Nashville Industrial Market
4th Quarter 2016
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Overview
The Nashville industrial market remains
active as interest in the positive business
climate continues to grow. As new
construction completes and more
developments are proposed there will be
an even greater opportunity for companies
to expand or enter the market. Recent
Nashville relocation announcements by
companies such as Axem Distributing
Inc, supplier to Italian gunmaker Berettaheadquartered in Gallatin, and TruForm,
supplier to Nissan-headquartered in Cool
Springs, show the ripple effect Nashville’s
growing economy is having on companies
and their suppliers across the U.S.
Nashville continues to exhibit healthy
market conditions closing 2016 with a 3.6%
overall market vacancy, a 30 basis point (bps)
increase from 3Q and 110 bps decrease
from the previous year-end. Increases in
some submarket vacancy are indicative of
new construction deliveries that are not yet
leased. However, single-digit vacancies are
still seen throughout the market.
Maintaining the strong momentum set in
2015, the market boasted an impressive
4.6 million square feet (msf ) of year-to-date
absorption, nevertheless, 800,000 square
feet (sf ) less than the previous year. The
Southeast and Wilson County submarkets
were the largest contributors accounting
for nearly 76% of the year-to-date activity.
The robust leasing activity seen in these
submarkets included Nissan North America
signing a 786,000 sf lease in the new
development Wilson Commerce Center
during 2Q and ShoeMetro (Ebuys) leasing
600,000 sf in CentrePointe Distribution Park
Bldg 2 during 4Q.
Rents continue to increase as landlords
look to capitalize on the current boom in
the market. In 4Q, the overall Nashville
market rental rate increased to $4.89 per
square foot (psf ), a 2% increase from 3Q
and 17% increase from the previous year.
Average flex rates rose to $10.96 psf and
warehouse/ distribution rates rose to $4.36
psf during 4Q.
Market Facts
8.0
16%
14%
6.0
12%
4.0
10%
2.0
8%
6%
0.0
4%
-2.0
2%
-4.0
Fourth quarter brought the completion of
multiple developments, adding over 2.4 msf
of industrial square footage to the Nashville
market. The largest of these completions
included two build-to-suit developments
for Nissan North America completed
during 4Q totaling approximately 1.8 msf.
At the end of 2016, Nashville had over 4.0
msf under construction. The Southeast
submarket accounts for nearly 60% of
this construction with a notable new
development located near the Smyrna /
Rutherford County Airport. Speculative
development consists of 73% of current
construction, marking that developers
are still bullish on the Nashville market.
With 39% pre-leasing on all upcoming
construction projects in the pipeline, the
most significant trend in 2017 will be the
lease up story on many of these speculative
developments.
0%
2008
2009
2010
2011
Absorption
2012
2013
Deliveries
2014
2015
2016
Vacancy
4.0 MSF
Currently under construction
3.6%
Overall vacancy in market
$4.36
Average warehouse asking rate
4.6 MSF
YTD absorption
Arrows denote change from previous quarter
Significant Deals 4Q16
400 New Stanford Road
Single-tenant distribution building sold for $27.9M
to Prologis.
Partnership. Performance.
Nissan Supplier Park
1,000,000 sf industrial building delivered this quarter
with an additional 500,000 sf to deliver in early 2017.
The building is 100% leased to Nissan.
ShoeMetro (Ebuys)
ShoeMetro (Ebuys) leased 600,000 sf in the
CentrePointe Distribution Park Bldg 2, which is
currently under construction and expected to deliver
mid-2017.
avisonyoung.com
Nashville Industrial Market
4Q2016
Year-To-Date
Average Asking Rates
#Blds
Inventory
Vacancy
Absorption
Deliveries
Under
Construction
Flex
Warehouse
East
210
15,450,835
1.0%
197,116
66,750
0
$9.57
$5.96
IBD
439
17,517,095
2.8%
(31,822)
0
0
$10.39
$5.85
North
600
42,984,186
2.5%
878,115
494,550
95,700
$11.13
$4.15
Southeast
539
58,999,227
5.5%
2,065,104
2,295,643
2,414,960
$10.27
$3.97
Southwest
274
14,561,814
2.9%
24,766
0
0
$16.43
$7.28
West
137
8,169,423
4.9%
57,367
0
0
-
$3.96
Wilson County
206
26,315,350
3.2%
1,476,012
959,600
1,549,000
$11.28
$3.53
2,079
169,306,251
3.6%
4,582,839
3,816,543
4,059,660
$4.36
326
14,691,679
3.4%
83,819
0
0
$10.96
2,405
183,997,930
3.6%
4,666,658
3,816,543
4,059,660
$4.89
Submarket
Market Totals
Warehouse
Flex
Totals
Top Lease Transactions 2016
Tenant
Square Feet
Lease Type
Property
Submarket
Quarter
Nissan
786,000
New
127-129 Couchville Pike
Wilson County
2q16
ShoeMetro (Ebuys)
601,520
New
CentrePointe Bldg 2
Southeast
4q16
Essex Technology Group
518,667
New
400 New Sanford Rd
Southeast
2q16
Top Sale Transactions 2016
Property
Square Feet
Submarket
Buyer
Purchase Price/ $PSF
Quarter
Airpark Business Center
1,155,037
Southeast
The Silverman Group
$87,000,000/ $75 psf
2q16
Famous Footwear
540,240
Wilson County
One Liberty Properties
$32,700,000/ $61 psf
3q16
400 New Sanford Rd
518,667
Southeast
Prologis
$27,900,000/ $54 psf
4q16
Top Construction Completions 2016
Property
Submarket
Completion
Square Feet
Major Tenant
Nissan Supplier Park
Southeast
4q16
1,000,000
Nissan
Wilson Commerce Center C
Wilson County
4q16
786,600
Nissan
CentrePointe Bldg 1
Southeast
2q16
601,520
Conn's
Brennan Pitts
Research Coordinator
615.727.7430
[email protected]
Avison Young
avisonyoung.com
615.727.7400