Nashville's Retail Market Vacancy Tightens in Q2 2022
- Retail absorption exceeds positive 413,418 square feet in the second quarter, bringing the YTD absorption to positive 598,377 SF
- Vacancy decreased in Q2 2022 to 4.3%, down 50 basis points over Q1
- Nashville has 990,340 square feet of retail space under construction, with new deliveries totaling 10,693 square feet so far for 2022
Nashville’s retail market took a hit in 2020, but key indicators have shown that Nashville’s economy has recovered quite well, a positive for the metro’s retail industry. Leisure and hospitality employment in the Nashville MSA grew 18.3% from June 2021 to June 2022. Vacancy has begun inching towards pre-pandemic levels, resulting in strong absorption at mid-year 2022, and is projected to hold steady over the next few quarters. As such, Nashville is expected to remain a tighter market than the national average, which will likely keep rent levels high. Nashville’s year-over yearrent growth of 11.3% far outpaces the U.S. benchmark of 4.3% YOY rent growth. Retail rates in Middle Tennessee track over 60% above the metro’s pre-Great Recession peak. Retail development is also elevated across the region following a record low in new supply levels in 2021, with the majority of the projects being part of a mixed-use development or build-to suit spaces.