Residential Report: July 2015 - Downtown Nashville · RESIDENTIAL REPORT: JULY 2015 DOWNTOWN...

1 Greater Nashville Association of Realtors, “Greater Nashville Home Sales Gain Through Mid-Year,” July 6, 2015 2 https://smartasset.com/mortgage/cities-strongest-housing-recoveries, April 22, 2015 3 http://www.auction.com/blog/wp-content/uploads/2015/04/Top-Housing-Markets-Spring-2015.pdf

RESIDENTIAL REPORT: JULY 2015

Pent-up demand yields rising rents & prices while residential

projects slowly deliver in downtown Nashville

NASHVILLE DOWNTOWN PARTNERSHIP 150 4th Avenue North, G-150 Nashville, Tennessee 37219 615-743-3090 www.nashvilledowntown.com

Unprecedented demand for downtown housing product

continues to yield increased rental rates and condo prices.

Rental occupancy has remained at 97% and above for the

fourth consecutive year. Housing prices have significantly

increased over the past 24 months, while inventory has

decreased to only a 1.2 month supply of resale units (down

from a 2-month supply in 2014). While product delivery is

imminent over the next three years, demand for rental

product continues to grow. Demand for purchase product will

have little relief unless existing or under construction projects

convert. Existing demand combined with area job growth

and increasing preferences for urban living options will sustain

demand for housing in the downtown area for the immediate

future.

Nashville Housing Market: The Greater Nashville Association

of Realtors mid-year report states that sales in June, second

quarter and year-to-date are all up compared to the same

time period in 2014. June sales are up 14.4% and mid-year

sales are up 12.2%. Sales pending toward the end of June

reveal that home sales are positioned to increase again in

July. “It has been a decade since our area has experienced

as strong a month of June as we did this year. The continued

growth with jobs, the economy and consumer confidence

indicates we can expect this trend to remain.”1

Nashville is ranked #1 on a list of cities whose housing markets

have had the strongest recoveries following the Great

Recession, according to data from the Federal Housing

Finance Agency and the National Association of Realtors.2

The city’s housing market is also touted as the “third-hottest in

the U.S.” according to a new report from Auction.com that

looked at a variety of indicators for the 49 largest U.S. cities

including growth in each city’s overall economy and

population and growth in home prices.3

https://smartasset.com/mortgage/cities-strongest-housing-recoveries

http://www.auction.com/blog/wp-content/uploads/2015/04/Top-Housing-Markets-Spring-2015.pdf

RESIDENTIAL REPORT: JULY 2015 DOWNTOWN NASHVILLE

4 http://www.forbes.com/sites/erincarlyle/2015/01/27/americas-fastest-growing-cities-2015/ 5 https://smartasset.com/mortgage/the-top-ten-cities-for-creatives, July 7, 2015 6 Nashville Business Journal, “Congrats, Nashville techies: You’re helping build an “up and coming’ tech scene,” July 2, 2015 7 http://fortune.com/2014/12/23/tech-job-trends-2015/

8 POLICOM Corporation, Economic Strength Rankings, June 2015 9http://www.mensjournal.com/expert-advice/the-10-best-places-to-live-now-20150312/nashville-tennessee 10 Reuters, “Apartment Market Strength Continues in Second Quarter with 5% Annual Effective Rent Growth and 95.2%

Occupancy,” July 1, 2015

A study conducted by Forbes.com listed Nashville as one of the fastest growing cities in

America with rankings based on factors such as estimated population growth, year-over-

year job growth, gross metro product growth, federal unemployment rate and median

annual pay for college educated workers for America’s 100 most popular MSAs.4

In addition to having a burgeoning housing market and rapid growth, Nashville is nationally

acclaimed in a variety of other areas, advancing its competitiveness. Nashville was

recently ranked in the “Top Ten Cities for Creatives,” out of 176 of the largest cities in the

country. Rankings were based on the cost of living and the concentration of people

working in a creative field.5 This summer Nashville was also ranked #9 on a list of best “up-

and-coming cities for tech jobs,” by ZipRecruiter.6 Also, a study by Dice.com, reported by

Fortune, rated Nashville as the country’s second fastest-growing market for creating tech

jobs.7

For the fifth year in a row, POLICOM, an independent research firm that analyzes local and

state economies, has ranked Nashville as one of the top ten (#7) strongest economies out

of 381 U.S. Metropolitan Statistical Areas (MSAs) on factors such as per capita income and

wage growth.8 Men’s Journal ranked Nashville as #2 on the list of top 10 cities to live now

due to quality of life, construction boom, thriving tech scene and affordability.9

According to 2Q data released by Axiometrics and reported by Reuters, Nashville

continues to exceed the national average for rental growth, annual effective rent growth

and occupancy. The national annual effective rent growth is 5% and occupancy is 95.2%.

Currently Nashville’s annual effective rent growth is 6.1% and the region’s occupancy rate

is 95.9%.10

https://smartasset.com/mortgage/the-top-ten-cities-for-creatives

http://www.mensjournal.com/expert-advice/the-10-best-places-to-live-now-20150312/nashville-tennessee


Peer City Comparison

Downtown Nashville’s population and residential units continue to trail

peer cities with over 8,600 residents and 5,096 units by the end of 2015.

Lack of residential zoning until the mid-1990’s put downtown Nashville

behind in urban residential development.

Figure 1 Year End Projections– Downtown Residents*

2014 2015 2016

Nashville 7,840 8,663 10,254

Austin 10,741 13,536 13,851

Charlotte 11,842 12,600 14,089

Indianapolis 23,758 24,994 NA

Memphis 24,300 24,367 25,402

Figure 2 Year End Projections–Downtown Housing Units*

2014 2015 2016

Nashville 4,612 5,096 6,032

Austin 6,754 8,668 8,884

Charlotte 7,690 8,182 9,155

Indianapolis 14,306 15,189 NA

Memphis 14,500 14,548 15,238

In 2014, downtown Nashville’s downtown population grew 6% which was

higher than its peer cities. By year-end 2015, Austin is estimated to lead

peer city population growth at 26%, followed by Nashville at 10.5%

Charlotte ranks at 6.4% growth followed by 4% in both Indianapolis and

Memphis.

Housing units and residents are both expected to increase 18% in

downtown Nashville from year-end 2015 to year-end 2016. Austin expects

to slow down to only 2% growth in both housing and residents while

Charlotte trails Nashville at 11.8% growth. Peer city downtown land area

comparisons show that Nashville, Austin and Charlotte are the most

comparable.

Figure 3 Rental Occupancy Rate*

2015

Nashville 97%

Austin 93%

Charlotte 96.3%

Indianapolis 95.4%

Memphis 93%

Figure 4 Land Area Comparisons*

Square Miles Acres Density per Acre

Nashville 1.8 1,180 7.3

Austin 1 640 21

Charlotte 2 1,300 9.7

Indianapolis 6.5 4,160 5.8

Memphis 6.5 4,160 5.8 *Information provided by Downtown Austin Alliance, Charlotte City Center, Indianapolis Downtown Inc.

and Downtown Memphis Commission (June 2015)


Downtown Nashville’s rental occupancy is 97%, and has remained above 95% for the past six years.

(fig. 6) It also has consistently held higher rental occupancy rates than its peer cities. A survey of

property managers conducted in June 2015 evaluated over 2,300 units in 27 properties. Sixteen of

the properties are 100% occupied and several have waiting lists. James Robertson Apartments sold

earlier this year and its 123 rental units have been taken out of inventory. Also, three rental units at

the Berger Building were rehabbed into office space. This occupancy rate also does not include

for-sale properties that have been rented out by their owners.

Downtown Housing Categories

Currently there are 4,902 downtown residential units of which 47% are rental, 49% are condo and

4% are single family units. Market rate housing constitutes 95% and affordable 5% of the housing

mix, dropping three percentage points from 2014 due to the closing of the James Robertson

Apartments. From 2000 through 2014, downtown has seen 300% population growth. (fig. 5) This is 13

times the percentage growth of the Nashville MSA, 18 times of Nashville, and over 20 times that of

the State of Tennessee during the same time period.

Figure 5 – Population Growth Comparisons

Population Growth 2000 2014 % Growth

Downtown 1,960 7,840 300%

Nashville 569,891 668,347 17%

Nashville MSA 1,453,577 1,792,649 23%

Tennessee 5,689,283 6,549,352 15% Source: Nashville Downtown Partnership 2015, US Census Bureau 2014

Rental Market

The 2,305 rental units within 27 properties in downtown Nashville make up 47% of the current

downtown housing mix. Currently, there are there are six rental projects under construction and

nine additional rental projects planned/announced that could deliver 4,204 units by 2018. If all

planned projects are realized, the total number of rental units’ downtown would rise to 6,509,

increasing rental product to 71% of the downtown housing mix.

Downtown apartments have had some of the highest occupancy rental rates in the Greater

Nashville area since 2007. Currently, downtown has an occupancy rate of 97%, and has been

over 95% since 2010 even with the addition of new rental product entering the market.

Occupancy rates remained at 92% or above even through the economic downturn (fig. 6).

According to the May 2015 survey of property managers, the downtown core is effectively full at

99%, Rolling Mill Hill is 96%, Rutledge Hill/SoBro is 100% and The Gulch is 95% occupied.

Figure 6 – Downtown Nashville Rental Occupancy Comparisons

Rental Occupancy Rate– Year Downtown Greater Nashville

2007 95% 94.84%

2008 93% 90.60%

2009 92% 90.20%

2010 95% 92.54%

2011 96% 93.36%

2012 98% 95.41%

2013 98% 95.16%

2014 98% 95.93%

2015 97% 94.95% Source: 1Q 2015 Greater Nashville Apartment Association Market Study, NDP Property Manager Survey May 2015


11Nashville, Tennessee, Municipal Code BL2014-951

In addition to the high downtown rental occupancy rate, the shadow market units (i.e.

individual-owned units within condominium properties) continue to rent at increasing rates. At

least 430+ additional condo units are leased. Most condominium properties have capped

percentages for rental units and strict monitoring by property management aids in identifying

this number.

The popularity of Short-Term Rental Properties (STRP) has surged downtown in the past 24

months, prompting the City of Nashville to pass Ordinance No. BL2014-951 and Ordinance No.

BL2014-909 to regulate this practice through a permit process. Nashville’s rising popularity

coupled with a shortage of hotel rooms and growing interest in unique travel stays and

amenities have created the perfect storm for the conversion of many downtown units to STRP.

A STRP is “defined as a residential dwelling unit, containing not more than four sleeping rooms

and that is used and / or advertised for transient occupancy.”11 The law applies to all

properties (including rooms and guest houses) that are rented for less than 30 consecutive

days to the same occupant. According to the Metro Nashville Codes Department, as of July

1, 2015, 75 permits have been issued for units downtown. Although difficult to track, it is more

likely that STRP are conversions from rental units than from owner-occupied condos due to

strict homeowner’s association rules and lack of provisions for this type of use in Master Deeds

for large residential properties.

Apartment rents increased over the past 36 months across the studio, one-, and two-bedroom

categories. The three-bedroom rent decreased on the high end due to a single rental unit

converted to a private residence, thus taken out of the mix. In the past 12 months, rents on

the high-end increased 46% for studios, 10% for one-bedroom, and 6% for two-bedroom units.

(fig. 7)

Figure 7 – Downtown Nashville Market Rate Rental Comparisons

Rental Market 2012 2013 2014 2015

SIZE 419 - 4,500 SF 419 - 4,500 SF 419 - 4,500 SF 419 – 2,059

MARKET RATE

CATEGORY

Studio $570 - $1,300 $590 - $1,300 $630 - $1,300 $630 - $1,900

1 bedroom $670 - $1,700 $700 - $1,899 $730 - $2,000 $730 - $2,200

2 bedroom $822 - $2,700 $858 - $2,799 $878 - $3,114 $878 - $3,300

3 bedroom $1,400 - $4,000 $1,400 - $4,000 $1,400 - $4,000 $1,400 - $3,200

According to a survey of property managers and leasing agents in downtown rental

properties, the units that yield the highest square foot prices are the studios ranging from 419 –

600 SF in newer rental properties that are walkable to restaurants and amenities. Some studio

properties in The Gulch rent between $3 and $3.48 per square foot.

There are 255 affordable rental units in four properties that make up 11% of the rental market

and 5% of the overall downtown housing market. (fig. 8) The previously affordable property

James Robertson Apartments was purchased in late 2014, taking 123 affordable rental units

out of inventory.


Figure 8 – Downtown Nashville Affordable Rental Comparisons

Rental Market 2015

SIZE 500 - 1,554 SF

AFFORDABLE CATEGORY

Studio $618 - $651

1 bedroom $658 - $693

2 bedroom $827

3 bedroom $905 - $953

Condominium Market

Downtown Nashville currently has 2,384 condo units within 40 properties. Condominiums

make up 49% of downtown housing. Twelve Twelve, the first condo project downtown since

Terrazzo in 2009, began delivering units in late 2014, and is currently 71% sold. Research in

early July indicates that there are only 40 re-sale units available to purchase across

downtown (15 under contract) which results in a 1.2 month supply, the lowest level seen in

the downtown market.

An assessment of four downtown high-rise properties shows that price per square foot of

condos has recovered since the recession and increased in all four properties annually since

2011 with the exception of Viridian between 2Q 2014 to 2Q 2015.* The price per square foot

average in 2014 was skewed somewhat by the sale of a Penthouse unit that sold for $658 SF.

With the Penthouse sale taken out of the mix, the average PPSF would have been $360. The

cumulative weighted average of all four properties has risen 6% in the past 6 months and

16.5% over the past 24-months. (fig. 9-10)

Figure 9 – High-Rise Square Foot Comparisons

PPSF By Building 2008 2009 2010 2011 2012 2013 2014 2015 (Jan –

June)

Viridian $317 $275 $258 $262 $287 $306 $360 /$398* $379

Encore $319 $243 $256 $242 $294 $361 $381 $396

ICON $303 $305 $280 $358 $383 $409 $452

Terrazzo $341 $259 $272 $294 $329 $375 $485

Weighted Average $319 $295 $294 $274 $325 $361 $395 $420

Source: http://realtracs.net, July 2015

http://realtracs.net/


Figure 10 – Downtown High-rise Price per Square Foot Comparison by Building

Across these four properties, the highest square-foot prices so far this year have occurred at

Terrazzo and ICON in The Gulch. A Terrazzo unit sold for $627 per square foot and three units

sold over $500 per SF at ICON: $560, $555 and $515 per square foot.

As of June 30, Twelve Twelve is 71% sold and its units have yielded some of the highest per

square foot prices seen in downtown. The units in the building are approximately 55% 2-

bedrooms/Penthouses and 45% one-bedroom. The first units to sell included the Penthouses

and premium corner units, averaging $500 per square foot. The average price per square

foot of the remaining units for sale is $450. The average square footage of all units is 1,120 and

average price is $545,000. The property is currently scheduled to sell out by the end of 2015.

Twelve Twelve interior Twelve Twelve amenities level

200

250

300

350

400

450

500

2008 2009 2010 2011 2012 2013 2014 2015 (Jan –June)

Downtown Highrise Price Per Square Foot By Building

Viridian Encore ICON Terrazzo


Single Family Market

Single-family homes make up 4% of downtown housing inventory. Of the 213 total homes

downtown, 211 are in the Hope Gardens neighborhood. The other two single family homes

are located in the downtown core. Nine single-family residential permits were issued for Hope

Gardens over the past 12 months, and four of the sites have completed development.

Downtown Geographic Boundaries

The Nashville Downtown Partnership’s definition of downtown includes properties within the

boundaries of the river on the east, the interstate loop on the south and west, and Jefferson

Street on the north. This geographic area is termed the Greater Downtown, which includes

the Central Business Improvement District (Core), The Gulch, North Capitol, Hope Gardens,

Rutledge Hill, Rolling Mill Hill, and SoBro. Germantown is adjacent to downtown, but not

included in the residential counts.


Under Construction

Six rental projects that are under construction will deliver

1,443 units by 1Q 2017.

Terra House, a mixed-use project at Rolling Mill Hill, will offer

194 rental units and over 12,000 SF of retail space. It is

currently under construction and will deliver units this

November.

Four projects are scheduled to deliver in 2016: 909 Flats,

located on Rosa L Parks Blvd, across from the Nashville

Farmers Market, will deliver 232 units to the Hope Gardens

neighborhood in January. Thirty-one rental units will come

online in February at 1000 Division Street, a mixed-use project

under construction in The Gulch. The Carillon Apartments,

just adjacent to First Tennessee Park, will deliver 306 rental

units in 2Q 2016. The SoBro, a 32-story apartment tower, will

deliver in summer 2016 and have 313 rental units and almost

20,000 SF of retail/restaurant space.

Additionally, Church Street Apartments will deliver 367 units

to the North Gulch area by 1Q 2017.

Pipeline Projects

Scheduled to begin construction this fall, an MDHA

affordable rental project located at 10th Avenue and

Jefferson Street would deliver 54 units by the fall of 2016. 505

would be a 45-story apartment tower with 550 rental units,

set to rise at the corner of 5th & Church Street. The project

would also include 45,000 SF of amenities, including a 33,000-

square-foot outdoor rooftop amenity level. Units are planned

to deliver in late 2017.

As part of the Convention Center Redevelopment at

Broadway and Fifth Avenue, an apartment tower with 350

units would be built. City Lights, the only pipeline project to

include for-sale units, would have 71 condos deliver in mid-

2017. The project would also include a 5,000 SF restaurant

and rooftop deck amenity. Other planned residential

projects include Capitol View Development Phase I,

Crescendo, Middleton Lofts, Sixth & Lea and Stockyard

residential project.

Rendering of 505

Stockyard Project Rendering

Terra House Rendering


Demographic Profile and Trends

The Nashville Downtown Partnership’s 2015 Downtown Residential Survey had an 11%

response rate. In May 2015, approximately 4,100 surveys were distributed to homeowners and

renters by direct email and via building and condo managers. The survey focused on

residents who live in Nashville’s downtown defined by these boundaries: Jefferson Street on

the north, Cumberland River on the east and the interstate loop on the south and the west.

Where Residents Moved From

Downtown continues to attract professional, highly educated residents from across all age

groups, elevating the city’s business talent pool. Thirty-four percent (up from 29% in 2014) of

residents moved to downtown from out-of-state, and another 32% moved from outside the

city. Twenty-seven percent moved from Nashville.

Household Status

Of the respondents, 41% are single, 45% are married, 7% are separated or divorced, and 7%

have a domestic partner.(fig.11) The number of respondents in the married category has

increased 14% since 2012.

Figure 11 – Household Status

Age and Gender

Respondents exhibit a broad cross section of age groups. Thirty percent of downtown

residents are considered to be Generation Y (age 34 and under). Baby Boomers (age 51-68)

make up 38%, up 5% since 2012. Generation X (age 35-50) represents 28% of the downtown

population, decreasing from 33% in 2012. Generation Y and Baby Boomers are the two

generations expected to show the most increase in migration to urban areas going forward.

Downtown residents are 52% male and 48% female. Male and female percentages continue

to fluctuate from year-to-year.

Household Income

Eighty-two percent of downtown households earn over $60,000 annually. Fifty-eight percent

earn over $100,000 annually, and 35% earn over $150,000 each year. Two percent earn less

than $20,000 annually. (fig.12)

41%

45%

7%7%

Household Status

Single

Married

Separated/Divorced

Domestic Partner


Figure 12 – Annual Household Salary Range

Level of Education Completed

Fifty-three percent of downtown residents have a college education and an additional 34%

hold postgraduate degrees. (fig.13).

Figure 13 – Level of Education Completed Comparisons

2 or 4 Year Degree Graduate or Professional Degree

Downtown 53% 34%

Nashville 29.7% 14.2%

Nashville MSA 27.7% 11.3% Source: Downtown Residential Survey 2015, Nashville Area Chamber of Commerce, June 2015

Work Location

Sixty-four percent (up 3% from 2014) responded that their office is located outside of

downtown. Being “close to work” has been in the top four positive influences of living

downtown since the initial survey in 2004 when it was the #1 influence. It has steadily dropped

over the years, and this year for the first time it did not make the top four. Although being

close to work certainly continues to be somewhat important, there are now more compelling

reasons that residents choose to live in downtown Nashville.

Quality of Life Factors

When residents were asked what four elements most positively influenced their continued

downtown living, the top tied responses were the urban experience (46%) and location-

convenience (46%) followed by arts and cultural events (32%), restaurant selection (31%) and

nightlife (30%). The urban experience has been cited for the 8th year as the top reason for

living downtown, although this year is tied for the number one slot with location-convenience.

This is the first year that restaurant selection (31%) has made the top four.

2%7%

9%

12%

12%

23%

35%

Annual Household Salary Range<$20K

$20-$39K

$40-$59K

$60-$79K

$80-$99K

$100-$150K

>$150K


Study Area Housing Market

The Greater Downtown has 4,902 existing units, and an additional 4,275 units are either

planned or under construction.

Figure 14 – Existing Housing Downtown Nashville

# Units Rental Condo/SF Property Address Rental/Condo

CBD Existing Apartments/Condos/Single Family

(Downtown Core) 112 Second Avenue Lofts 4 3 1 112 Second Avenue Rental/Condo

114 2nd Avenue 1 - 1 114 2nd Avenue Condo

115 8th Avenue North 1 - 1 115 8th Avenue North Condo




219 5th Avenue North 3 2 1 219 5th Avenue North Condo/Rental

244 5th Avenue 2 1 1 244 5th Avenue North Condo/Rental

320 Broadway 4 - 4 320 Broadway Condo


423 Union Street 2 2 - 423 Union Street Rental


Ambrose Lofts 21 - 21 162 4th Avenue North Condo

Art Avenue Lofts 32 - 32 231 5th Avenue North Condo

Banner Lofts on 3rd 31 31 162 3rd Avenue North Rental

Bennie Dillon Original Lofts 86 - 86 700 Church Street Condo

Capitol Towers 219 184 35 510 Gay Street Rental/Condo

The Cumberland/Cumberland Penthouses 289 256 33 555 Church Street Rental/Condo

Church Street Lofts 17 - 17 301 Church Street Condo

The Kress Lofts 29 - 29 237 5th Avenue North Condo

Lofts above ICHIBAN 8 8 - 107 Second Avenue N Rental

Lofts at 160 32 32 - 160 2nd Avenue North Rental

Lofts at Noel Court 4 - 4 214 3rd Avenue North Condo

Lofts at the Exchange 47 - 47 309 Church Street Condo

Lofts at the Reserve 62 62 301 Rosa L Parks Rental

Market Street Apartments 74 74 - 150 Second Avenue South Rental

Metro Manor 170 170 - 500 Fifth Avenue North Rental

Phoenix Lofts 6 - 6 207 3rd Avenue North Condo

Printers Alley Condos 4 - 4 211 Printers Alley Condo

Private Residence 1 - 1 226 3rd Avenue North Single Family

The Quarters 32 - 32 178 2nd Avenue North Condo

Rhea Building Lofts 11 11 - 166 2nd Avenue North Rental

Riverfront Studios - lofts above 2 2 - 210 Broadway Rental

Smith House 1 - 1 167 Rosa L Parks Single Family

Stahlman Building 142 142 - 222 3rd Avenue Rental

Viridian 305 - 305 415 Church Street Condo

Watauga House 25 - 25 222 Polk Ave. Condo

Westview 10 - 10 179 8th Avenue North Condo

1,683

980 703


Continued…

Area Location # Units Rental Condo/SF Property Address Rental/Condo

North Capitol District Lofts 69 - 69 Corner of Harrison & 3rd Ave Condo

Harrison Square 15 - 15 Harrison & 3rd Avenue North Condo

Harrison Square Phase II 48 - 48 Harrison & 3rd Avenue Condo

Hope Gardens Residences 211 211 Hope Gardens Single Family

Ireland28 28 - 28 900 Block of Ireland Street Condo

Riverfront Condos 145 - 145 726 1st Ave. N. Condo

Row 8.9n 29 - 29 800 Block 8th Avenue North Condo

545 - 545

Rolling Mill Hill City View - Art Deco 24 24 - 210 Middleton Street Rental

City View - Metro 36 36 - 210 Middleton Street Rental

City View - Victorian 12 12 - 210 Middleton Street Rental

City View Apartments 102 102 210 Middleton Street Rental

Nance Place Apartments 109 109 - 8 Academy Place Rental

Ryman Lofts 60 60 - 100 Middleton Rental

343 343

SoBro/Rutledge Hill Academy Square Condominiums 50 - 50 100-149 Academy Square Condo

Cardwell Place Condominiums 4 4 Lea Avenue and Rutledge Condo

Encore 333 - 333 301 Demonbreun Condo

Howell Park 40 - 40 401-479 2nd Ave. S. Condo

Peabody Quarters 24 24 - 310 - 312 Peabody Street Rental

Room in the Inn 38 38 705 Drexel Street Rental

Rutledge House 41 - 41 656 Second Ave. S. Condo

Rutledge Terrace 18 - 18 430 Second Ave. S. Condo

Big Red Lofts 20 20 527 8th Avenue South Rental

568 82 486

The Gulch Eleven North Apartments 302 302 210 11th Avenue North Rental

ICON 417 - 417 600 12th Avenue South Condo

Laurel House Apartments 48 48 - 1101 Laurel Street Rental

Mercury View Lofts 32 32 - 1209 Pine Street Rental

Pine Street Flats 296 296 - 1055 Pine Street Rental

Terrazzo 117 - 117 700 12th Avenue South Condo

Twelve Twelve 286 286 1212 Laurel Street Condo

Velocity 265 222 43 320 11th Avenue South Condo/Rental

1,763 900 863

TOTAL EXISTING 4,902 2,305 2,597


12 Davis, Kirby, Fourth Quarter GNAA Statistics Overview, Greater Nashville Apartment Association, 1Q 2015 13 Davis, Kirby, Fourth Quarter GNAA Statistics Overview, Greater Nashville Apartment Association, 1Q 2015 14 Urban Land Institute, Gen Y and Housing: What They Want and Where They Want It, 2015

Conclusion

Downtown residential inventory is increasing as forecasted, but not at the rate necessary to

keep up with demand. Twelve Twelve is the only condo project that has delivered since

Terrazzo in 2009, and is currently 71% sold. The only other for-sale project in the pipeline is City

Lights which will add only 71 units to the market in mid-2017. For the past three years there has

been a two-month supply or less of re-sale units available. Having a 6-month supply is

considered a “healthy market.” Downtown will continue to have pent-up demand for

purchase product unless some of the planned rental projects convert to condos as Twelve

Twelve did in 2014.

Rental demand also continues to remain high with occupancy at 97% or above for the fourth

year in a row, even with delivery of product to the market. Although there are projects in the

pipeline planned to deliver over the next three years, the inflow of jobs to downtown as well

as a peak in the number of millennials turning 24 years old this year will create a steady

demand going forward. According to statistics released by the Greater Nashville Apartment

Association, the Nashville area is not overbuilt. From 2000-2013, Nashville’s population

increased by 331,555 people, or 132,622 new households, which would create a demand for

47,733 rental units. The actual amount delivered during this time frame was 19,929.12

Corporate headquarters such as Bridgestone Americas and HCA subsidiaries – Parallon and

Sarah Cannon – have chosen to move and invest in downtown. Other companies such as

ServiceSource and UBS continue to expand their downtown workforce. Creatives and

entrepreneurial companies are beginning to populate the city as services and amenities

follow. This year, 4.7 million Americans will turn 24 years old, and they will be getting jobs and

moving out on their own13, with 37% of them preferring to live in an urban environment. This

generation “represents the largest source of new demand for rental housing and first-time

home purchases.14

Pent-up demand, resulting in higher rental rates and housing prices, creates a barrier to entry

for many who want to live downtown. An integral housing product needed downtown is

workforce housing for those who earn between 80% - 150% of AMI. Land prices have

escalated in the past few years, making it difficult for private developers to provide this

product. The Metropolitan Development & Housing Agency served as master developer of

two residential communities at Rolling Mill Hill – Nance Place and Ryman Lofts – that offer

affordable options downtown. Affordable rental units only make up 5% of the downtown

inventory. City leaders and developers need to continue to search for creative ways to

incent this type of housing product downtown.

Residential Report: July 2015 - Downtown Nashville · RESIDENTIAL REPORT: JULY 2015 DOWNTOWN...

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