Nashville is hot. Forbes ranked the Tennessee city seventh on its list of the 25 fastest-growing cities in the country. And its unemployment rate? That’s down to 2.4 percent. It’s little wonder, then, that the city’s industrial market is soaring.
Avison Young in its first-quarter Nashville industrial report, said that the area’s pro-business environment has brought a steady stream of new companies to the market. Since 2014, Nashville has seen 450 company relocations and expansions, which has brought more than 43,000 new jobs to the city.
The new companies have brought higher demand for industrial space. Avison Young reported that there is now about 3.9 million square feet of new industrial construction underway in the market. Of this total, 80 percent is speculative construction.
One of the highlights? Cedar Farms, Phase 1, in Wilson County. This 900,000-square-foot development is the largest spec project the Nashville market has seen.
The market isn’t completely red-hot, though. In 2017, net industrial absorption soared to more than 5 million square feet. During the first quarter of this year, though, that pace slowed a bit. In the first quarter, the Nashville industrial market absorbed 283,870 square feet.
The largest lease signed in the quarter was CEVA Logistics, which took 399,000 square feet in the Beckwith 9 development that is expected to deliver in the second quarter. XPO Logistics, another supply chain solutions company, leased 280,000 square feet in Commerce Farms Five. This recently delivered Wilson County project is now fully occupied just six months after completion.
The construction boom has resulted in a higher industrial vacancy rate. Avison Young says that the industrial vacancy rate increased by 60 basis points on a year-over-year basis, rising to 4.2 percent. Average asking rental rates have risen, too, though, in the first quarter, ending it at $5.59 a square foot. That’s a solid jump of 15 percent when compared to the same quarter a year earlier.