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Jul 23
2010
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Nashville's Apartment Market Performance Gets Rolling
Posted by: Michael Cunningham on Jul 23, 2010 09:35 Tagged in: Rent , Occupancy , Multifamily , Construction , Blogs , Apartment Development , Apartment
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Nashville ranks among the U.S. apartment markets recording the most pronounced upturns in performance during 2010. Demand is coming in at very strong levels that well exceed deliveries, driving up occupancy quite rapidly and, in turn, stimulating rent growth.
MPF Research's calculations show Nashville apartment absorption during the January-June 2010 time frame at nearly 4,200 units, compared to roughly 1,000 units of new supply. Apartment demand in Music City perhaps was boosted a bit by flooding that damaged a portion of the total housing stock in May, but the impact doesn't appear to be especially significant. Pointing to that result, apartment demand during the first half of 2010 proved substantial throughout the metro, not just in the neighborhoods where flooding occurred.
Nashville's overall occupancy rate for apartments now has reached 94 percent, up 3.1 percentage points since bottoming at the end of 2009. Notable progress is occurring in all key submarkets except Sumner County, on the metro's far northeast side.
Improved occupancy allowed apartment operators to boost effective rents at an impressive clip of 4 percent during 2010's first half, with most of that growth occurring specifically during 2nd quarter. Year-to-date increases erased the losses seen in 2009's last half, taking annual rent change just past the breakeven point at a positive figure of 0.2 percent.
Building actually started recently on a couple of moderately-sized apartment communities totaling 311 units. However, the total stock under construction in the metro remains under control at just over 800 units, so it won't take much near-term demand to surpass completion levels.
A portion of the data used in this post is acquired through property management software, which provides property owners and managers the ability to report baseline statistics to county recorder's offices, news publications, and other reporting agencies. Improvements to property management systems will allow us to more efficiently track occupancy and rent/price fluctuations at city and county levels.
Originally published on July 23, 2010, by Greg Willett
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