Q2 2012 Nashville, Tennessee Commercial Real Estate Economy

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Q2 2012 Nashville, Tennessee Commercial Real Estate Economy

Nashville’s remarkable ability to attract major corporate expansions and relocations, a key element in the success and diversification of the local economy over a number of years, has again come to the fore. Substantial job creation is expected as a result of Amazon.com’s recent decision to move to the area (see the Industrial Space section of this report). General Motors’ revamping of its former Saturn plant in Spring Hill also will add substantial numbers to local employment rolls. As reported in the Nashville Business Journal in late September, locally-based national health care giant HCA Holdings Inc. “is creating more than 1,000 jobs as part of a major expansion in Davidson County” (see Special Real Estate Factors). And these are only recent additions to the economic base.

While job growth has slowed in the recent term, it seems likely that these, related and other corporate activities, other factors permitting, may drive larger increases in the period ahead. According to data provided by the U.S. Bureau of Labor Statistics (BLS), total non-farm employment in the local Metropolitan Statistical Area (MSA) was up just 3,300 jobs (0.4%) from 12 months prior. Over the preceding 12 months, the gain was 21,400 jobs (2.9%). Employment per the latest August, meanwhile, remained down just 12,200 jobs (1.6%) from the pre-recession August 2007 peak. The lion’s share of recession-related job losses, accordingly, has been recovered.

While Nashville’s housing market did not escape the pangs of the recession, all signs at present point to healing. According to Greater Nashville Association of Realtors (GNAR) as reported by the Journal in September, August sales, at 2,606 closed transactions, were up 27.3% year-over-year. “The August home sales numbers indicate that the Greater Nashville real estate market is demonstrating an important characteristic—sustainability,” stated a top GNAR executive in a prepared statement. “There have been four consecutive months with closings above 2,400—the first occurrence since 2007. This is encouraging evidence these positive trends could continue in the coming months.” Average days on the market for single-family homes was 81 days.

Pending sales were up as well: the 2,572 pending transactions were up 25.2% year-over-year. The median single-family selling price for August was $175,000, up 1.8% since August 2011. Inventory on the market, meanwhile, declined 14.7% to 18,223 homes. Also in decline is the rate of foreclosure. According to CoreLogic as reported by the Journal in late September, the 1.53% of Nashville area home mortgages reported in foreclosure as of July were down 0.29 percentage points year-over-year. “Nashville’s foreclosure rate was lower than the national average of 3.25%.”

Rounding out the favorable news from the housing front, the 5,531 residential units granted building permits through the first eight months of 2012 were up fully 86.8% from the total awarded during the comparable period of 2011, according to data provided by the U.S. Bureau of the Census. Of these, 3,604 were for detached single-family homes, up 27.5%.