Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.
Top Multifamily Market to Watch: Nashville, TN
The Nashville metro area added more than 25,000 jobs in 2014, with the largest gains in construction (up 10.1% year-over-year) and professional services (up 7.1%). The recent announcement that Google Fiber will expand to Nashville promises to breathe additional momentum into the already hot tech industry. Unemployment sits at just 5.0% in one of the nation’s post-crisis secondary market success stories. With a healthy outlook for demand, Nashville’s challenges are overwhelmingly on the supply side. With nearly 4,500 new apartment units expected by the end of 2015, largely at the top-end of the market, rent growth is projected to slow in the near-term. For buyers with a long investment horizon, the robust outlook for Nashville’s demand drivers and its relatively higher cap rates may present opportunities to capitalize on a short-term slowdown in fundamentals that will give others pause.
Not to be ignored, there are emerging concerns about affordable housing opportunities in an area where nearly 1 in 5 residents lives below the poverty line. A grassroots affordable housing alliance is pushing for Nashville to adopt inclusionary housing measures, working to ensure that a share of new housing units are reserved for low- and middle-income tenants. The implications for market-rate multifamily development remain unclear, but the public debate bears monitoring over the next year.
To read more on Nashville and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.
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