October 2021

Nashville Unseats Raleigh as No. 1 in ULI Ranking for Real Estate Investment

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Friday October 15, 2021

Nashville Unseats Raleigh as No. 1 in ULI Ranking for Real Estate Investment

North Carolina Capital Drops to Second Place While Phoenix Surges Past Austin for Third Spot

From CoStar:

Nashville, Tennessee, leaped over the capitals of North Carolina and Texas to become the most promising market for real estate and investor demand next year in the latest ranking from an influential industry research group.

Nashville moved to the top spot from No. 3 on the annual “Emerging Trends in Real Estate” report for the Urban Land Institute research and public policy organization produced by consulting firm PwC.

ULI’s 2022 report is based on surveys and direct interviews with about 2,000 real estate professionals on what they consider to be the best markets in the coming year. Private property owners or developers represent a third of those interviewed, followed by those with real estate advisory, service firms or asset management roles.

While the pandemic wreaked havoc on real estate initially, the report noted that interviews revealed “surprising resilience of the economy and of property markets generally, inspiring greater confidence in the industry’s collective capacity to adapt to changing market conditions and future unknown risks.”

The Raleigh-Durham area of North Carolina, where there is a major life science research and manufacturing presence, rose to the top for investment prospects on last year’s report. Raleigh-Durham dropped to No. 2 on the 2022 report behind Nashville, a city that has seen tremendous growth, and the city is poised for more because of proposed employment hubs from the likes of online retailer Amazon and computer software and services provider Oracle.

Nashville’s Progress

Nashville entered ULI’s top 10 in 2016.

Downtown Nashville’s changing skyline represents the most visible benchmark of progress, with new office and residential towers mixed with hotels reaching skyward.

In 2018, Seattle-based e-commerce giant Amazon chose Nashville for an operations center with the promise of 5,000 jobs filling two office towers under construction in Nashville Yards, a massive new development at downtown’s western edge.
Financial firm AllianceBernstein announced plans to relocate its headquarters to Nashville from New York City in 2018, bringing more than 1,000 jobs and filling space at Fifth + Broadway, a mixed-use development that rose out of the former convention center that officially opened this year. A new convention center opened in 2013, which unleashed a spate of hotel construction.

Like most cities, Nashville felt the pandemic pinch, notably in tourism. Tourism from the leisure side has roared back while convention business slowly returns.

This year, Austin-based software maker Oracle announced plans to build a large campus near downtown Nashville that promises to employ 8,000 highly paid tech professionals.

“Job growth kicked multifamily development into higher gear. Downtown Nashville tops the nation for units under construction, with more than 9,000 units underway,” which is more than 3,000 units above the second place Downtown Miami, according to David Kahn, CoStar’s director of market analytics for the Southeast.

Apartment investment sales in Nashville entered record territory in September with more than $2.2 billion, far exceeding the area’s 2019 record of nearly $1.9 billion.

Industrial development, which is mostly in the suburbs, has been surging as well. Investor demand has been so strong that developers now are selling projects in forward sales before the buildings are leased. That’s a change from years past when empty warehouses would sit while awaiting tenants and only sold once they were leased.

Last week, for example, Cincinnati-based Al. Neyer announced the firm sold its fourth warehouse project in the Nashville area in a forward sale. “We sold three of the four before we put shovel in the ground,” Patrick Poole, the firm’s Nashville market leader, told CoStar.

Read more from Richard Lawson with CoStar here.

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