Nashville Rent Growth Driven by Class A Product
Nashville was a top performer for rent growth in April, and that achievement was driven by growth in Class A properties. Despite the economic fallout from the COVID-19 pandemic, Nashville’s apartment market achieved a 3% rent increase in the year-ending April 2020. That was the third biggest increase among the nation’s largest 50 markets and 200 basis points above the U.S. average. Nashville’s overall rent growth was supported by Class A product which posted a 6.5% annual hike, by far the best performance among the nation’s 50 largest markets and 550 basis points above the national average for that property class. Meanwhile, Nashville’s Class B and C units posted smaller annual increases of 2.1% and 0.5%, respectively. This recent performance is especially noteworthy given that Nashville trailed the U.S. norm for overall rent growth throughout 2017 and 2018 due to high levels of development activity in the market which caused Class A performance to lag. The large volume of completions in the pipeline could take a toll on Nashville’s top-tier product in the near term. At the end of April 2020, there were 13,126 units under construction in Nashville, representing 8.5% of existing stock, the highest ratio among the nation’s top 50 markets.