As construction is plummeting for industrial in Nashville — fundamentals are prospering. Just 3.8 million square feet of product was underway in the second quarter, marking the lowest levels seen since the third quarter of 2020, according to a market report from CBRE.
The low levels of development come as rents enjoyed a 12.7 percent year-over-year surge to $10.04 per square foot. The R&D/Flex submarket was home to the highest rents at the end of the first half, averaging $13.92 per square foot. MetroCenter/Cocrill followed, with its average of $13.62 per square foot.
Also, vacancy was down 26 basis points to 3.1 percent at the end of June.
"Nashville was the second tightest market in the U.S. behind Omaha (2.0%) and was one of only five markets with a vacancy rate under 4.0%," CBRE said.
Interestingly, completions (1.9 million square feet) for industrial in Nashville hit their highest levels since the third quarter of 2023. However, net absorption of two million square feet outpaced the supply that came online. And of the completions, 18.9 percent were preleased to 3PLs.
"Properties built since 2015 absorbed 16.9 times more space than properties built pre-2015, yet net absorption remained positive in older properties," CBRE further explained.
Moreover, leasing volume soared by 22 percent year-over-year. SERVEONE took the largest signing, thanks to its 750,000 square foot deal in the Northeast/ I-65N Corridor submarket. Confidential — Auto and FedEx followed, with their 717,160 square feet and 558,600 square feet leases in I-840, respectively.
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