Leasing has pulled back Nashville's office sector, as tenants flock to newer spaces instead of renewals. Overall, the category's volume plunged by 36 percent from the fourth quarter, according to a market report from CBRE.
The CRE firm noted that office space occupiers were five times more likely to sign a new lease than an expansion or renewal during the first three months of 2025.
"New leases totaled 371,000 sq. ft., 61.0% in properties built since 2010, and almost four times larger than deals signed in properties built pre-2010. On average, new leases were double the size of renewals, a reversal from the previous quarter when renewals surpassed new deals," it said in an analysis.
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Why exactly that's case was not made clear by CBRE, but it could be because tenants are looking for higher quality offices in the market, which has become more of a prevalent trend in the post-pandemic world.
Oracle took the top deal with its 65,548-square-foot sublease in Downtown. That was followed by new leases made by Acadia Healthcare and Phoenix Consulting Group, which both secured 63,111 square feet and 20,632 square feet, respectively.
That said, office in Nashville overall looks stable.
Most notably, net absorption surged to hit a 12-month high of 263,000 square feet.
"Occupancies within prime properties during Q1 contributed 404,757 sq. ft. of positive absorption to the net total, yet several flight-to-quality relocations whose previous spaces remained vacant dampened total net absorption for the market," CBRE wrote.
Vacancy fell by a full percentage point year-over-year to 17.4 percent. The North Nashville submarket averaged the lowest rates, at just 2.8 percent.
Average rents increased by 7.7 percent from 12 months prior and 1.5 percent from the fourth quarter to reach $36.61 per square foot gross.
Additionally, office construction dropped by 4.5 percent year-over-year and 2.8 percent from the previous three months.
In the future, CBRE forecasted that new leases exceeding 10,000 square feet in the first quarter could lift net absorption up even further.
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