Tenants are scooping up office space in Nashville, according to a report from CBRE. Leasing volume more than doubled in the second quarter versus the previous three months to 1.3 million square feet.
The strength was highlighted by some bigger deals, as three tenants secured signings that surpassed 100,000 square feet. This includes Holland & Knight (144,984 square feet in the Downtown submarket), Sentry Insurance (104,070 square feet in Airport North) and VUMC (101,345 square feet in West End/ Belle Meade).
"New leases continued to grow market share versus renewals by deals signed, a gradual post-pandemic trend," CBRE wrote in further context.
"Transactions were overall larger, new leases averaging 15,000 sq. ft. and renewals 12,000 sq. ft., or quarterly occupier footprint growth of nearly double across transaction types as tenants right-sized."
Demand for office space in Nashville was also strong. The 515,000 square feet posted marked the highest total since the second quarter of 2023 and the sixth consecutive quarter of positive net absorption.
Asking rents rose by 4.5 percent from the previous three months to $38.25 per square foot. CBRE attributed the growth to new construction availability and the fight for quality.
"Properties built after 2010 commanded a 70.5% asking rent premium over properties built before 2010, averaging $54.61 per sq. ft. and $32.03 per sq. ft., respectively," CBRE said.
Meanwhile, the performance in the categories comes as deliveries spiked to 841,000 square feet, which outpaced demand. That led to vacancy climbing by 33 basis points to 18.3 percent.
However, fundamentals could become more favorable looking ahead. CBRE forecasts that supply will be limited in the near future, leading to "vacancy compression."
"As the development pipeline slows, tightened supply within new construction properties could support higher rents within remaining availability," CBRE further predicted.
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