Industrial Real Estate Values Skyrocket in Nashville, Growth Projected to Continue
As you’ve surely already heard, industrial property is red hot, and is changing the commercial real estate market, especially in cities like Nashville. According to a recent CoStar article, “logistics companies are expanding to secondary North American cities, transforming portions of once sleepier areas that have seen huge population upticks in the past two years into larger distribution hubs.” Along with other “secondary cities” such as Cincinnati, Phoenix, and Tampa, the Nashville real estate market is exploding right now, in part due to this industrial expansion.
Photo by Guillaume Bolduc on Unsplash
As you’ve surely already heard, industrial property is red hot, and is changing the commercial real estate market, especially in cities like Nashville. According to a recent CoStar article, “logistics companies are expanding to secondary North American cities, transforming portions of once sleepier areas that have seen huge population upticks in the past two years into larger distribution hubs.” Along with other “secondary cities” such as Cincinnati, Phoenix, and Tampa, the Nashville real estate market is exploding right now, in part due to this industrial expansion.
Some notable Q4 sales in the Greater Nashville market include local developer CA South’s purchase of two parcels along the Cumberland River (690 and 1106 Davidson St.) for a combined $21.5 million and a 123.3-acre property, also located near the Cumberland, that went for $54 million to logistics giant Prologis. And industrial rents are following suit: According to the Nashville Post, “average triple-net asking lease rate in Q3 was $6.16 per square foot — a 12-percent increase year-over-year.” This is a record high.
Photo by CHUTTERSNAP on Unsplash
This pervasive trend around the nation is causing many large properties, particularly office buildings, to be converted to industrial space by developers looking to capitalize. And even expensive property subcategories such as cold storage are seeing a significant bump.
Years before the start of the global pandemic, Amazon was already changing the game with its ultra-convenient consumption model, pushing the need for more and more last-mile warehouse and distribution centers. However, the pandemic added fuel to this already growing phenomenon, as it, along with related behaviors and policy decisions, converged to expose weaknesses in the wider suppler chain. As a recent CCIM article points out, “that last mile is dependent on multiple components of infrastructure, including ports, inland waterways, rail, highways, bridges, energy, aviation, and even levees and storm-water management. All must work in synchronization for the last mile of delivery to function at peak efficiency and capacity.”
In short, the ways we are now governing, shopping, eating, working, planning, and doing business are all affecting industrial real estate, pushing up demand for the foreseeable future.