Nashville's Commercial Real Estate Sector is Bracing for Change

According to the Latest Findings of the Colliers Nashville CRE Vitality Index

NASHVILLE, Tenn. (August 3, 2022) – Key drivers indicate Nashville’s commercial real estate sector is bracing for change, according to the latest findings of Colliers Nashville’s Commercial Real Estate Vitality Index. The Mid-Year 2022 results show the Index stands at 1-point lower than the Year-End 2021 results and is only 3-points lower than where the Index stood pre-covid.

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The Colliers Index, launched in January of 2019, uses key economic indicators to track the health and vitality of Middle Tennessee’s commercial real estate sector from 2001 to the present. These indicators include local & regional budgets, rent escalations, de-escalations, job growth, vacancies, population growth, gross domestic product, market sentiment, investment, and other factors. The combined variables factor into a weighted algorithm that creates an accurate measurement tool to monitor the relative health of Nashville’s commercial real estate sector over time.

Key drivers impacting Nashville’s commercial real estate environment are at both macro national/international and local levels. Indicators of the macro-level drivers include inflation and interest rates, the Russia-Ukraine conflict, the COVID-19 pandemic, and supply chain disruptions. Key contributing local level drivers include:

Solid Investment – Capital continues to flow into Middle Tennessee as investment in commercial real estate remains at a significant $5.45B, a drop since 2021 but considerably higher than pre-pandemic figures.

Job Growth/Unemployment – Unemployment has dropped dramatically from 16% in April 2020 to 2.7% in May 2022. The office sector continued to grow and with job growth up 9% at the end of Q2 2022, compared to Q1 2020.

Remote Work Spurs Disruption in the Market – Sublease space available in the market currently stands at 2.5M square feet, which equals 3% of the 61.1M inventory. The increase in sublease office availability is due to the shift from the in-office work model to the hybrid work model. Data indicates that before the COVID-19 pandemic, workers reporting to the office stood at 78%, and during the 2009 financial recession, available sublease space was at 800,000 SF. Since the pandemic, employers have transitioned their work model to include hybrid reporting, decreasing office reporting by 67% post-pandemic.

Colliers Nashville hosted an event at Geodis Park, Nashville, on Tuesday, August 2, 2022, where the company presented the Colliers Index Mid-Year 2022 findings. A discussion on the economy was also held with Federal Reserve Bank of Atlanta’s Laurel Graefe, Regional Executive and Senior Officer, and Colliers Nashville’s Bert Mathews, Executive Vice President, and Partner.

Nashville's Commercial Real Estate Sector is Bracing for Change

To Learn More from the Colliers CRE Vitality Index

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Katie joined Colliers in the fall of 2014. She works closely with her advisors, third-party data sources, sales associates and members of the marketing staff to conduct high quality and accurate market analysis, research and reporting for the company and Colliers USA.

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Danielle Henderson

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