The Nashville multifamily market posted a solid performance during the second quarter of 2023, led by accelerating net absorption and rising rents, according to Northmarq‘s second quarter Nashville Multifamily Market report.
And expect more supply to hit this market soon. Northmarq reported that more than 21,300 apartment units are under construction throughout the region, with a concentration of new development in downtown Nashville.
The demand for apartment units in Nashville has kept rents strong in the region. Northmarq reported that the the average asking rent for Nashville-area apartment units rose to $1,705 in the second quarter, up 1% from the previous month. That figure is down 0.8% on a year-over-year basis, though.
This doesn’t mean that the Nashville multifamily sector doesn’t face challenges. The vacancy rate in the market inched higher during the second quarter, rising 10 basis points to 6.6%. On a year-over-year basis, this rate has jumped by 210 basis points.
And interest rates have slowed multifamily sales, even in the hot Nashville market. Northmarq says that year-to-date multifamily transactions are down 60% from the first half of 2022. The median sales price for multifamily sales in 2023 so far is $178,900 a unit. The cap rates are between 5% and 5.5%.
