This year Nashville has seen a tidal wave of apartments being built and coming up for rent. And experts say the market is starting to get water-logged.
Longtime apartment developer Marty Heflin says Nashville’s hit the peak of its apartment building boom.
“I think we’re headed to the bottom right now,” Heflin says.
This is important because most of the folks filling these units are a big part of the city's recent growth: Millennials who are new to town.
Recent data from Colliers International, a commercial real estate firm, show more than 10,000 apartments are slated to come online over the next year — yet another record for new supply. And Germantown is ground zero for the onslaught, with roughly 4,000 of those apartments. But research shows the rate at which they’re being rented is beginning to wane. And Heflin says developers are working hard to find tenants as fast as possible.
"In some of the higher-end developments around town, you are starting to see one, two, three months free," Heflin says. "We are not quite to clowns twirling signs in the streets yet for ‘come on in a lease right away.’ But I would say it’s definitely becoming a concessionary environment right now."
There is another piece of good news for those who are not developers: Finally, rents are expected to rise more slowly in the coming year.
Heflin says that he doesn’t expect the current oversupply to last long. Why? Because Nashville has an economic base that’s grown stronger — good jobs, pro sports, and relatively low taxes compared to other big cities. And these make things more stable.
"We are staying on the map now. And that is the big difference," Heflin says. "We have reached a certain size and a certain diversity of our economic base."
Because of the economic diversification, Heflin says Nashville is less subject to the real estate boom bust cycle.