Suburban Strip Mall Investment in Greater Nashville
Franklin, TN
Middle TN Strip Malls as Investments
Middle Tennessee is a great place for real estate investors to focus on strip malls. Throughout 2023, the area’s suburban strip mall investments displayed impressive growth, driven by multiple factors. The current vacancy rate for Greater Nashville’s strip centers is an amazingly low 1.7% and market rent at strip malls is in the high $20s per SF. Even in emerging, more rural submarkets such as Robertson and Dickson County, you’re now seeing retail asking rents in the high teens and vacancy rates even lower than Nashville proper. (Costar)
One of the key drivers of success for suburban strip malls in the Nashville area is the city's continuous residential growth. Jobs keep coming; people follow the jobs; and cities and towns around Nashville continue to expand. SmartAsset looked at population data for the nation’s 344 largest cities, and two in the state of Tennessee ranked within the top 25 for fastest growing: Murfreesboro (number 16) and Clarksville (number 25). Prime suburban locations such as these, strategically situated near major traffic arteries, have experienced heightened growth and consequently leasing activity. The rental rates for strip malls in these sought-after areas have surged, but “fixer uppers” are still out there.
Adam Tepman, the artist formerly known solely at StripMallGuy, gets it. In an interview with Kyle Mathews late last year, Tepman mentioned he likes to say his “favorite anchor is a busy street.” And when people bug him about where are the credit tenants, he answers “the credit is that’s the person’s college fund for their kids.” These strip malls dotting small-to-medium sized towns across the country are the lifeblood of their communities. Yes, there are some national tenants in the mix as well, but for the most part, this is small-business America.
Retail Post-Pandemic
Post-pandemic, strip center investment is especially attractive, because after a time of people being told to stay home and away from others, they are now more appreciative than ever of the in-person shopping experience. They may still be doing hybrid work, but on their lunch break and afterwards, they are hitting the stores.
And, man, are they eating out! According to the Site To Do Business, in the Greater Nashville area, over 40% of adults said they go to a fast food restaurant 9+ times per month. Chaching, Mr. and Mrs. Subway Franchisee!
So, as you are considering your next real estate investment, along with residential flips, land banking, and other popular choices, think about going just a little bolder and purchasing your first small strip center. Explore partnering with someone who’s been there/done that and can help you look for ways to add value and improve rental income over time. This can be a wonderful source of income for many years to come.
