delivered to

the market this spring 2016 and has not yet fully leased.

Downtown Housing Categories

Currently there are 5,084 downtown residential units of which 49% are rental, 47% are condo and

4% are single family units. Market rate housing constitutes 95% and affordable 5% of the housing mix.

From 2010 through 2015, downtown has seen 61% population growth (fig.5). This is 6 times the

percentage growth of the Nashville MSA, 7 times of Nashville, and 15 times that of the State of

Tennessee during the same time period.

Figure 5 – Population Growth Comparisons (2010 – 2015)

Population Growth 2010 2015 % Growth

Downtown 5,155 8,313 61%

Nashville 626,681 678,889 8.3%

Nashville MSA 1,670,890 1,830,345 9.5%

Tennessee 6,346,105 6,600,299 4.0% Source: Nashville Downtown Partnership 2016, US Census Bureau

Rental Market

The 2,506 rental units within 33 properties in downtown Nashville make up 49% of the current

downtown housing mix. Currently, there are there are ten rental projects under construction that will

deliver 2,497 units by 2018, with 928 coming online this year. An additional ten projects are

announced/planned that could deliver over 3,200 additional units by 2019.

Downtown apartments have consistently had high occupancy rental rates. Currently, downtown

has an occupancy rate of 97%, and has been over 95% since 2010 even with additional rental

product delivering to the market. Occupancy rates remained at 92% or above even through the

economic downturn (fig. 6). According to the June 2016 survey of property managers, the

downtown core is full at 98%, Rolling Mill Hill is 97%, Rutledge Hill/SoBro is 100% and The Gulch is 95%

occupied.

Figure 6 – Downtown Nashville Rental Occupancy Comparisons

Rental Occupancy Rate– Year Downtown Greater Nashville

2007 95% 94.84%

2008 93% 90.60%

2009 92% 90.20%

2010 95% 92.54%

2011 96% 93.36%

2012 98% 95.41%

2013 98% 95.16%

2014 98% 95.93%

2015 97% 95.33%

2016 97% 95.32% Source: 1Q 2016 Greater Nashville Apartment Association Market Study, NDP Property Manager Survey June 2016


10Nashville, Tennessee, Municipal Code BL2014-951

In addition to the high downtown rental occupancy rate, the shadow market units (i.e.

individual-owned units within condominium properties) continue to rent at increasing rates. At

least 600+ additional condo units are leased. Most condominium properties have capped

percentages for rental units and strict monitoring by property management aids in identifying

this number.

Lack of sufficient inventory of hotel rooms and a rise in popularity of Airbnb and VRBO have

served as a catalyst for a growing short-term rental market downtown. Over the past 36 months,

Short-Term Rental Properties (STRP) have grown significantly, leading the City of Nashville to pass

Ordinance No. BL2014-951 and Ordinance No. BL2014-909 to regulate this practice through a

permit process. A STRP is “defined as a residential dwelling unit, containing not more than four

sleeping rooms and that is used and / or advertised for transient occupancy.”11 The law applies

to all properties (including rooms and guest houses) that are rented for less than 30 consecutive

days to the same occupant. According to the Metro Nashville Codes Department, as of June

22, 2016, 141 permits have been issued for downtown units, almost double from last year (75

permits). Although difficult to track, it is more likely that STRP are conversions from rental units

by property owners than from owner-occupied condos due to strict homeowner’s association

rules and lack of provisions for this type of use in Master Deeds for large residential properties.

Figure 7 – Downtown Nashville Market Rate Rental Comparisons

Rental Market 2012 2013

2014

2015

2016

SIZE 419 - 4,500 SF 419 - 4,500 SF 419 - 4,500 SF 419 – 2,059 SF 419 – 2,059 SF

MARKET RATE

CATEGORY

Studio $570 - $1,300 $590 - $1,300 $630 - $1,300 $630 - $1,900 $655 - $1,500

1 bedroom $670 - $1,700 $700 - $1,899 $730 - $2,000 $730 - $2,200 $755 - $2,060

2 bedroom $822 - $2,700 $858 - $2,799 $878 - $3,114 $878 - $3,300 $955 - $3,399

3 bedroom $1,400 - $4,000 $1,400 - $4,000 $1,400 - $4,000 $1,400 - $3,200 $1,425 - $3,700

According to a survey of property managers and leasing agents in downtown rental properties,

rental rates continue to rise in all categories. The only caveat is that smaller studio units seem

to be capped at $1,500 per month, which has essentially been market driven. Overall, units

that yield the highest square foot prices are studios ranging from 419 – 600 SF in newer rental

properties that are walkable to restaurants and amenities. Some studio properties in The Gulch

rent between $3 and $3.15 per square foot (fig 7).

There are 255 affordable rental units in four properties that make up 10% of the rental market

and 5% of the overall downtown housing market (fig. 8). Over the past 12 months, rental prices

for these units increased from .5% - 2%.


Figure 8 – Downtown Nashville Affordable Rental Comparisons

Rental Market 2016

SIZE 500 - 1,316 SF

AFFORDABLE CATEGORY

Studio $654

1 bedroom $697

2 bedroom $833

3 bedroom $958

Condominium Market

Downtown Nashville currently has 2,358 condo units within 43 properties. Condominiums make

up 47% of downtown housing. Twelve Twelve, the first condo project downtown since Terrazzo

in 2009, began delivering units in late 2014 and sold out in April 2016. Research in early July

indicates that there are 78 resale units available to purchase across downtown (32 under

contract) which results in a 2.7-month supply. A balanced market has a six-month supply of

units.

An assessment of four downtown high-rise properties shows that price per square foot of condos

has consistently increased in all four properties annually since 2011. Prices in the more

established buildings have increased by double digits over the past 18 months, with the Viridian

up 15%, Encore up 16% and ICON up 12%. The cumulative weighted average of all four

properties dropped a few percentage points from 2015. However, the weighted average was

particularly high in 2015 due to 232 condo units at Twelve Twelve delivering within one year.

Seventy-nine percent of the weighted average came from these sales prices. The weighted

average has risen 16% from 2014 to the present. The breakout data is provided for buildings

that average more than twelve annual transactions in order for the data to be meaningful to

establish a trend (fig. 9-10).

Figure 9 – High-Rise Square Foot Comparisons

PPSF By Building 2010 2011 2012 2013 2014 2015 2016 (Jan-June)

Viridian $257 $263 $288 $308 $380 $396 $436

Encore $257 $243 $294 $364 $380 $406 $443

ICON $305 $281 $358 $391 $415 $442 $466

Twelve Twelve $471 $498 $511

Weighted Average $298 $275 $325 $361 $407 $474 $471

Source: http://realtracs.net, July 2016; Parks in the Gulch data for Twelve Twelve, June 30, 2016

http://realtracs.net/


Figure 10 – Downtown High-rise Price per Square Foot Comparison by Building

Across these four properties, the highest square-foot prices so far this year have occurred at

Twelve Twelve for $904, $903 and $803. Other record prices include $628 at ICON, $536 at

Encore, and $532 at Viridian.

Twelve Twelve’s last developer units sold in April 2016. This property’s units have yielded some

of the highest per square foot prices seen in downtown. In resales alone in 2015 and 2016, the

average price per square foot is $699. Comparing the original sales price to the re-sale price

yields an average delta of $126.60 per square foot. Average one-bedroom resales are $501

PPSF, average two-bedroom are $631 PPSF, average interior two-bedroom are $545 PPSF,

average corner 2-bedroom are $703 PPSF and average penthouse is $828 PPSF.

Twelve Twelve interior Encore amenities level

$200

$250

$300

$350

$400

$450

$500

$550

2010 2011 2012 2013 2014 2015 2016 (Jan-June)

Downtown Highrise Price Per Square Foot by Building

Viridian Encore ICON Twelve Twelve


Single Family Market

Single-family homes make up 4% of downtown housing inventory. Of the 220 total homes

downtown, 217 are in the Hope Gardens neighborhood. The other three single family homes

are located in the downtown core. Four single-family residential permits were issued for Hope

Gardens over the past 12 months, and two of the sites have completed development.

Downtown Geographic Boundaries

The Nashville Downtown Partnership’s definition of downtown includes properties within the

boundaries of the river on the east, the interstate loop on the south and west, and Jefferson

Street on the north. This geographic area is termed the Greater Downtown, which includes the

Central Business District (Core), The Gulch, North Capitol, Hope Gardens, Rutledge Hill, Rolling

Mill Hill, and SoBro. Germantown is adjacent to downtown, but not included in the residential

counts.


Under Construction

Ten residential projects that are under construction will deliver

2,697 units by year-end 2018. By the end of 2016, 928 units will

open in five projects.

Five projects are scheduled to deliver in 2016: 909 Flats, located

on Rosa L Parks Blvd, across from the Nashville Farmers Market in

Hope Gardens is currently preleasing its 232 units for August move-

ins. Thirty-one rental units will come online in August at The James,

a mixed-use project under construction in The Gulch. The Carillon

Apartments, 306 units, just adjacent to First Tennessee Park, began

move-ins in June. The SoBro, a 32-story apartment tower, will

begin move-ins in October and have 313 rental units and almost

20,000 SF of retail/restaurant space. Jefferson Street Apartments,

developed by the Metropolitan Development & Housing Agency,

will deliver 54 affordable rental units this fall.

Additionally, Church Street Apartments will deliver 367 units to the

North Gulch area by 1Q 2017. River House under construction at

Rolling Mill Hill will deliver 245 apartments in the fall of 2017. 505, a

mixed condo and apartment tower will begin delivering units in

the fall of 2017. Olmsted SoBro will begin delivering part of its 328

rental units in 2017, continuing into 2018. Solis North Gulch will

deliver 271 rental units in 2018.

Pipeline Projects

Thirteen additional residential projects have been announced or

planned that could deliver 3,700+ units to the market by 2019.

The Fifth and Broadway development includes an apartment

tower with 350 units. City Lights, one of three pipeline projects to

include for-sale units, plans to break ground in late July and

deliver 71 condos in 2017. Other planned residential projects

include 8th & Division, 8th & Demonbreun, Ballpark Apartments,

Broadway Mixed-Use Tower, Capitol View Development Phase I,

Crescendo, Sixth & Lea, SoBro mixed-use residential/hotel

development, Water Tower, Rolling Mill Hill parcels awarded by

MDHA and Stockyard residential project.

Rendering of 505

CityLights amenity deck

Stockyard Project Rendering

8th & Division Rendering

909 Flats Rendering Broadway Mixed-Use Tower Ballpark Apartments


Demographic Profile and Trends

The Nashville Downtown Partnership’s 2016 Downtown Residential Survey had a 10.4% response

rate. In May 2016, approximately 4,500 surveys were distributed to homeowners and renters by

direct email and via building and condo managers. The survey focused on residents who live

in Nashville’s downtown defined by these boundaries: Jefferson Street on the north,

Cumberland River on the east and the interstate loop on the south and the west.

Where Residents Moved From

Downtown continues to attract professional, highly educated residents from across all age

groups, increasing the city’s workforce competitiveness. Thirty percent of residents moved to

downtown from out-of-state, and another 34 percent moved from outside the city. Twenty-

eight percent moved from Nashville.

Household Status

Of the respondents, 38% are single, 47% are married, 10.5% are separated or divorced, and 4.5%

have a domestic partner (fig.11). The number of respondents in the married category has

increased 24% since 2014.

Figure 11 – Household Status

Age and Gender

Respondents exhibit a broad cross section of age groups. Twenty-nine percent of downtown

residents are considered to be Generation Y (age 35 and under). Baby Boomers (age 52-69)

make up the largest group at 41%, up 8% since 2012. Generation X (age 35-50) represents 27%

of the downtown population, decreasing 6% since 2012. Generation Y (ages 35 and under)

represents 29% of the population (fig.12). Generation Y and Baby Boomers are the two

generations expected to show the most increase in migration to urban areas going forward.

Downtown residents are 49% male and 51% female. Male and female percentages continue

to fluctuate around the fifty-percent mark from year-to-year.

Figure 12 – Age of Respondents

47%

38%

10%

5%

Household Status

Married

Single

Separated/Divorced

Domestic Partner

29%

27%

41%

3%

35 or under

36-51

52-69

70 or over


Household Income

Eighty-three percent of downtown households earn over $60,000 annually. Sixty-three percent

earn over $100,000 annually, up 5% from last year. Thirty-six percent earn over $150,000 each

year. One percent earn less than $20,000 annually (fig.13).

Figure 13 – Annual Household Salary Range

Level of Education Completed

Fifty-three percent of downtown residents have a college education and an additional 34%

hold postgraduate degrees (fig.14).

Figure 14 – Level of Education Completed Comparisons

2 or 4 Year Degree Graduate or Professional Degree

Downtown 53% 34%

Nashville 30.7% 13.2%

Nashville MSA 28.5% 11.% Source: Downtown Residential Survey 2016, Nashville Area Chamber of Commerce, June 2016

Work Location

Sixty percent responded that their office is located outside of downtown. Although being close

to work is cited by 27% of downtown residents as a top reason to live downtown, residents

choose more compelling reasons to live in downtown Nashville.

Quality of Life Factors

When residents were asked what four elements most positively influenced their continued

downtown living, the top response was the urban experience (53%) followed by central

location/convenience (48.5%), arts and cultural events (28.5%), being close to work (27%), and

restaurant selection (26%). The urban experience has been cited for the 9th year as the top

reason for living downtown.

1%

5%

11%

10%

10%

27%

36%

Less than $20,000

$20,000 to $39,999

$40,000 to $59,999

$60,000 to $79,999

$80,000 to $99,999

$100,000 to $150,000

More than $150,000

0% 10% 20% 30% 40%

Annual Household Salary Range


Study Area Housing Market

The Greater Downtown has 5,084 existing units, and an additional 6,464 units are either

planned or under construction (fig 15).

Figure 15 – Existing Housing Downtown Nashville

# Units Rental Condo/SF Property Address Rental/Condo

CBD Existing Apartments/Condos/Single Family

(Downtown Core) 113 Second Avenue Lofts 1 1 113 Second Avenue Rental

115 8th Avenue North 1 - 1 115 8th Avenue North Condo

123 2nd Avenue North 1 - 1 123 2nd Avenue North Condo


213 Printers Alley 1 1 213 Printers Alley Single Family

217 2nd Avenue North 1 1 217 2nd Avenue North Condo

218 3rd Avenue North 1 1 218 3rd Avenue North Rental


219 5th Avenue North 3 2 1 219 5th Avenue North Condo/Rental

244 5th Avenue North 2 1 1 244 5th Avenue North Condo/Rental

320 Broadway 4 - 4 320 Broadway Condo


423 Union Street 2 2 - 423 Union Street Rental


500 Fifth Apartments 170 170 500 Fifth Avenue North Rental

506 Lofts 5 5 506 Church Street Rental

Ambrose Lofts/Music City Loft 21 18 3 162 4th Avenue North Condo

Art Avenue Lofts 32 - 32 231 5th Avenue North Condo

Banner Lofts on 3rd 31 31 162 3rd Avenue North Rental

Bennie Dillon Original Lofts 86 - 86 700 Church Street Condo

Capitol Towers 219 184 35 510 Gay Street Rental/Condo

Cumberland on Church/Penthouses 289 256 33 555 Church Street Rental/Condo

Church Street Lofts 17 - 17 301 Church Street Condo

Kress Lofts 29 - 29 237 5th Avenue North Condo

Lofts above ICHIBAN 8 8 - 107 Second Avenue N Rental

Lofts at 160 32 32 - 160 2nd Avenue North Rental

Lofts at Noel Court 4 4 214 3rd Avenue North Condo

Lofts at the Exchange 47 - 47 309 Church Street Condo

Lofts at the Reserve 62 62 301 Rosa L Parks Rental

Market Street Apartments 63 63 - 150 Second Avenue South Rental

Phoenix Lofts 6 - 6 207 3rd Avenue North Condo

Printers Alley Lofts 9 9 211 Printers Alley Rental

Private Residence 1 - 1 226 3rd Avenue North Single Family

The Quarters 32 - 32 178 2nd Avenue North Condo

Rhea Building Lofts/Music City Suites 11 11 - 166 2nd Avenue North Rental

Smith House 1 - 1 167 Rosa L Parks Single Family

Stahlman Building 142 142 - 222 3rd Avenue Rental

Viridian 305 - 305 415 Church Street Condo

Watauga House 25 - 25 222 Polk Ave. Condo

Westview 10 - 10 179 8th Avenue North Condo

1,689

1011 678


Continued…

Area Location # Units Rental Condo/SF Property Address Rental/Condo

North Capitol District Lofts 69 - 69 Corner of Harrison & 3rd Ave Condo

Harrison Square 15 - 15 Harrison & 3rd Avenue North Condo

Harrison Square Phase II 48 - 48 Harrison & 3rd Avenue Condo

Hope Gardens Residences 217 217 Hope Gardens Single Family

Ireland28 28 - 28 900 Block of Ireland Street Condo

Riverfront Condos 145 - 145 726 1st Ave. N. Condo

Row 8.9n 29 - 29 800 Block 8th Avenue North Condo

551 - 551

Rolling Mill Hill City View - Art Deco 24 24 - 210 Middleton Street Rental

City View - Metro 36 36 - 210 Middleton Street Rental

City View - Victorian 12 12 - 210 Middleton Street Rental

City View Apartments 102 102 - 210 Middleton Street Rental

Nance Place Apartments 109 109 - 8 Academy Place Rental

Ryman Lofts 60 60 - 100 Middleton Rental

Terra House 194 194 - 115 Middleton Rental

537 537

SoBro/Rutledge Hill Academy Square Condominiums 50 - 50 100-149 Academy Square Condo

Cardwell Place Condominiums 4 4 Lea Avenue and Rutledge Condo

Encore 333 - 333 301 Demonbreun Condo

Howell Park 40 - 40 401-479 2nd Ave. S. Condo

Room in the Inn 38 38 705 Drexel Street Rental

Rutledge House 41 - 41 656 Second Ave. S. Condo

Rutledge Terrace 18 - 18 430 Second Ave. S. Condo

Big Red Lofts 20 20 527 8th Avenue South Rental

544 58 486

The Gulch Eleven North Apartments 302 302 210 11th Avenue North Rental

ICON 417 - 417 600 12th Avenue South Condo

Laurel House Apartments 48 48 - 1101 Laurel Street Rental

Mercury View Lofts 32 32 - 1209 Pine Street Rental

Pine Street Flats 296 296 - 1055 Pine Street Rental

Terrazzo 117 - 117 700 12th Avenue South Condo

Twelve Twelve 286 286 1212 Laurel Street Condo

Velocity 265 222 43 320 11th Avenue South Condo/Rental

1,763 900 863

TOTAL EXISTING 5,084 2,506 2,578


11 Freeman Webb, “Freeman Webb 2Q 2016 Market Overview.”

Conclusion

All of the recently released data points to a continuation of growth in the real estate market.

Freddie Mac’s conclusion that the Nashville MSA is the healthiest housing market in the nation

coupled with Axiometrics data showing local occupancy rates in this year’s Q2 up 40 basis

points from Q1 to 96.1% and that effective rents climbed 6.5% year-over-year reveal that

Nashville is in a steady position for continued growth.

According to a study released mid-year 2016 by Freeman Webb, the Nashville regional market

will still have a demand for 19,600 apartment units by the end of 2017. This study looks at the

supply of units under construction or recently delivered to the market, the additional units

required due to population growth and decline in homeownership, as well as speculative supply

of units. Although the report states that demand is expected to outpace supply in the Nashville

MSA, some submarkets will feel the impact as local supply may surpass local demand.11

Figure 16 - Freeman Webb 2Q 2016 Market Overview

Downtown residential inventory is being delivered as forecasted, and demand remains high

with rental occupancy rates remaining at 97%, while housing prices continue to escalate. The

only for-sale project in the pipeline that is set to deliver before 2018 is City Lights which will add

only 71 units to the market in late 2017. Downtown currently has a 2.7-month supply of resale

units. Having a 6-month supply is considered a “balanced market.” Increasing land prices and

construction costs amid the Nashville construction boom make building for sale units prohibitive.

Downtown will continue to have pent-up demand for purchase product unless some of the

planned rental projects convert to condos.

In the very short term, there will be year over year imbalances in supply and demand. The

current temporary shortages may be balanced out by near term deliveries. However, the long

term forecast continues to indicate a shortage of residential inventory in the downtown area.

residential report: july 2016 - nashvilledowntown.com · realtors mid-year report states that sales...

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