NASHVILLE, Tenn. (WKRN) — Rents in Nashville appear to be turning. The vacancy rate is in the double digits — which is the highest in 20 years — and the downtown core has taken an even bigger hit. News 2 took a look at what these empty units could mean for Music City renters this fall.
Here’s what he had to say back in January: “All of these cranes, they’re multi-family, they’re mixed use…In the urban core, we are leading the way for supply, and the problem with that is is we’re actually not seeing the demand that we saw even a year ago.”
The current numbers are proving Flynn right. According to real estate data firm CoStar, Nashville’s vacancy rate is 10.8%. In the downtown core, it’s as high as 17.5%.
“Absolutely they overbuilt for what the need was,” said Flynn. “The vacancy is just building and building and building and building, so every single month, there’s more and more vacancy.”
Those vacancies are forecast to climb even higher, as 22,000 units are in the pipeline under construction, according to new data from Matthews Real Estate Investment Services. That means it’s a great time to rent for some folks,
“I see a lot of two months, I’ve seen 10 weeks, I’ve seen three months free,” said Flynn, describing the lease terms and deals he’s seeing in Nashville. “There’s a lot of opportunity for people to capture deals, and even push back on what they’re being offered, negotiate. It’s a soft market in the multi-family downtown.”
Two years ago, one out of every 20 apartment buildings was offering a deal, Matthews Real Estate Investment Services reported. This year, however, many more apartments jumped on the incentive train: one out of every three.
“I don’t know how much they can drop, especially on highly-leveraged buildings that are new builds downtown. I don’t know how much they’re able to drop their rents. At some point, it’s very possible for us to see distress in the multi-family market,” said Flynn.
According to Flynn, Nashville looks promising in the long term, but like many cities right now, it faces short-term headwinds.