1Q 2012 Nashville Office
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Transcript of 1Q 2012 Nashville Office
www.ColliersNashville.com
1Q
2012
Forecast
2012
VACANCY
NET ABSORPTION
CONSTRUCTION
ASKING RATE
MARKET REPORTNASHVILLE
First Quarter Is a Good Start for the Upcoming Year
The past two years have been a recovering period for the national and local economies. Recently, businesses have seen the benefits of expansion, relocation and growth due to low rental rates. This frame of mind brings more businesses to the area. Proving that Nashville is a desirable location time and time again are a series of positive rankings in national surveys on business and the local economy’s status.
Nashville was named one of the top twenty “Best Performing” US cities by Business Insider in March, the number two city for “Most Cost-Attractive Business Location” in KPMG’s Competitive Alternatives survey, and Tennessee was named as the number one state for “Low Business Taxes & Regulations” by the US Chamber of Commerce. The city boasts an unemployment rate of 6.9%, which is well below the national average of 8.3%, and the gross metro product (GMP) is up 7.0% from the pre-recession peak.
In addition to a low unemployment rate, growing GMP, and attractive business regulations, there are other features making Nashville a solid choice for businesses such as reasonable asking rates, coming in at an average of $18.32 per square foot for all building types. We saw positive absorption in seven of the nine submarkets for an overall absorption of 80,253 square feet. Though still considered low by usual industry standards for a first quarter compared to recent recession-impacted data, this quarter’s absorption is headed in the right direction and is showing movement in the market.
MARKET INDICATORS
1Q 2012 | OFFICE
Nashville Office MarketSummary of Statistics, Q1 2012
Vacancy Rate: 10.5%
Absorption: 80,253 SF
Under Construction: 333,496 SF
Asking Rents Per Square Feet:Class A: $21.86Class B: $18.20Class C: $13.89Overall Rental Rates: $18.32
Downtown Class A: $18.21Suburban Class A: $17.67
Quarterly Comparisons and Totals
QUARTER BLDGSTOTAL
INVENTORY SF
DIRECT VACANT
DIRECT VACANCY
RATE
SUBLEASE VACANCY
RATE
NET ABSORPTION
CURRENT QTR
NET ABSORPTION
YTD SF
UNDER CONSTRUCTION
SF
AVG ASKING RATE
Q1.12 516 35,144,134 2,328,067 10.5% 2.1% 80,253 80,253 333,496 $18.32
Q4.11 382 31,039,759 3,432,515 11.1% 2.1% 122,589 493,865 333,496 $19.92
Q3.11 380 31,039,756 3,399,841 11.0% 2.2% 105,707 285,561 320,820 $19.78
Q2.11 381 31,056,877 3,506,318 11.3% 2.2% 166,274 210,025 267,832 $18.05
Q1.11 419 33,633,050 3,641,291 11.9% 2.0% 68,010 68,010 128,110 $19.71
Updated 7-2011
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MARKET REPORT | Q1 2012 | OFFICE | NASHVILLE
www.ColliersNashville.com
Having shown Nashville’s resiliency against the downfalls of recession through the low unemployment rate and steadily improving absorption numbers, several companies have expanded or relocated headquarters here. The Nashville Chamber of Commerce cites that 168 business have relocated to Nashville in the past five years. We can now add Harris Research, Inc. (HRI) to that list, which announced in March that it would be opening a regional headquarters in town.
Companies are also expanding in the area
including HCA’s IT operations, ServiceSource, Jackson National Life Insurance Co. and Symmetry Medical. “Despite the recession, Nashville continues to show remarkable strength and the ability to still grow and expand,” states Managing Partner Nate Greene CCIM. “This first quarter of 2012 has just further cemented my belief that our market is on the right track and the rest of the year is going to show more and more market improvement.”
Class A Class B Class C
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Airp
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Airp
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Bren
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Cool
Spr
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Dow
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Met
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Rive
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1Q 2012 | Vacancy Space By Type
Class A 1,191,089 SF
Class B 1,873,293 SF
Class C 623,685 SF
1Q 2012 | Net Absorption By Submarket
RECENT SALES TRANSACTIONSSALES ACTIVITY
PROPERTY BUYER SALE PRICE SIZE SF SUBMARKET
Synergy Business Park Boyle Investment Company $62,800,000 496,235 Brentwood
Baker Donelson Center SunLife Financial $47,000,000 228,567 DowntownFirst Image Building David L. Black $8,700,000 110,000 MetroCenter
30 North Offices 30 North Offices $2,960,000 36,000 West End
333 Union Street Andy’s Union LLC $1,641,283 34,177 Downtown
RECENT LEASING TRANSACTIONSLEASING ACTIVITY
PROPERTY TENANT SIZE SF TYPE SUBMARKET
Highland Ridge III ACS 17,794 New Airport North
Maryland Park Center Forterus 15,000 New Brentwood
Metro Airport Center I ACS 14,213 Expansion Airport North
Cool Springs III Carlise Tire 10,405 New Cool Springs/Franklin
DEFINITIONS
Absorption - The net change in occupied space between the current quarter and the previous quarter, calculated by summing all the positive changes in occupancy and subtracting all the negative changes in occupancy.
Class A Building - Most prestigious buildings competing for premier office users with rents above average for the area. Buildings have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence.
Class B Building - Buildings competing for a wide range of users with average rents. Building finishes are fair to good for the area and systems are adequate but the building does not compete with Class A at the same price.
Class C Building - Buildings competing for tenants requiring functional space at rents below the average for the area.
Total Building SF - All single & multi tenant office buildings above 10,000 SF excluding medical, government and owner occupied.
Vacancy Rate - Percentage rate of the total amount of physically vacant space divided by the total amount of existing inventory.
*Bold text denotes Colliers International Nashville transactions.
MARKET REPORT | Q1 2012 | OFFICE | NASHVILLE
www.ColliersNashville.com
HIGHLIGHTS FROM THE QUARTER• We welcomed the well-respected
office brokerage team of Bill Neill and Mark Woolwine in January of this year. Both Bill and Mark have worked in commercial real estate for more than 20 years.
• Company partners, Nate Greene and Bert Mathews were named in the Nashville Post’s IN CHARGE issue, a compendium of Middle Tennessee’s business, political and civic power brokers. Nate and Bert were recognized among 16 other real estate industry leaders.
• Reaffirming Colliers International’s leadership in the commercial real estate industry, The Lipsey Co., the industry’s leading training consultancy, has ranked Colliers
among the top global brands in a new survey of more than 50,000 industry professionals.
• Colliers International headed one of the largest global giving campaigns called Everyone Gives. In just 17 days, more than 12,000 people participated to pledge over $700,000 to thousands of charities across the globe. With such a great success this first year, we are hopeful that 2013’s campaign will be an even greater success. For more information regarding the Everyone Gives campaign, please visit www.EveryoneGives.org.
UPDATE Market Comparisons
OFFICE MARKET
SUBMARKET BLDGS TOTALINVENTORY
SF
DIRECTVACANT
SF
DIRECTVACANCY
RATE
SUBLEASEVACANCY
RATE
VACANCY RATE PRIOR
QTR
NET ABSORPTIONCURRENT QTR
NET ABSORPTION
YTDUNDER
CONSTRUCTION
AVG ASKING RATE
AIRPORT NORTH 43 3,902,536 354,658 9.1% 2.5% 10.3% 53,253 53,253 0 $16.86
AIRPORT SOUTH 71 3,447,839 562,754 16.3% 1.2% 16.3% 4,971 4,971 0 $12.93
BRENTWOOD 86 5,007,163 270,392 5.4% 0.7% 5.1% 31,785 31,785 0 $20.25
COOL SPRINGS/FRANKLIN 91 5,829,273 354,378 6.1% 0.8% 7.6% 16,084 16,084 175,000 $19.33
DOWNTOWN 70 8,113,820 1,511,980 18.6% 3.7% 19.3% 1,434 1,434 90,000 $18.21
GREEN HILLS/MUSIC ROW 64 2,678,130 172,188 6.4% 1.1% 4.7% 9,079 9,079 0 $20.72
METROCENTER 17 1,572,901 119,636 7.6% 1.0% 6.1% (29,386) (29,386) 68,496 $15.64
RIVERGATE/NORTH 23 655,433 91,726 14.0% 0.0% 16.7% 284 284 0 $14.76
WEST END/BELLE MEADE 51 3,937,039 250,355 6.4$ 2.9% 6.6% (17,251) (17,251) 0 $20.83
CLASS
A 137 17,103,249 1,191,089 7.0% 3.2% 7.9% 7,759 7,759 175,000 $21.86
B 276 14,689,662 1,873,293 12.8% 1.2% 13.7% 50,852 50,582 158,496 $18.20
C 103 3,351,223 623,685 18.6% 0.2% 18.0% 11,642 11,642 0 $13.89
TOTAL 516 35,144,134 3,688,067 10.5% 2.1% 11.0% 80,253 80,253 333,496 $18.32
MARKET REPORT | Q1 2012 | OFFICE | NASHVILLE
www.ColliersNashville.com
Richard Fulton, CCIMDIR +1 615 850 2719
Vice President
Nate Greene, CCIMDIR +1 615 850 2729Managing Partner &
President
Bert MathewsDIR +1 615 850 2701Partner & President
Chris Grear, CCIMDIR +1 615 850 2702
Vice President
John Gifford, CCIMDIR +1 615 850 2713
Senior Associate
Shane Douglas, CCIMDIR +1 615 850 2734
Associate
Lee ParadiseDIR +1 615 850 2717
Vice President
Vickie SaitoDIR +1 615 850 2711
Senior Associate
UNITED STATES:
NashvilleNate GreeneManaging Partner & President300 BroadwayNashville, TN, 37201TEL +1 615 850 2729FAX +1 615 850 3229
RESEARCHER:
NashvilleAllison SchepmanDirector of Marketing300 BroadwayNashville, TN, 37201TEL +1 615 850 2748FAX +1 615 244 2957
512 offices in 61 countries on 6 continents
• $1.5 billion in annual revenue• 979 million square feet under management
• 12,500 professionals
Copyright © Colliers International
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it.
Accelerating success.
ABOUT COLLIERS INTERNATIONAL – NASHVILLE
Collier International Nashville is one of the largest full service commercial real estate firms in the region. Its brokers provide a myriad of services to owners and tenants with a commitment to excellence that has won them the respect of local, national and international clients for many years. With more than 25 employees, the firm serves clients ranging from Fortune 500 corporations, major banks and insurance companies to investors, private institutions and small businesses.
Chad PoffDIR +1 615 850 2707
Associate
Figure 1: Nashville Office Submarkets include Airport North, Airport South, Brentwood, Cool Springs/Franklin, Downtown, Green Hills/Music Row, Metrocenter, Rivergate/North and West End/Belle Meade.
BRENTWOOD
GREEN HILLSMUSIC ROW100 OAKS
COOL SPRINGS/FRANKLIN
WEST END
RUTHERFORD COUNTY
WILSONCOUNTY
RIVERGATE/HENDERSONVILLE
NORTHWEST
CENTRAL BUSINESS DISTRICT
AIRPORTSOUTH
AIRPORTNORTH
DOWNTOWNMETRO CENTER
Gallatin Rd.
Leba
non P
l.
West E
nd A
ve.
Harding Pl.
O ld Hickory Blvd.
Fran
klin
Moores Ln.
Murfreesboro Rd.
Nolensville Rd.
Done
lson
Pike
Briley
Pkwy.
Bell Rd
.
Woodmont Blvd.
Charlotte Ford, CCIMDIR +1 615 850 2751
Senior Associate
Bill NeillDIR +1 615 850 2742
Vice President
Mark WoolwineDIR +1 615 850 2732
Vice President