Nashville’s Office Leasing Activity This Year Rivaled by Few Other North American Tech Hubs

Nashville ranks among the top North American tech markets for office leasing activity this year, registering office demand and rent growth exceeded only by a few much larger tech hubs, according to CBRE’s annual Tech-30 report.

Nashville topped all Tech-30 markets in net absorption, a proxy for office demand, from last year’s third quarter to this year’s second quarter, ahead of No. 2 Vancouver and No. 3 Baltimore. Net absorption measures the amount of space newly occupied against the amount newly vacated in a given timeframe.

Among the leading tech submarkets in each Tech-30 market, Nashville’s central business district posted the second-highest net absorption behind Philadelphia’s University City.

Nashville also ranked highly for office rent growth. Nashville’s 6.1% rent growth from last year’s second quarter to this year’s second quarter trailed only Boston and Baltimore. Nashville’s CBD posted the second-largest rent growth among tech submarkets, behind only Baltimore’s BWI market.

"We have witnessed a notable uptick in tech office demand, resulting in some of the largest deals completed year-to-date,” said Janelle Gallagher, senior vice president at CBRE, “Nashville's strong market fundamentals provide an excellent environment for tech companies to attract and retain top talent."

CBRE’s Tech-30 report, now in its 13th year, measures the tech industry’s impact on office demand and rents in the 30 leading tech markets in the U.S. and Canada, as well as select submarkets.

In the U.S., the tech industry increased its share of office leasing activity to 18% in the first three quarters of this year, boosted in part by the growth of the artificial intelligence industry, according to CBRE’s annual Tech-30 report.

Tech notched a 3.8-percentage point gain so far this year from its 14.2% share of U.S. office leasing for all of 2023. The industry’s share so far this year exceeds that of the Finance & Insurance industry (16.5%) and the Professional & Business Services industry (15.7%). Tech had trailed both industries in 2022 and the first half of 2023 before reclaiming the lead in last year’s third quarter. It now has held its lead in five consecutive quarters.

In Canada, the tech industry claimed 15.2% of office leasing activity in this year’s first three quarters, up from a trough of 10.3% in 2023. Tech’s share in Canada trails that of Professional & Business Services (18.5%) and Finance & Insurance (16.8%).

Other notable details about Nashville’s office market and tech job market in the report include:

• Nashville’s 5.1% growth in tech software and services jobs from 2022 to 2023 was exceeded only by Toronto.
• Tech companies accounted for 26.7% of Nashville’s office leasing activity by square footage in the first three quarters of this year.
• Tech companies claimed 13.4% of the $191.4 million in venture capital awarded to Nashville companies in this year’s first half.
• Nashville’s CBD is one of the few tech submarkets to register lower vacancy (17.2%) than its citywide average (17.9%).

“We are seeing current tech users continue to invest in the future of Nashville by expanding and renewing their office space, with many seeking new construction or A+ office properties,” said David Gossett, vice president with CBRE. “Our market offers a variety of mixed-use opportunities for companies looking to expand or establish operations in the city.”