Key Take Aways from Nashville December Meeting!

• Nashville continues to see a lot of interest for corporate headquarter relocations and large back office groups.
• With the election over, there is a lot of questions around potential changes to tax law, specifically with capital gains tax changes and estate exemptions.
• Construction and materials pricing has stabilized, but lead times are longer, though they are predictable.  They are seeing a lot of new GC competitors entering the market, along with new subcontractors.  Also in the construction space, builders risk insurance prices are going thru the roof having doubled since last year.
• Reports are a lot of engineering and design changes to building tied to Covid.
• Predictions are for a net loss of 15% in required office space needs.
• In the multi-family and industrial space, lenders are becoming more competitive.  Interest rates remain low with 2.5% on 10 year deals for Industrial and 3.75-3% on 10 year deals for multi-family (60-70$ LTV).  On the office side, lenders are looking for quality and diversified rent rolls – look at 3-3.5%.  Overall, closings are just taking more time.
• In retail, grocery anchored centers and retail within multi-family mixed-use projects have seen minimal impact.   A number of retail tenants are also reporting sales are up over 2019 figures.  Nashville benefited by having low vacancy rates going into the pandemic.
• On the Engineering front, there is lots of entitlement work underway.  The large masterplan developments were set up well to ebb and flow with the market.
• City and county planning staffs are looking at zoning and storm water ordinances that haven’t been reviewed in years.
• The group generally reported that day to day occupancy in the office is about 20% and that most leasing activity is for short term renewals.