Nashville industrial real estate market reports
Increased e-commerce needs and unquenched tenant demand have fueled leasing activity and served as buffers for the Nashville industrial market not only during the pandemic but also during one of the city’s largest construction cycles. The outlook for the remainder of the year is positive as market activity only continues to pick up, however, industrial vacancy could continue to rise as a large amount of speculative construction is expected to deliver by year end.
At the end of the first quarter, Nashville’s industrial market had 7.1 msf under construction. First quarter deliveries added 1.5 msf to inventory, with an additional 6.1 msf expected to complete by year-end.
With no slowdown in positive momentum, healthy demand brought over 1.1 msf of positive net absorption during the first three months of the year.
Direct asking rent
Persistent tenant demand, as well as soaring land and construction costs continue to place upward pressure on industrial rents across the market. Average rents increased 5.5% year-over-year, ending the quarter at $6.89 psf.
At the end of the first quarter, the amount of total industrial space available decreased from year end 2021, falling to approximately 13.5 msf on the market. Available sublease space decreased as well ending the quarter at just under 1 msf.
Despite Nashville’s industrial construction boom and a large wave of speculative space hitting the market vacant, vacancy remains in a healthy range. Overall industrial vacancy ended the quarter at 5.2%, up 170 basis points year-over-year.
The Nashville industrial market continues to witness substantial investor interest, with investment sales totaling $169 million at the end of the first quarter. The strong performance was lead in large part by Stonelake Capital’s portfolio purchase of Space Park North and Old Stone Bridge industrial parks for $76.5 million ($80 psf).
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