Future Cities
Nashville
2024 North America Industrial Big-Box Review & Outlook
April 29, 2024 5 Minute Read
Demographics
Just over 2.4 million people live within 50 miles of the market’s core, with a projected five-year growth rate of 6.4%, the second-highest of all U.S. markets in this report. There is a population of 29.1 million within 250 miles, more than Houston, St. Louis and Memphis.
Figure 1: Nashville Population Analysis
The local warehouse labor force of 54,204 is expected to grow by 11.3% by 2034, according to CBRE Labor Analytics. The average wage for a non-supervisory warehouse worker is $17.86 per hour, just above the national average.
Figure 2: Nashville Warehouse & Storage Labor Fundamentals
* Median wage (1 year experience); non-supervisory warehouse material handlers.
Location Incentives
Over the past five years, there have been more than 120 economic incentives deals totaling more than $260 million for an average of $9,300 per new job in metro Nashville, according to fDi Intelligence.
CBRE’s Location Incentives Group reports that top incentive programs in Tennessee include the Job Tax Credit, offering a one-time corporate income tax credit to business that create at least 25 new jobs within three years and make a minimum capital investment of $500,000. The tax credit may offset up to 50% of franchise and excise taxes. Any unused credits may be carried forward for up to 15 years.
Figure 3: Nashville City Top Incentive Programs
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.
Logistics Driver
Nashville’s central location places it within two-day ground delivery of 72% of the U.S. population. It is one of six U.S. cities with three major intersecting interstate highways, creating competitive and affordable transportation costs that attract top global logistics and distribution firms. With a $1.4 billion expansion project underway, Nashville International Airport continues growing its cargo-handling capabilities and has six air carriers, including FedEx, servicing the market.
Nashville’s central location places it within two-day ground delivery of 72% of the U.S. population.
Supply & Demand
Nashville continues to experience strong big-box fundamentals due to its central location and population growth. Leasing activity finished the year at 6.4 million sq. ft., slightly lower than 2022’s 6.9 million sq. ft. Net absorption hit a record in 2023 at 6.2 million sq. ft. This helped vacancy rates stay below 3% for the third consecutive year, at 2.5%, the second-lowest of all U.S. markets in this report. General retailers & wholesalers were most active, accounting for 47.5% of total leases.
8.5 million sq. ft. was under construction by year-end, nearly all still available to lease. There is nearly three times more available under construction space than available existing space. This may lead to more vacancies even with continued strong lease volume. Given that this market has had 97% occupancy since the pandemic’s onset, occupiers are expected to have the most lease options in years.
Figure 4: Share of 2023 Leasing by Occupier Type
Source: CBRE Research.
Figure 5: Lease Transaction Volume by Size Range
Source: CBRE Research.
Figure 6: 2023 Construction Completions vs. Overall Net Absorption by Size Range
Figure 7: Direct Vacancy Rate by Size Range
Figure 8: Under Construction & Percentage Preleased
Figure 9: First Year Taking Rents (psf/yr)
Source: CBRE Research.
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Industrial & Logistics Research
John Morris
President, Americas Industrial & Logistics, Advisory Services
