Skyrocketing rents in primary office and industrial markets have pushed tenants, and investors, into high-demand secondary markets. High on the list of such markets is Tennessee.
The Nashville office market currently has the nation’s lowest vacancy rate, at 4.7 percent, according to a third quarter report from real estate services firm Cushman & Wakefield. As for industrial, Memphis is making noise after experiencing the biggest decline in availability quarter-over-quarter, at 260 basis points, according to a report from real estate services firm CBRE. Memphis, the second largest commercial airline hub in the world, has an overall vacancy rate of 3.3 percent, one of the tightest in the country, according to Cushman & Wakefield.
Nashville is one of the top five markets for office pre-leasing, according to real estate services firm JLL. Of the 3.8 million sq. ft. under construction in the market, about 72 percent is pre-leased, says Tom Hooper, the local executive vice president with JLL. The city serves as a draw for Millennials looking for a downtown area that includes entertainment, he says.
“We’ve been one of the fastest growing cities, with unemployment real low at 3. 9 percent,” Hooper says. “We’re similar to Austin—we compete with Austin,—but we have a lower cost of living.”