Nashville Q3 Multifamily Market Insights: Long-term growth prospects favorable, despite recent cooling

Highlights:

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• The Nashville multifamily market continued to cool during the third quarter, as asking rents ticked lower, and the vacancy rate rose. Despite mixed conditions in recent months, construction activity remains heightened with more than 6,400 units already delivered to this point in the year.
• After reaching an all-time low one year ago, the vacancy rate has risen in each of the past four quarters. Local vacancy increased 70 basis points during the third quarter to 5. 2 percent; year over year, the rate has advanced 150 basis points.
• Asking rents fell slightly in the last three months, dropping 2.5 percent to $1,674 per month. Year over year, average rents are up 6.2 percent.
• The multifamily investment market performed well during the third quarter, as sales activity gained momentum, and per-unit pricing remains well above last year’s figure. The median sales price to this point in the year is $266,000 per unit, a 50 percent increase from the median price in 2021. Cap rates inched higher, averaging 4.4 percent in the third quarter.

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