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Austin vs. Nashville: Two Cities with A Lot in Common

CoStar Market Insights: Both Cities Have Been Transformed This Economic Cycle
July 2, 2018

Aerial image of Austin.



Similarities between the two cities are obvious, even with a cursory look. Not just because Nashville and Austin have vibrant music scenes, but because the two have completely transformed this economic cycle.

Both markets have led the country for employment growth, where Austin has increased its employment by 35 percent, followed by Nashville’s 30 percent.

While Austin’s population growth has more than doubled Nashville’s this cycle, they have both led the United States for net migration. Interestingly enough, Austin’s progression did not catch up to Nashville’s until last cycle. Prior to 2008, Nashville had both more people and jobs. Both markets have witnessed strong office-using employment growth, fueling strong income gains of 30 percent since 2010.

At the same time, multifamily developers have flooded the cities. Throughout the cycle, Nashville has led the country in multifamily inventory growth, increasing its footprint by 35 percent, followed by Austin’s 31 percent.

Aerial image of Nashville.



There is no question why these markets were so popular. But how have they handled the supply infusion?

Both Austin and Nashville have been dealing with an oversupply issue since 2013, causing vacancies to increase. Currently, the vacancy rate in each market is about 8 percent, which is down from 9 percent in 2017. Additionally, both cities reached their peak for development in 2017 and construction is finally starting to slow down.

Austin currently has 5 percent of its inventory under construction, compared to Nashville’s 8 percent. Forecasts show Austin’s fundamentals should settle soon, whereas Nashville still has a few years left to recover.

Rents have increased in both markets by 25 percent over the cycle and while annual rent growth was down in 2017, it has recently improved for both metropolitan areas. Investors are extremely attracted to these high-growth cities, and pricing has more than doubled over the cycle.

While Austin is now a larger city in many different ways, Nashville is not too far behind.

Year-over-year employment growth has slowed for both markets, but Austin’s growth numbers were about 1 percent higher than Nashville’s in the second quarter of 2018. Forecasts show that Nashville’s growth will fall to the national average, whereas Austin’s will remain elevated. It appears that Nashville will probably not be catching up to Austin anytime soon.


CoStar Market Insights provides a snapshot of recent real estate trends. The CoStar Market Analytics team monitors commercial and multifamily real estate across 390 metro areas, with a granular understanding of the projects, players and economic trends that move these markets.

Learn how CoStar Market Analytics can add to your market knowledge, helping to minimize risk and maximize returns.

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