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Nashville’s Multifamily Development Pipeline is Among the ...€¦ · Nashville MSA | Housing...
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Nashville MSA | Housing Permit Activity 0 5,000 10,000 15,000 20,000 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 New Housing Permits One Unit Permit Multi-Unit Permit Source: U.S. Census Bureau Nashville’s Multifamily Development Pipeline is Among the Nation’s Most Active Research & Forecast Report NASHVILLE | MULTIFAMILY 2nd Quarter 2016 Key Takeaways > Supply totaled 4,899 units at the end of 2Q 2016, more than double the 10-year average of 2,120 units. > Nashville’s multifamily market absorbed 5,126 units over the last 12 months, the largest volume since 2010. Central Nashville and Murfreesboro/Smyrna have led the metro in demand over the past few quarters. > Nashville’s annual rent growth of 7.2% in 2Q 2016 ranked among the top ten in the nation. Nashville Multifamily Market Nashville’s development pipeline remains one of the nation’s most active, as robust demand drivers have sustained the region’s ability to absorb new completions. Favorable demographic trends, expanding economy and employment growth have been a boon to the multifamily apartment in Nashville. At the end of 2Q 2016, work was underway on 50 multifamily properties totaling 12,113 units. Of that total, 7,680 units are scheduled for completion in the next 12 months. Over 40% of these units are located in Central Nashville. Properties under construction include SoBro, Giarratana’s 342-unit apartment in Central Nashville to be completed in December 2016, Alliance Residential Company’s 330-unit Broadstone 8th South, and the 451-unit LC Province that is scheduled to open in September 2017 in Mount Juliet. Nashville’s apartment market recorded average occupancy of 96% over the last five years, leading to increased demand and rent growth levels. In the year-ending 2Q 2016, transaction volumes totaled $1.4 billion, a 1.9% increase year-over- year. Nashville had the 15th largest volume in the south. Transaction activity yielded an average price of about $116,000 in year-ending 2Q 2016. The average cap rate for YE 2Q 2016 stood at 5.29%, the 15th lowest among the top 100 U.S. metros. In the coming year, supply is expected to remain in record-high territory, with 7,680 units scheduled to complete within that time frame. Occupancy may decrease slightly and rent growth could slow, yet market indicators suggest that Nashville has the potential to be an outperformer with regards to occupancy and rent growth. UNITS UNDER CONSTRUCTION SUBMARKET UNITS Central Nashville 5,296 West Nashville 1,764 Far East Nashville 1,065 Franklin/Brentwood 962 North Nashville 929 South Nashville 650 East Nashville 569 Murfreesboro/Smyrna 504 Sumner County 374 Southeast Nashville 0 Total 12,113 UNITS COMPLETING IN 12 MOS. SUBMARKET UNITS Central Nashville 3,695 Far East Nashville 1,065 West Nashville 843 North Nashville 680 Franklin/Brentwood 601 Murfreesboro/Smyrna 504 Sumner County 374 East Nashville 324 South Nashville 320 Southeast Nashville 0 Total 8,406 Multifamily Development - Submarket Rankings Summary Statistics 2Q 2016 Nashville Multifamily Market Existing Units 129,492 Quarterly Supply 1,752 Current Occupancy Rate 96.6% Quarterly Occupancy Change 0.5% Under Construction (units) 12,113 Monthly Rent $1,085 Rent per Square Foot $1.119 Quarterly Rent Change 2.6% Annual Rent Change 7.2% One-Year Forecast Annual Supply 7,680 units Annual Demand 5,636 units Annual Rent Change 4.6% Occupancy -1.3%
Transcript of Nashville’s Multifamily Development Pipeline is Among the ...€¦ · Nashville MSA | Housing...
Nashville MSA | Housing Permit Activity
0
5,000
10,000
15,000
20,000
2017201620152014201320122011201020092008
New
Hou
sing
Per
mits
One Unit Permit Multi-Unit Permit
Source: U.S. Census Bureau
Nashville’s Multifamily Development Pipeline is Among the Nation’s Most Active
Research & Forecast Report
NASHVILLE | MULTIFAMILY2nd Quarter 2016
Key Takeaways > Supply totaled 4,899 units at the end of 2Q 2016, more than double the 10-year average of
2,120 units.
> Nashville’s multifamily market absorbed 5,126 units over the last 12 months, the largest volumesince 2010. Central Nashville and Murfreesboro/Smyrna have led the metro in demand overthe past few quarters.
> Nashville’s annual rent growth of 7.2% in 2Q 2016 ranked among the top ten in the nation.
Nashville Multifamily MarketNashville’s development pipeline remains one of the nation’s most active, as robust demand drivers have sustained the region’s ability to absorb new completions. Favorable demographic trends, expanding economy and employment growth have been a boon to the multifamily apartment in Nashville.
At the end of 2Q 2016, work was underway on 50 multifamily properties totaling 12,113 units. Of that total, 7,680 units are scheduled for completion in the next 12 months. Over 40% of these units are located in Central Nashville. Properties under construction include SoBro, Giarratana’s 342-unit apartment in Central Nashville to be completed in December 2016, Alliance Residential Company’s 330-unit Broadstone 8th South, and the 451-unit LC Province that is scheduled to open in September 2017 in Mount Juliet. Nashville’s apartment market recorded average occupancy of 96% over the last five years, leading to increased demand and rent growth levels.
In the year-ending 2Q 2016, transaction volumes totaled $1.4 billion, a 1.9% increase year-over-year. Nashville had the 15th largest volume in the south. Transaction activity yielded an average price of about $116,000 in year-ending 2Q 2016. The average cap rate for YE 2Q 2016 stood at 5.29%, the 15th lowest among the top 100 U.S. metros.
In the coming year, supply is expected to remain in record-high territory, with 7,680 units scheduled to complete within that time frame. Occupancy may decrease slightly and rent growth could slow, yet market indicators suggest that Nashville has the potential to be an outperformer with regards to occupancy and rent growth.
UNITS UNDER CONSTRUCTIONSUBMARKET UNITS
Central Nashville 5,296
West Nashville 1,764
Far East Nashville 1,065
Franklin/Brentwood 962
North Nashville 929
South Nashville 650
East Nashville 569
Murfreesboro/Smyrna 504
Sumner County 374
Southeast Nashville 0
Total 12,113
UNITS COMPLETING IN 12 MOS.SUBMARKET UNITSCentral Nashville 3,695
Far East Nashville 1,065
West Nashville 843
North Nashville 680
Franklin/Brentwood 601
Murfreesboro/Smyrna 504
Sumner County 374
East Nashville 324
South Nashville 320
Southeast Nashville 0
Total 8,406
Multifamily Development - Submarket Rankings
Summary Statistics 2Q 2016 Nashville Multifamily Market
Existing Units 129,492
Quarterly Supply 1,752
Current Occupancy Rate 96.6%
Quarterly Occupancy Change 0.5%
Under Construction (units) 12,113
Monthly Rent $1,085
Rent per Square Foot $1.119
Quarterly Rent Change 2.6%
Annual Rent Change 7.2%
One-Year Forecast
Annual Supply 7,680 unitsAnnual Demand 5,636 unitsAnnual Rent Change 4.6%Occupancy -1.3%
OCCUPANCY
SUBMARKET OCCUPANCY %
North Nashville 98.3%
Southeast Nashville 97.8%
South Nashville 97.3%
Far East Nashville 97.2%
West Nashville 96.9%
Sumner County 96.8%
East Nashville 96.7%
Murfreesboro/Smyrna 95.3%
Central Nashville 94.8%
Franklin/Brentwood 94.2%
MONTHLY RENT
SUBMARKET RATE
Central Nashville $1,592
Franklin/Brentwood $1,411
West Nashville $1,164
Murfreesboro/Smyrna $1,084
Far East Nashville $1,019
South Nashville $992
Sumner County $985
East Nashville $965
North Nashville $917
Southeast Nashville $889
Historical Rental Rates
67
8
910
3
245
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1. Central Nashville2. East Nashville3. Southeast Nashville4. South Nashville5. West Nashville6. North Nashville7. Sumner County8. Far East Nashville9. Murfreesboro/Smyrna10. Franklin/Brentwood
Submarket Overview - 2Q Rankings
QTRLY RENT CHANGE
SUBMARKET RATE
Franklin/Brentwood 4.6%
East Nashville 3.2%
West Nashville 3.1%
Far East Nashville 3.0%
Southeast Nashville 2.5%
Murfreesboro/Smyrna 2.5%
North Nashville 2.4%
Sumner County 2.0%
South Nashville 1.5%
Central Nashville 0.1%
QTRLY OCCUPANCY CHANGE
SUBMARKET RATE
Franklin/Brentwood 1.3%
South Nashville 1.1%
North Nashville 1.0%
West Nashville 0.8%
Southeast Nashville 0.7%
Central Nashville 0.5%
Sumner County 0.3%
East Nashville 0.2%
Far East Nashville -0.1%
Murfreesboro/Smyrna -1.0%
Source: MPF Research
Historical Occupancy Rates
Source: MPF Research
#5#4#8#5Best City in America
-Travel + Leisure (July 2016)
City Americans Are Moving To - Forbes.com (June 2016)
Best Big City for Jobs 2016 - Forbes (May 2016)
Best Cities for Young Workers - Credit Sesame (May 2016)
$600
$700
$800
$900
$1000
$1100
2Q161Q164Q153Q152Q151Q154Q143Q142Q141Q144Q133Q142Q131Q134Q123Q122Q121Q124Q113Q112Q111Q11
2011 2012 2013 2014 2015 2016
93.8%
94.1%
95.0%
95.6%
95.1%
95.7%95.8%
95.1%
94.9%
95.8%
96.0% 96.0%
95.8%
96.1% 96.1%
95.1%
95.5% 95.5%
96.3%
95.2%
96.6%96.3%
2 Nashville Research & Forecast Report | 2Q 2016 | Multifamily | Colliers International
2Q INVESTMENT ACTIVITY
PROPERTY BUYER UNITS SALE PRICE PRICE/UNIT
The Landings of Brentwood
Steadfast Apartment REIT 724 $110,000,000 $151,934
The Overlook Apartments Passco Companies 452 $52,100,000 $115,280
Opus 29 Security Properties 139 $34,400,000 $247,753
Note 16 Apartments Security Properties 86 $19,300,000 $224,753
The Reserve at Drakes Creek Summit Equity 168 $12,200,000 $72,768
380 Harding Summit Equity 160 $11,300,000 $70,527
Villages of Gallatin Gallatin Leased Housing Associates 64 $4,700,000 $73,438
DEVELOPMENT LEADERS
DEVELOPER UNITS COMPLETED IN THE LAST 12 MOS.
UNITS UNDER CONSTRUCTION
TOTAL UNITS
Giarratana Nashville LLC 146 834 980
Lifestyle Communities 403 451 854
Bristol Development Group 393 392 785
Lennar Corp 0 664 664
Crescent Communities 0 612 612
Source: Real Capital Analytics
Cost of Living Index
Source: Nashville Area Chamber of Commerce
Seattle 140.3
San Francisco 176.4
Los Angeles 140.3
Austin 96.0
Tampa 91.6
Chicago 116.2
Indianapolis 91.1
Nashville 95.2
Atlanta 99.9
Raleigh 90.5
Charlotte 96.4
New York City 227.4
Boston 144.3
Source: FRED Economic Data
Employment/Unemployment
650
700
750
800
850
900
950
May-16Jan-16Sept-15May-15Jan-15Sep-14May-14Jan-14Sep-13May-13Jan-13Sep-12May-12Jan-12Sep-11May-11Jan-11Sep-10May-10Jan-10
Non-
Farm
Em
ploy
men
t
0%
2%
4%
6%
8%
10%
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Unemploym
ent Rate
Unemployment RateNon-Farm Employment
Terra House
3 Nashville Research & Forecast Report | 2Q 2016 | Multifamily | Colliers International
Copyright © 2015 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. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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