Picture by Jonathan Ross/iStockphoto.com
Workplace markets nationwide are nonetheless adapting to post-pandemic shifts, with main corporations persevering with to downsize and to rethink growth plans. Excessive rates of interest and scarcer debt are additionally enjoying their half in a relative slowdown of workplace improvement. The Nashville workplace market had a powerful place by the top of final yr, because the metro’s favorable enterprise local weather has saved it rising.
Right here is the most recent report on how Nashville’s workplace market entered 2023, in keeping with CommercialEdge knowledge.
Downtown Nashville’s giant tasks
As of January, Nashville had 4.6 million sq. ft of rentable workplace house underneath development. This represents an 8.0 % growth of current inventory, placing Nashville within the second spot nationally by way of new house underway as a share of inventory, tied with Miami. Austin took the primary spot, with new development representing 10.3 % of current inventory. Nationally, workplace house underneath development amounted to 2.2 % of inventory in January.
Nashville’s prime 5 largest workplace properties underway had been all located within the downtown space.
The $1 billion mixed-use Nashville Yards undertaking—developed by Southwest Worth Companions—contained two of the biggest workplace buildings at present underneath development. The bigger one, at 566,000 sq. ft of rentable house, can be occupied by Amazon. The second is deliberate to be mixed-use and is slated to comprise 465,000 sq. ft.
Lincoln Property Co. can be among the many builders betting on downtown Nashville. The corporate is at present constructing a 535,000-square-foot luxurious workplace constructing, situated at 410 eighth Ave. S., known as Circle South.
In December, Convexity Properties obtained a $125 million mortgage for the event of a 15-story, 378,000-square-foot mixed-use undertaking at 5 Metropolis Blvd. The property is slated to incorporate 360,000 sq. ft of workplace house, 18,000 sq. ft of retail, and can come on-line in 2024.
Deliveries slowed down throughout the metro
A single workplace property got here on-line within the metro throughout the first two months of 2023, within the Franklin submarket. Boyle Funding Co. accomplished an workplace constructing—throughout the McEwen Northside master-planned group—measuring 126,000 sq. ft of workplace, and 15,000 sq. ft of retail and restaurant house.
ONE22ONE. Picture courtesy of GBT Realty
In 2022, workplace completions throughout the Nashville market totaled 906,000 sq. ft—a 60.3 % decline year-over-year, from the two.3 million sq. ft of house delivered in 2021.
The most important of those was ONE22ONE, developed by a three way partnership of GBT Realty and Koch Actual Property Investments. The 24-story, Class A constructing includes 373,000 sq. ft of house, of which a good portion was already leased. Firstbank signed on for 52,000 sq. ft of house, whereas a further 120,000 sq. ft can be occupied by a number of different corporations.
Total, workplace leasing remained gradual
Nashville’s workplace market recorded some leasing exercise in 2022, however emptiness solely reasonably improved—the speed stood at 17.5 % as of February, down 130 foundation factors year-over-year. Nationally, workplace emptiness clocked in at 16.5 %.
The metro’s full-service equal itemizing price was $31.6 as of February, up 4.1 % year-over-year. Nationally, the speed stood at $38.3.
As corporations proceed to re-assess their post-pandemic wants for workplace house, leasing continues to be gradual throughout most main metros. Layoffs within the tech sector particularly contributed to this slowdown, with many growth plans now on maintain.
Gross sales went up in 2022
In 2022, transactions in Nashville’s workplace market totaled $1.3 billion, a 90.5 % enhance year-over-year. Gross sales amped up within the metro, with high-quality workplace house taking the primary spot on traders’ lists. The common worth per sq. foot reached $257 as of December, 4 % greater than the nationwide determine.
The most important sale of 2022 occurred in November. Northwood Buyers paid $715 million for Fifth + Broadway, a mixed-use property that was accomplished in 2021 by Skanska USA and developed by Brookfield Properties. The asset consists of 367,000 sq. ft of workplace house, 250,000 sq. ft of retail and leisure, a 56,000-square-foot museum and 381 residential models.
One other giant workplace sale closed in June, within the downtown submarket. Intercontinental Actual Property acquired the 1200 Broadway workplace tower for $295 million from Endeavor Actual Property Group. The 26-story property was accomplished in 2019 and is LEED Silver licensed. The asset traded at roughly $344.6 per sq. foot, considerably above the market common.
Coworking good points traction in Nashville
As distant work progressively grew to become extra commonplace over the previous three years, coworking corporations sought to open places in all main metros, and Nashville was no exception. As of February, the metro had 625,000 sq. ft of confirmed coworking house and 1.4 million sq. ft of allotted house throughout 69 places—representing 2.4 % of all rentable workplace house available in the market.
By comparability, the biggest coworking markets had comparable figures—Manhattan’s workplace market had 13.4 million sq. ft of versatile house, representing 2.7 % of all rentable workplace house, whereas Los Angeles had 6.9 million, or 2.3 %.
Serendipity Labs Nashville. Picture courtesy of Stream Realty Companions
Serendipity Labs opened its first location in Nashville final yr. The coworking agency signed on for 21,100 sq. ft of workplace house at Tricera Capital’s L&C Tower, a 276,818-square-foot workplace constructing, situated within the downtown submarket.
Miami-based versatile workspace supplier Ampersand Studios additionally opened its first location within the metro final yr. The corporate agreed to an 11-year, 26,124-square-foot lease at 1030 Music Row, a 126,000-square-foot boutique workplace property.
