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A Magnet for Jobs and Population Growth, Nashville Making More Relocation Short Lists

Making Amazon's HQ2 Short List is Just the Beginning
May 9, 2018
Music City or the Athens of the South, whichever moniker you might know Nashville by, most agree the city's real estate scene is enjoying quite a ride these days

Multifamily projects are exploding, as are sales of commercial buildings, in the heart of the city. March Egerton, who’s been working in residential and commercial real estate in Nashville for the past 20 years, likens it to what has been seen in Austin, TX in recent years.

"Buyers from other markets seem to still view Nashville as a good value, but there’s also now just a general perception that it is a very hot city," Egerton said.

Whether the region can maintain that good fortune likely depends on how it manages, or doesn't, its rapid growth. The enthusiasm for new apartments threatens to send that market into oversupply, and the region's tax-adverse citizenry voted down an ambitious plan to relieve clogged commuter arteries with light rail and bus lines.

Still, it certainly didn't hurt the buzz around Nashville that it was named one of 20 cities nationwide to make’s short list for its second headquarters, or HQ2.

East Nashville, which is where Egerton focuses his operation, is one of the possible sites Amazon could pick if it were to choose Nashville. Others include Cool Springs or Williamson County, Century Farms / South Nashville and areas near Interstate 24, according to CoStar research.

Even if Amazon never arrives, the city has already snagged a big-name corporation. New York-based AllianceBernstein Holding LP just announced it would relocate its headquarters to Nashville.

It makes sense to Elinor Avant, market analyst with CoStar Group.

"I think the biggest thing going for us is culture," Avant said. "Everyone who visits Nashville falls in love. We also have a smart workforce, and it is very affordable."

Such news also comes as no surprise to Nashville native Bert Mathews, president of the Mathews Company, a firm started by his grandfather.

"Nashville has really been attractive for job growth, a lot of Millennials moving here," Mathews said. "A lot of people just in general are moving here, and you add great quality of life, lower costs, low taxes and a wonderful place to live, and that for people like AllianceBernstein has been incredibly attractive. They’re able to attract the quality people that they want to have work for them. They’re either in Nashville already, or it’s a great place for people to move."

Mathews said multifamily is especially booming, and investors are coming from all over to take advantage of what’s happening in the state’s capital.

"Someone was telling me over the last couple of years we’ve had apartment developers from more than 22 states come into the Nashville market, and so we are seeing a growth that is really unprecedented and investors from markets we’ve never seen before," Mathews said.

They include investors from the Far East and the Middle East, according to Mathews.

But why all the fuss over Nashville now?

"It’s driven primarily by the great job growth and population growth that we’re having," Mathews said.

Another factor has been the city’s leadership, which is key, according to Mathews. He pointed to the forward thinking of three recent mayors in particular, including Phil Bredesen, Bill Purcell and Karl Dean, as being beneficial to today’s success.

"They made specific decisions around economic development, infrastructure and just focused on jobs for our community," Mathews said.

However, there are other factors to consider that could impact Nashville’s future.

The multifamily sector has been expanding at the fastest rate in the country, but has been causing a bit of oversupply in recent years, according to Avant. Other asset classes are also strong, including office.

"We didn’t start building here until 2017," Avant said. "Prior to 2017, we had the lowest vacancy rate in the country."

Other keys to the city’s success include abundant capital in the marketplace and a downtown that’s being rejuvenated.

"That’s been the most focused, but the suburbs are doing extremely well also," Mathews said.

The good news is all product types are performing well, including hotel, industrial and even retail as well, according to Mathews.

However, will the city hit a hiccup as a result of the recent defeat of the proposed large-scale transit plan?

Avant refers to the city’s public transportation system as its "downfall," noting, "We currently do not have a very good system compared to other cities on Amazon’s list."

That, coupled with the city’s increasingly long commutes, may not fare well for the city in the long run.

"I think that you balance that with the transit vote with other decisions that could be made, and it could put some of the things that make Nashville so attractive at risk," Mathews said.

However, he believes the good news for Nashville outweighs any bad.

"As long as our population growth and job growth keep growing, we will do extremely well," Mathews said. "Nashville is a great place to invest for the long term."

Karen Jordan, News Reporter  CoStar Group   
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